Silver Weekly Price Forecast – Silver Markets Crater

Silver markets initially rally during the week, but then got absolutely slaughtered as risk appetite around the world continues to crater due to the coronavirus. The silver markets selling off on a sign of lowered industrial demand, and quite frankly probably some forced liquidation as traders need to raise capital to cover margin in other markets. There have been horrific losses in other assets so sometimes traders need to shift funds around, and this is especially true in situations like we have right now.

SILVER Video 02.03.20

To the downside, the $16.00 level underneath offers a lot of support, so I think that might be where the market goes looking to find buyers. The candlestick closing as low as it has during the week shows just how much negativity there is, as the bloodshed on the world’s exchanges hasn’t ended. I fully anticipate that we will continue to go lower, and any rally at this point will probably be sold into on signs of exhaustion.

However, if central banks around the world start cutting rates, and I suspect that could happen over the weekend, that might have the opposite effect in this market in sending precious metals higher. It is a bit of a guess at this point, but that certainly would be the type of wildcard that could change things. This weekend is going to be crucial as to where we go next, and the world’s central banks are most certainly on notice at this point. Ultimately, there are probably more losses but eventually silver will offer a bit of value, which again I suspect is closer to the $16.00 level underneath. At that point in time it might be a longer-term “buy-and-hold” scenario.

Gold Price Prediction – Prices Tumble as Momentum Turns Negative

Gold prices were hammered on Friday as a crowded trade lost many weak longs. Prices sliced through short term support levels, despite declining US yields but a steady dollar. Generally, gold prices are negatively correlated to the 10-year yield but the correlation has broken down as gold drop in tandem with US yields. US personal consumption expectations rose in January to an 11-month high.

Technical Analysis

 

Trade gold with FXTM

 

[fx-broker slug=fxtm]

Gold prices were hammered on Friday, as trades quickly exited pushed the yellow metal down more than 4%. Volatility on gold prices surged higher but eased into the close. Why concerns over the spread of the coronavirus continue to weigh on riskier assets, gold has been immune and up until Friday used as a safe-haven asset. Prices sliced through support near the 10-day moving average which is now seen as resistance at 1,615. Prices bounced near the 50-day moving average at 1,569. Prices have also slipped through an upward sloping trend line that comes in near 1,571.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram also generated a crossover sell signal, crossing through the zero index level. The downward sloping trajectory of the MACD histogram points to accelerating negative momentum.

Inflation Rises

The Personal-consumption expenditures rose 0.2% in January from December, according to the Commerce Department. Personal income advanced 0.6% last month, the largest gain in 11 months. Expectations were for a  0.2% increase in spending and a 0.4% gain in personal income. Gains in income and spending came against the backdrop of still-modest inflation pressures. The price index for personal consumption expenditures, rose 0.1% on the month and was up 1.7% from a year earlier. Year-over-year price gains were 1.5% in December and 1.3% in November.

Crude Oil Weekly Price Forecast – Crude Oil Markets Take a Beating for the Week

WTI Crude Oil

The WTI Crude Oil market broke down rather significantly during the trading week, slicing down through the $45 level. Ultimately, this is a market that looks as if it is going to try to make its way down to the $40 level, where there should be a significant amount of support. The crude oil markets continue to suffer at the hands of the coronavirus, and therefore there is no real way to measure risk, and that’s one of the biggest problems with this market right now. When you look at the candlestick, it’s clearly negative and there is no real attempt to rally. Ultimately, I think that the $40 level will offer a significant about the support, but it’s almost going to have to be something OPEC does as far as production cuts on an emergency meeting. Otherwise, any bounce that we get could be somewhat technical but slicing through the $40 level would be a horrific turn of events. For what it’s worth, looking at the daily chart, it looks as if we had formed a very flat, and that does measure for a move to $35 albeit being a bit optimistic for the sellers. Rallies are to be sold.

