Gold Price Futures (GC) Technical Analysis – RT Zone at $1235.80 to $1222.70 Controlling Near-Term Direction

Gold futures spiked through recent resistance to hit its highest level since July 26 earlier in the session as stock market volatility and a 500 point drop in the Dow Jones Industrial Average encouraged investors to seek shelter in the safe haven asset. The rally stalled, however, after the stock market mounted a dramatic turnaround following a test of key value areas which proved to be attractive to investors.

At 1953 GMT, December Comex Gold is trading $1233.70, up $9.10 or +0.74%.

Comex Gold
Daily December Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1244.70 will signal a resumption of the uptrend. The next main top comes in at $1278.20.

The market is in no position to change the main trend to down, however, it is up 17 days from the last main bottom which puts it in the window of time for a potentially bearish closing price reversal top.

On the upside, the major resistance is a retracement zone at $1246.30 to $1264.90.

The main range is $1278.20 to $1167.10. Its retracement zone is $1222.70 to $1235.80. This zone is controlling the near-term direction of the gold market. A sustained move over $1235.80 will give the market an upside bias. A sustained move under $1222.70 will give gold a downside bias.

The short-term range is $1184.30 to $1243.00. If the bias shifts to the downside then its retracement zone at $1210.60 to $1204.40 will become the primary downside target.

Daily Technical Forecast

Based on Tuesday’s price action, the longer-term direction for gold is likely to be determined by trader reaction to the downtrending Gann angle at $1240.70. This angle essentially stopped the rally on Tuesday.

A sustained move under $1240.70 will indicate the presence of sellers. This is followed by the main Fibonacci level at $1235.80. A sustained move under this level will indicate the selling is getting stronger. The next two targets are the main 50% level at $1222.70 and the uptrending Gann angle at $1218.30.

A sustained move over $1240.70 will signal the presence of buyers. This could trigger a spike into the main top at $1244.70, followed by the major 50% level at $1246.30. This is a trigger point for a potential acceleration to the upside with the first target angle coming in at $1259.50, followed by the major Fibonacci level at $1264.90.

 

Natural Gas Price Predication – Price Rebound But Fail At Resistance

Natural gas prices rebounded 2.6% on Tuesday recapturing most of Monday 3% decline. Prices where unable to pierce through resistance level and are still likely rangebound. Colder than normal weather is expected to cover most of the Mid-west and east coast over the next 6-10 days but then the weather is expected to warm leaving most of the country with normal weather. Post tropical cyclone Vincent is making its way east over Mexico and could generate a minor disturbance in the Gulf of Mexico. Colder than normal weather last week increased heating demand by 73% which was offset by electrical generation demand according to data from the the Energy Information Administration.

Technical Analysis

Natural gas prices rebounded 2.6% but was unable to take out resistance near the 10-day moving average at 3.227. Support on natural gas is seen near the 50-day moving average at 3.01. Momentum on natural gas prices 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 below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for natural gas.

Demand Begins to Increase as the Weather Turns Colder

Demand increases as temperatures fall. Total U.S. consumption of natural gas rose by 6% compared with the previous report week, according to data from the Energy Information Administration. In the residential and commercial sectors, consumption increased by 73% as temperatures fell to unseasonably cold levels in many parts of the country. At the same time, natural gas consumed for power generation declined by 18% as cooling demand receded. Industrial sector consumption increased by 5% week over week. Natural gas exports to Mexico decreased 5% during the report week.

Gold Price Prediction – Prices Attempt to Break Out but Ease Into the Close

Gold prices attempted to break out and where strongest at the US equity markets open as the Dow tumbled nearly 500 points. As equities recovered through the trading session the risk off theme slumped allowing gold prices to edge back from the highs of the session.  The dollar was mixed as yields where unable to break out. Hedge funds likely continued to cover their short position in futures and options which was reported by the CFTC on their commitment of trader’s report which was released last Friday.

Technical analysis

Gold prices attempted to break out from its bull flag pattern but was met with selling and prices where unable to surge higher. Resistance is seen near the July highs at 1,266. The 20-day moving average crosses above the 50-day moving average which shows that a medium term up trend is now in place. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flattening trajectory which points to consolidation. The fast stochastic is printing a reading of 83, above the overbought trigger level of 80 which could foreshadow a correction. The fast stochastic is also moving sideways which reflects consolidation.

Hedge Funds Exit Short Positions Pushing Prices Higher

The most recent commitment of traders report released by the Commodity Futures Trading Commision, for the date ending October 16, 2018 showed that managed money exited short positions while adding to long position in futures and options. According to the CFTC hedge funds reduced short position by 45K contracts while increasing long position in futures and options by 20.6K contracts. Hedge funds who are short still outnumber hedge funds that are long by 37K contracts, 107K long to 144K short. A  second break out which would culminate if a bull flag pattern, will likely lead to an additional short covering in gold prices.