WTI Oil Video 02.03.20

Brent

Brent markets also have broken down a bit during the week as well, slicing through the $50 level. Ultimately, the market then goes looking towards the $42.50 level. At this point in time I think that rallies are to be sold into, unless something structurally changes. Demand for crude oil is falling through the floor, and quite frankly there is far too much in the way of supply to think that we have a real chance of recovering for any length of time.

Natural Gas Weekly Price Forecast – Natural Gas Markets Continue to Show Negativity

Natural gas markets have broken down significantly during the week, slicing through the $1.80 level. That’s an area that has been supportive in the past, and at this point the fact that the market has broken down suggests that we are going to go lower. The oversupply of natural gas continues to be a major problem with this market, as fracking continues to produce way too much. Furthermore, the warmer temperatures coming does not help the situation, and beyond that we have received a very bearish inventory report this past week, so at this point it’s likely that we will see plenty of sellers. The question now is whether or not we can break down below the $1.60 level, and if we do that would be quite remarkable.

NATGAS Video 02.03.20

To the upside, the market could very well try to reach towards the $1.80 level before selling off again, or perhaps even the $2.00 level. I have no interest in buying this market, because quite frankly this is a market that has been far too oversold for far too long to believe that it is suddenly going to change its tune. With warmer temperatures, and oversupply of natural gas, and quite frankly now the worry about the coronavirus killing off demand, it’s very unlikely that this market will be able to recover anytime soon. It is going to take several bankruptcies in the United States when it comes to natural gas suppliers and drillers in order to bring down the commodity supply. At this point, market participants continue to sell rallies.

Gold Weekly Price Forecast – Gold Markets Crater for The Week

Gold markets initially shot higher during the week, reaching towards the $1700 level. That is an area that of course offers a lot of resistance, as it is a large, round, psychologically significant figure. By turning around the way it has, it looks extraordinarily negative as we sliced through the $1600 level. By breaking through there, it shows quite a bit of negativity and a real lack of follow-through. At this point, it’s likely that the market continues to go a little bit lower, or perhaps kills time by going sideways. A simple bounce back is a bit much to ask, at least without some type of stabilization.

Gold Price Predictions Video 02.03.20

The market is still in an uptrend, but this is clearly a “shot across the bow” for those who would be bullish of gold. Longer-term, it’s probably very likely that we do continue to the upside in a bit of a safe haven bit, but a lot of forced liquidation has been going on this week, as margin calls are being fired off in other markets. Large funds will have to sell profitable positions to keep afloat, and that may be what’s going on with the gold market currently. It certainly isn’t US dollar strength, because quite frankly there is none. At this point, it’s likely that the market continues to be very jittery and nervous, so if you are looking to go long, waiting for some type of supportive daily candlestick is probably the best way to go. That, or perhaps a recapturing of the $1600 level.

Gold Price Forecast – Why Are Gold Prices Crashing with Stocks?

Gold prices are crashing as we head into Friday’s close. The Fed may use its emergency powers to slash interest rates as soon as this weekend. A surprise rate cut could stabilize gold prices and stop this unjustified liquidation.

Trying to make sense of these markets is impossible. If I told you U.S. stocks would crash 14% in one week – how high would you expect gold prices to jump? $50…$100…$150? I would guess at least $100 but probably more. Nope – gold is down over $50.00 on Friday.

All week I’ve been monitoring the Fed Watch Tool for clues regarding interest rates. On Tuesday, the odds for a March 18th rate cut started at 14.4%, by the close they had jumped to 27.7%. As we head into the weekend, they’re now proposing a 100% chance for a 0.25% cut and a 47.2% chance for a 0.50% cut.

A screenshot of a cell phone

Description automatically generated

Note: The odds for a .50% cut were 0% yesterday. The Fed could move as soon as this weekend. 

I try not to cry manipulation, but it’s hard to justify this week’s price action as natural. It seems several forces were at play, much out of our control. It appears someone wants the Fed to ease, and this week’s crash makes that possible. Sadly, many investors were hurt and shaken out of their positions in the process.

I don’t have a crystal ball, and I’m not sure what will happen next week. But I do know governments are running out of options to stimulate economies; interest rates are at all-time lows. All they have left is money printing, and that will lead to much higher precious metal prices.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/

Silver Price Forecast – Silver Markets Break Down Drastically

Silver markets broke down significantly during the trading session on Friday, breaking through the 200 day EMA which of course is a very negative sign. Silver is going to be a bit interesting considering that the market participants are likely to go looking at the $16.50 level. That’s an area that I think continues to attract a lot of attention as it was previous support but quite frankly it’s probably only a matter of time before we break down a bit. Precious metals of course are a bit of a safe haven when it comes to markets, but silver has an industrial component as well, and that of course is part of what’s getting punished.

SILVER Video 02.03.20

Furthermore, the markets may have witnessed a bit of forced liquidation of silver as a lot of traders would have been in profit. By taking profits here they can pay for losses elsewhere. That’s simply the market looking for liquidity where it can find it. At this point, silver is more than likely going to find a bottom, but I think we may have a little bit more pain to go. Over the weekend we may get some central bank interest-rate cuts, so that could help silver, but there are far too many question marks out there right now to simply put money to work. This is a very dangerous market and essentially a “50-50 proposition” that we are dealing with. At that point, it’s no longer trading but it then becomes gambling. That of course is not very advisable. Expect extreme volatility on Monday regardless of what happens over the weekend.

Crude Oil Price Forecast – Crude Oil Markets Break Down Yet Again on Friday

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken down significantly during the trading session on Friday to slice down below the $45 level. It is possible that we get a bit of a bounce from here, but any bounce should be sold into, especially if we get closer to the $50 level. OPEC needs to cut production to have any hope of a bounce for a longer-term move, and quite frankly even then I don’t think that will be enough as people are worried about global demand and the longer-term oversupply that we already have. With that being the case, I am a seller. However, if we break down below the lows again, we could go looking towards the $40 level.

Crude Oil Video 02.03.20

Brent

Brent markets have also broken down, to slice down below the $50 level. It’s very likely that the market may go looking towards the $45 level given enough time, but in the short term a little bit of a recovery may be possible. That recovery should continue to be sold into as there are far too many reasons to think that this market is going to fall apart again. Granted, we can’t go in one direction forever but clearly buying is all but impossible less something drastically changes. We would need to see the coronavirus situation suddenly disappear, something that’s not going to happen. Ultimately, this is a market that seems as if it is going to go lower given enough time but with all things, you don’t chase the trade.

Natural Gas Price Forecast – Natural Gas Markets Fall Yet Again

Natural gas markets have broken down a bit during the trading session on Friday again, as the market continues to show signs of weakness. Quite frankly, the oversupply of natural gas doesn’t seem to be going the way anytime soon, and therefore I think that rallies will continue to be sold. We are starting to see a little bit of a bounce late in the day but that’s probably just people taking profits into the weekend.

NATGAS Video 02.03.20

The inventory figure this week was miserable, showing that there is not enough demand still. The lack of demand by the markets for natural gas continues to hamper any type of price appreciation, but quite frankly we have much bigger issues than that now. The oversupply simply is going nowhere until there are bankruptcies in the United States. We are about to see massive credit issues for a lot of the companies that have been supplying the market was so much natural gas, and that will force bankruptcies. That in turn will eventually disrupt supply, something the market desperately needs. Until then, it’s all but impossible to buy this market, because quite frankly there are too many things working against it.

Furthermore, the weather in the United States continues to be warming up, and that will drive down demand as well. At this point in time, there’s nothing good about this market in fading the rallies continues to be a major issue. The $1.80 level would be the first place at be looking to sell on signs of weakness, followed by the $2.00 level after that. In fact, I see the $0.20 region as an entire barrier that will be broken.