Crude Oil Price Update – Next Wave of Volatility Coming After API Report

U.S. West Texas Intermediate crude oil futures are trading sharply lower on Tuesday. The selling is being fueled by concerns about slowing global economic growth and another steep drop in the stock market. Prices were under pressure from the opening on supply concerns after Saudi Arabia’s energy minister sought for a second straight day to assure markets the kingdom will keep the world adequately supplied with crude.

At 1715 GMT, December WTI Crude Oil is trading $66.44, down $2.92 or -4.20%.

WTI Crude Oil
Daily December WTI Crude Oil

Daily Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down when sellers took out $67.74. It was further confirmed when the selling extended through $66.50. The next target is the August 16 main bottom at $63.48.

The market is in no position to change the main trend to up, but we are in the window of time for a closing price reversal bottom.

The main range is $63.48 to $76.72. Its retracement zone at $68.54 to $70.10 is controlling the near-term direction of the market. Today’s rout was triggered when sellers took out the lower or Fibonacci level at $70.10. Consider the zone resistance.

Daily Technical Forecast

Based on the current price at $66.44 and the earlier price action, the direction of the December WTI Crude Oil futures contract into the close is likely to be determined by trader reaction to the uptrending Gann angle at $66.42.

Holding $66.42 will indicate buyers are coming in late to support the market. This could lead to an intraday retracement. Potential upside resistance targets are $68.54 and a resistance cluster at $69.36 to $69.72.

Breaking through $66.42 and sustaining the move will signal the presence of sellers. If this creates enough downside momentum then look for the selling to continue into the next uptrending Gann angle at $64.95. This is the last potential support angle before the $63.48 main bottom.

The next move is likely to be fueled by the API report, due to come out at 2030 GMT. Crude oil stocks are seen up by 3.550 million barrels, while gasoline supplies are seen down 1.797 million barrels and distillates down by 2.375 million barrels.

Natural Gas Price Fundamental Daily Forecast – Traders Pricing in Warmer Longer-Term Outlook

Natural gas futures are under pressure early Tuesday, continuing yesterday’s sell-off that was fueled by a change in the long-term weather forecast. While the short-to-medium term forecasts are calling for cold temperatures, the new longer-term forecasts are calling for milder temperatures than previously expected.

At 0829 GMT, December Natural Gas futures are trading $3.197, down $0.017 or 0.53%.

The forecasts for colder temperatures over the next two weeks seem to have been priced into the market. It appears that the reports three weeks out are causing issues for traders.

Once again, traders are calling for consistency, but rather than wait around for the news, some have decided to start banking profits after the recent run-up. Furthermore, rising production is also encouraging current long traders to square positions.

In other news, Bloomberg is reporting that natural gas prices in Western Canada continued their freefall amid restrictions on the area’s main pipeline network and as Enbridge Inc. targeted a mid-November restart for a ruptured pipe that cut off supplies to businesses, homes and oil refineries.

Gas at Alberta’s pricing hub dropped to a five-month low on Friday, according to data compiled by Bloomberg.

Forecast

The daily chart indicates the selling pressure is increasing. On Monday, the trend changed to down on the daily chart when sellers took out the recent bottom at $3.202. The next target is the main bottom at $3.161. This is the price the market was trading prior to the Hurricane Michael run-up which took prices to $3.409 on October 10.

Our chart work indicates that the market is likely to trade down to $3.125 to $3.057. This area represents value on the weekly chart so we’re likely to see buyers show up on a test of this zone.

Looking ahead to Thursday’s Energy Information Administration (EIA) report, early estimates range from 50 Bcf to 72 Bcf. This week’s report will be very important to market sentiment to see how record production fared against colder-than-normal conditions across much of the U.S. last week.

Price of Gold Fundamental Daily Forecast – Stock Market Weakness, Volatility Will Feed Rally

Gold is soaring on Tuesday and in a position to take out last week’s high as global stock market weakness drives investors to seek protection in the safe-haven asset. Geopolitical tensions are also helping to underpin gold prices as investors are being forced to deal with political tensions between Saudi Arabia and Western powers, uncertainties surrounding Brexit and lingering budgetary issues between Italy and the European Union.

At 0806 GMT, December Comex Gold is trading $1237.00, up 12.40 or +1.01%.

After a steady opening, gold picked up strength when Asian stock markets opening lower. There was no particular event fueling the selling pressure. The price action suggests investors are expressing caution amid rising global tensions.

On Monday, gold was mostly pressured by a 4.1% rally in China’s Shanghai Composite. However, this move lasted only one session suggesting it was fueled by profit-taking rather than new short-selling.