Gold Price Forecast – Forced Selling Of Yellow Metal

Gold markets fell hard during the session on Friday, as we have sliced through the $1600 level. By doing so, the market shows signs of extreme weakness as we have not only broken through a big figure, but we have also touched the 50 day EMA. Looking at this candlestick, it is extraordinarily negative, but at this point if we break down below the 50 day EMA it could unwind this market even further. The $1550 level will be the next target, and then eventually the $1500 level. At this point, any rally needs to clear the $1600 level on a daily close to begin buying. If we do that before the weekend, then it might be a bit of speculation that the server banks around the world looking to cut interest rates, but quite frankly that is still a gas.

Gold Price Predictions Video 02.03.20

If the market gets news over the weekend, this could be an extraordinarily volatile place to be. Quite frankly, pay attention to the $1600 level to determine which direction you should be trading, but you won’t be able to have that information until the markets open up. This weekend could be extraordinarily important for gold, so to suggest that we know what’s going to happen before all of the news gets out of the way would quite frankly be ineffectual. The world is certainly teetering on the edge of panic, and eventually that should help gold but we don’t know where the bottom is quite yet.

Gold Price Forecast – Did Gold Prices Peak?

Since January, we’ve been calling for Gold to reach $1700 by March. Prices hit $1691.70 on Monday before reversing sharply. The massive liquidation in stocks this week may have forced a premature top in Gold.

On Monday I wrote, Gold Nears $1700 Target as Stocks Plummet. Our Gold Cycle Indicator jumped to 405 and entered maximum topping, suggesting the 6-month cycle was nearing maturity. I assumed prices would stretch a little higher, but the ensuing market liquidation proved overwhelming.

Correction Target

If the gold cycle peaked at $1691.70, then I won’t expect the next 6-month low until late April or early May. Preliminary analysis supports a decline to $1480 – $1520.

A close up of a map

Description automatically generated

What could change our outlook? If stocks continue to plummet, then the Fed will be forced to cut interest rates, and that could put gold back on its feet. With the S&P 500 down 13.40% for the week (as I write), the Fed could announce something as soon as this weekend.

Don’t Let The Bull Throw You

Despite all the volatility, precious metals and miners are in long-term bull markets. There will be pullbacks and corrections, sometimes deep – don’t let these events shake you. The bull is powerful and will do its best to throw you. Grit your teeth, cinch down that flank strap, and decide not to be thrown.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/

 

Natural Gas Price Fundamental Daily Forecast – May Be Overcooked; Don’t Get Caught Shorting Weakness

Natural gas futures hit a multi-year low on Friday, strongly suggesting the winter heating season is over and traders are ready to move on to the spring. Besides the weather, traders are also blaming the steep losses this week on coronavirus fears.

Another catalyst behind Friday’s rout is the loss of 22.3 gas-weighted heating degree days (gHDD) from the American model over the past 24 hours, according to forecaster DTN, which adjusted its latest forecast to warmer ahead of Friday’s opening.

At 14:39 GMT, April Natural Gas is trading $1.722, down $0.30 or -1.71%. The low of the session so far is $1.642.

U.S. Energy Information Administration Weekly Storage report

On Thursday, the EIA reported that domestic supplies of natural gas fell by 143 for the week-ending February 21. Total stocks now stand at 2,200 trillion cubic feet, up 637 billion cubic feet from a year ago, and 179 billion cubic feet above the five-year average, the government said.

Going into the report, traders were looking for a larger-than-average withdrawal for the week-ending February 21.

A Bloomberg survey predicted withdrawals ranging from 145 Bcf to 165 Bcf, with a median of 156 Bcf. Polls by the Wall Street Journal and Reuters produced similar results, while NGI’s model projected a pull of 152 Bcf.

The EIA recorded a 167 Bcf draw for the similar week last year, while the five-year average withdrawal stands at 122 Bcf.

Daily Forecast

Now that the market has hit its multi-year low at $1.642 and winter has been officially put to bed (aside from a few pockets of cold weather than tend to pop up in March) speculators can kick back and relax. What this means is that a few of the major short-sellers are likely to start booking profits so there exists the possibility of a meaningful short-covering rally over the near-term.

Start watching for signs of a bottom like a lower-low, higher-close, commonly known as a closing price reversal bottom. Turning higher on a move over yesterday’s close at $1.752 can produce such a move.

Don’t get complacent if short. This market can turn higher in a hurry if the short-sellers start to take profits. The next rally may have nothing to do with the weather.

Gold Daily News: Friday, February 28

The gold futures contract lost 0.04% on Thursday, as it continued to fluctuate after retracing most of Friday’s-Monday’s rally. The daily trading range remained relatively big yesterday, as it reached over 25 dollars. It shows how high short-term volatility is. Investors were buying the safe-haven asset amid corona virus outbreak, economic slowdown fears recently. But gold has retraced a big chunk of that rally after bouncing off $1,700 mark.

Gold is 1.3% lower this morning despite stock market’s sell-off and the mentioned corona virus fears. What about the other precious metals? Silver lost 1.00% on Thursday. Today silver is 4.0% lower after breaking below January lows. Platinum lost 1.02% on Thursday, and right now it is trading 3.3% lower. The metal broke below $900. Palladium was the only gainer again, as it advanced by 1.68% yesterday. However, it is 3.9% lower this morning.

The financial markets went risk-off since last Friday, as corona virus fears came back again. Yesterday’s Durable Goods Orders release was mixed, the Preliminary GDP was in line with expectations and Pending Home Sales number was better than expected. However, stocks accelerated their sell-off and the S&P 500 index lost a stunning 4.42%.

Today we will have the Personal Spending and Personal Income numbers release at 8:30 a.m. Then at 9:45 a.m. the Chicago PMI will be released. There will also be Michigan Consumer Sentiment number release at 10:00 a.m. So a lot of news releases ahead of us this morning. However, economic data releases seem less important than the mentioned virus scare recently.

Check more of our free articles on our website – just drop by and have a look. We encourage you to sign up for our daily newsletter, too – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up for the free newsletter today!

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Price of Gold Fundamental Daily Forecast – Watch for Buyers as Market Enters Value Area

Gold prices are down over 1% on Friday as investors continued to book profits after a recent run-up in prices. The market has now give back more than half of its gains from the rally that began on February 5. Nonetheless, the precious metal is set to finish with a third consecutive monthly gain although it is likely to end the week with a loss.

At 13:25 GMT, April Comex gold is trading $1623.80, down $18.70 or -1.14%.

The weakness in gold this week has come as a surprise to some. One would think that with the global equity markets plunging over 10% in just a matter of days, gold prices would’ve soared. But that hasn’t been the case.

Gold is probably under pressure this week for a number of reasons. Firstly, it may be too costly or overpriced. Secondly, traders may have fully priced in the sooner-than-expected rate cuts from the Fed. Thirdly, some of the bigger hedge funds may be booking profits to offset some of their losses or to meet margin calls in other markets. Finally, investors may have determined that buying U.S. Treasurys for safe-haven protection is a better play due to liquidity issues in gold.

Daily Forecast

We said earlier in the week that the longer-term fundamentals for gold are bullish and that investors may not buying again when the market hits a value zone. Not everyone has the money to chase a market higher.

Gold is currently trading inside a value zone defined as $1628.10 to $1604.80. Watch the price action and read the order flow on a test of this zone to determine if buying is taking place. Ideally, we’d like to see a closing price reversal bottom, but that moves seems unlikely today unless there is a dramatic turnaround.

Gold may have to spend a few days inside the value zone, building a support base, before prices move higher.

Oil Price Fundamental Daily Forecast – Prices May Be Too Cheap for Buyers to Ignore

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures hit multi-year lows on Friday and were set for their steepest weekly decline in more than four years as the spread of the coronavirus raised fears of a global recession and consequently lower demand for crude oil and other refined fuels.

At 12:54 GMT, April WTI crude oil is at $45.73, down $1.36 or -2.95% and April Brent crude oil is at $51.04, down $1.14 or -2.18%.

Benchmark Brent crude, which fell about 2% on Thursday, has lost around 13% this week, putting it on track for its steepest decline since January 2016. The front-month April contract expires later on Friday.

“Brent crude under $50 a barrel will be a nightmare scenario for OPEC and may well provoke a … response of some kind from the core grouping,” said Jeffrey Halley, a senior market analyst at brokerage OANDA.

Still Hope of Rebound in Demand

Some market participants are expecting the recent sell-offs to be reined in as soon as the demand fears wane. Furthermore, with coronavirus cases in China beginning to slow, the country may soon return to full production, while the spread of the virus runs its course throughout the rest of the world.

“We have to believe that the COVID-19 virus will be contained sooner rather than later. I’m optimistic we should see some positive news by mid-next week at the latest,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

“Subsequently, the sudden drop in demand will rise back just as suddenly, to at least 75% to 90% of prior levels. The rise back will be spurred by current low prices.”

Daily Forecast

The markets are getting pretty close to levels that will become attractive to speculators, but there has to be a catalyst to get the markets moving higher. China’s PMI data over the week-end are expected to come in weak, but that news may already be priced into the market.

News from China started the selling, and news from China is likely to ignite the rally. If you believe the data, the virus may be subsiding in China and the country may start to go back to work. Once investors know the duration of the virus then they’ll be better able to figure out when the outbreak is likely to end in the rest of the world. This will then encourage more buying in crude oil along with extremely cheap prices.

Sweden Ends Its Experiment with Negative Interest Rates. Should Gold Be Worried?

In December, the Sveriges Riksbank, the world’s oldest central bank, has raised the main interest rate from -0.25 percent back to zero, ending its experiment with the negative interest rate policy, as the chart below shows.

Chart 1: Riksbank’s repo rate from January 2010 to January 2020.

This is a huge change. As a reminder, Riksbank was a pioneer of negative interest rates. As early as in 2009, it moved the overnight deposit rate below zero. Then, in 2015, the Swedish central bank cut its main interest rate, the repo rate, to -0.10, worried about the repercussions of the sovereign debt crisis in the euro zone. In 2016, Riksbank was forced to go further, setting the interest rates as low as -0.50 percent, to prevent a Japanese-style deflationary spiral in Sweden.

And now, after all these years, Riksbank abandons the negative interest rates, again being in the avant-garde of central banking, as policy interest rates are still negative in the euro zone, Japan, Denmark, Switzerland and Hungary.

Why Riksbank has ended the NIRP? One explanation is that Sweden’s inflation rate is close to the target, so the monetary tightening was necessary. In other words, the NIRP did its job and was not needed any longer. As we read in the Riksbank’s press release,

Inflation has been close to the Riksbank’s target of 2 per cent since the start of 2017, and the Riksbank assesses that conditions are good for inflation to remain close to the target going forward.

It sounds plausible, but the truth is that inflation has been hovering around the target for a few last years, as the chart below shows. So why did the Riksbank decide to hike interest rates only now – and in face of weaker economic activity?

Chart 2: Sweden’s annual CPI rate from January 2015 to December 2019.

The answer is that Sweden’s central bank has finally acknowledged what we were writing from the very beginning of the NIRP, i.e., that the costs of this policy outweigh the benefits, euphemistically speaking. Indeed, Riksbank admitted itself that concerns about the side-effects of the negative interest rates on the economy contributed to its decision. As we read in the minutes from the December meeting,

a long period of negative interest rates may have negative side effects on the economy, as the draft Monetary Policy Report commendably describes. This is a parameter that we should take into account.

In particular, the Sweden’s central bank is worried about the health of the housing market and households’ level of debt. As Governor Stefan Ingves noted,

Let me add, as I often do, that the long-term development of the Swedish housing market entails a risk to the Swedish economy in both the short and long term. There are a number of structural problems in the Swedish housing market. This creates both imbalances and risks, in the form of high indebtedness among households, and economic inefficiency, in that it will be more difficult for people to move in connection with finding a new job.

Indeed, the real estate price index has increased 33 percent since 2015 (from 180 points to 240) and doubled since the Great Recession, while the household debt-to-GDP ratio has risen from 65 percent in 2008 and 82 percent in 2015 to 88 percent in 2019. Please note that the whole Swedish private-sector debt has climbed to 285.7 percent of GDP, one of the highest rates in the OECD.

What does it all mean for the gold market? Well, the Riksbank’s recent hike confirms that the ultra loose monetary policy in general and the negative interest rates in particular do not support the real economy, but they rather zombify it instead. They also boost asset prices and debt, increasing the risk of a financial crisis.

Sweden is relatively small economy, but the ECB or the Bank of Japan are not likely to follow suit and also end their romance with the negative interest rates anytime soon. The Fed claims that it does not want to go below zero, but Trump supports this policy, so who knows…

So, the fact that Riksbank ended its NIRP should not upset the gold bulls. They still can count on other, more systematically important, central banks. One day, the unexpected negative shock arrives and it will expose the fragility of the current financial situation, so carefully cultivated under the strange world of negative interest rates. Investors would then also rediscover the safe-haven allure of gold.

If you enjoyed the above analysis and would you like to know more about the fundamentals of the gold market, we invite you to read the February Market Overview report. If you’re interested in the detailed price analysis and price projections with targets, we invite you to sign up for our Gold & Silver Trading Alerts. If you’re not ready to subscribe yet and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

Arkadiusz Sieron, PhD
Sunshine Profits – Effective Investments Through Diligence and Care

Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our Trading Alerts.

 

Crude Daily Forecast – Crude Slips Below $45 as Demand Slides

Crude prices continue to lose ground this week. Currently, U.S. crude oil is trading at $45.20, down $0.95 or 2.09% on the day. Brent crude oil is trading at $50.26, down $1.15 or 2.24%.

Crude Slips to 13-Month Low

As the coronavirus continues to spread, the economic fallout to the global economy is growing. This has been the catalyst behind a plunge in oil prices. Crude has declined by 14.7% this week and briefly fell below the $45 level earlier on Friday. This is its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

The bleak economic situation in China, with much of the industrial sector paralyzed, has led to a sharp reduction in demand for oil. China is the world’s second-largest oil producer, and the deteriorating situation is taking its toll on Saudi Arabia, which is China’s top supplier of oil. Starting in March, Saudi Arabia will sharply reduce its oil exports to China, which currently stands at about 2 million barrels per day (bpd). Analysts say that this amount could be cut significantly, perhaps as much as 300,000 bdp.  Chinese refineries have sharply cut refinery runs, leading to a growing oversupply of crude on global markets.

Technical Analysis

WTI/USD continues to fall and break below support levels this week. The pair tested support at 45.50 earlier on Friday and this line could break before the end of the trading week. The next support level is at 43.55.

On the upside, there is resistance at 47.50, followed by resistance at .$49.50, which is just below the symbolic $50 level.

Crude Oil Price Update – Major Buyer Could Be Lurking Between $45.92 and $43.55

U.S. West Texas Intermediate crude oil futures finished sharply lower on Thursday and in a position to challenge its December 24, 2018 main bottom at $45.92. The market is also poised to move lower for sixth straight session on Friday, while remaining on track to close the week more than 12% lower. This would mark its biggest weekly decline in more than four years.

On Thursday, April WTI crude oil settled at $47.09, down $1.64 or -3.37%.

Daily April WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $45.88 will reaffirm the downtrend.

The nearest resistance is the main top at $54.66. A trade through this price level will change the main trend to up. This is highly unlikely, however.

Today’s session begins with the market down six sessions from its last main top at $54.66. Typically, we start to look for potentially bullish closing price reversal bottom between 7 and 10 days from the last main top. So start looking for bottoming action next Monday through Thursday.

Short-Term Outlook

Lower tops and lower bottoms are the definition of a downtrend. Lower highs and lower lows define a downswing. Taking out Thursday’s low at $45.88 will confirm the current downswing. If this move is able to generate enough downside momentum then look for the selling to possibly extend into the January 20, 2016 main bottom at $43.55.

Although we typically look for closing price reversal bottoms in 7 to 10 days from a top, due to the huge loss in price on the current downswing, we’re not going to ignore a closing price reversal bottom on the sixth day down. So pay attention to yesterday’s close at $47.09. It’s going to begin Friday’s session as resistance, but overcoming this level on an intraday basis could spook some of the weaker short-sellers into covering their positions. This move would be an early indication of a short-term bottom.

Gold Price Prediction – Prices Consolidate as US Yields Stabilize

Gold prices are consolidating and despite the selloff in riskier assets, the rush to gold as a safe haven was minor. Gold has been consolidation and continues to range trade waiting for US yields to take another leg lower.  Yields dropped to 1.235% which is the lowest in more than 100-years but rebounded and above the 1.32%, which weighed on gold prices. The flight to bonds should continue following data that will be released at the beginning of March. Housing data continued to impress as the drop in the mortgage rate continued to attract home buyers.

Technical Analysis

Trade gold with FXTM

 

[fx-broker slug=fxtm]

 

Technical Analysis

Gold prices moved higher early as riskier assets came under pressure. As the day progressed, prices retraced and traded near Wednesday close. The price action still looks like a bull flag pattern. This is a pause that refreshes higher. Target resistance on gold prices is seen near the 2012 highs at 1,792. Support is seen near the 10-day moving average at 1,621. Short term momentum has turned negative as the fast stochastic recently generated a crossover sell signal, and continue to accelerate lower as a steady clip. The current reading on the fast stochastic is 61, declining from overbought territory which also reflects decelerating positive momentum. The MACD histogram is printing in the black with a declining trajectory which points to consolidation.

The Housing Market is Surge

Declining Treasury yields are weighing on mortgage rates, providing lower costs to purchase homes. The National Association of Realtors reported that Pending Home sales surged 5.2% in January, up 5.7% year over year. Pending sales measure signed contracts, not closings.

Silver Price Forecast – Silver Markets Stabilize

Silver markets did very little during the trading session, which is quite interesting considering the stock markets around the world are collapsing. This suggests that perhaps people are starting to look at the industrial component of silver just as much as it is the precious metal component. At this point, I believe that silver does favor the upside longer-term, but obviously we have a lot of issues to work through right now. The 50 day EMA certainly looks as if it is offering a little bit of support, as it typically will. Underneath, the $17.50 level underneath should offer quite a bit of support.

SILVER Video 28.02.20

All things being equal this is a market that has plenty of support underneath, not the least of which will be found at the $17.00 level as it is a large, round, psychologically significant figure, and of course the scene of the 200 day EMA. This means that the market is probably going to continue to respect that area but if we did break down below the $17.00 level, then it’s likely that the market goes looking towards the $16.00 level next. That would be the beginning of a major “risk on” type of move in my estimation, something that doesn’t seem very likely in this environment. That being said, the most important thing about the market is its price, so you would have to listen to it. I think we are much more likely to see a bounce from here than anything else, reaching towards the $19.00 level.