On Tuesday, the Greater China markets were trading lower. Hong Kong’s Hang Seng index fell 2.03 percent while China’s Shanghai Composite and Shenzhen Composite declined 1.37 percent and 1.229 percent respectively. Japan’s Nikkei 225 was down 2.44 percent while the Topix Index fell 2.36 percent.

All three major U.S. futures indices were also trading lower during their pre-market session and in a position to challenge their lows for the month.

Forecast

After consolidating in a tight range for over a week, gold is finally breaking out to the upside early Tuesday. The size of the rally today will likely be determined by the volatility and the direction of U.S. equity markets as well as whether the breakout is being fueled by short-covering, new buying or a combination of the two.

The first resistance at $1235.80 has been overtaken. If the upside momentum continues then the buying is likely to extend into at least $1246.30. This is a major upside target and a potential trigger point for an acceleration into $1264.90 over the near-term.

There are no major economic releases today so the price action will be dictated by investor demand for risk. Shortly before the regular session gold and stock market openings, it looks as if today will be a “risk-off” session which means gold is likely to remain underpinned all day.

Oil Price Fundamental Daily Forecast – Weakness Suggests Traders Expect Ample Supply When Sanctions Begin

U.S. West Texas Intermediate and international-benchmark Brent crude oil are under pressure Tuesday. The selling is being fueled by a drop in Asian equity markets and by a pledge by Saudi Arabia to play a “responsible role” in stabilizing the energy markets as we rapidly approach the start of the sanctions against Iran.

At 0729 GMT, December WTI crude oil is trading $68.97, down $0.39 or -0.56% and January Brent crude oil is at $78.91, down $0.53 or -0.67%.

Crude oil opened steady on Tuesday following yesterday’s reversal bottom and higher close. However, sellers quickly took control when stock markets in Asia opened weaker than expected. Crude oil continued to weaken along with the equity markets led by a steep drop in the major Chinese indexes. The decline in prices renewed concerns over demand tied to the slide in China’s economy.

Also helping to keep a lid on prices and contributing somewhat to the sell-off was top crude oil exporter Saudi Arabia’s pledge to keep markets supplied despite its increasing isolation from the West over the killing of prominent Saudi journalist Jamal Khashoggi.

Traders have been underpinning prices since late last week on the notion that the Saudi’s would cut crude supply in retaliation for potential sanctions against it over its involvement and attempted cover-up of the Khashoggi killing.

However, this idea may have been put to bed on Monday when Saudi Energy Minister Khalid al-Falih said that “there is no intention” for such action, and that Saudi Arabia would play a ‘constructive and responsible” role in world energy markets.

Forecast

Prices are likely to remain under pressure on Tuesday as traders are likely to continue to react to the two events which could lead to lower demand and greater supply.

A weakening Chinese economy could lead to lower demand. Even if it didn’t, rising U.S. production would likely offset any increase in global demand.

Furthermore, today’s early price action suggests that traders believe the market will be amply supplied when the sanctions against Iran begin on November 4. Traders seem to be willing to give Saudi Arabia and Russia the benefit of the doubt that they will be able to offset any loss of Iranian exports, which some estimate to be about 1.5 million barrels per day of crude oil.

Unless there is a dramatic disruption to supply between now and November 4, it looks as if the crude oil market will be in the strong hands of bearish traders.

Later on Tuesday, the American Petroleum Institute is set to release it estimates of weekly inventories. Crude oil stocks are seen up by 3.550 million barrels, while gasoline supplies are seen down 1.797 million barrels and distillates down by 2.375 million barrels.

Precious Metals Edge Up On Increasing Tensions Over Multiple Geo-Political Issues

Gold prices inched up early Tuesday as Asian stocks faltered, weighed down by political tensions between Saudi Arabia and Western powers, uncertainties around Brexit and Italy’s budgetary woes. Geopolitical tensions are escalating and that has brought some safe-haven buying back into the gold market.

Russia’s latest statement could also be considered as the reason for the hike in gold price action as Russia said it would be forced to respond in kind to restore the military balance with the United States if Trump carried through on a threat to quit a nuclear arms treaty and began developing new missiles.

Spot gold XAUUSD is trading at $1231.80 an ounce up by 0.79% on the day, while US gold futures GCcv1 is trading at $1235.40 an ounce up 0.88% on the day. Gold is used as an alternative investment during times of political and financial uncertainty but increases in the value of USD in long-term could affect price action in gold in a negative manner in long term.

US Crude Price Turns Dovish As Saudi Announced Possible Partnership With Russia

While USD has been hogging a lot of limelight in name of safe haven instrument recently, the risk of market sentiment currently prevalent in the market has resulted in traditional safe-haven assets seeing positive price action as precious metals come in second place among common safe haven instruments preferred by investors aside from US Greenback.

The dollar gained against its major peers on Tuesday, reining as the preferred safe haven currency amid an increase in risk off-market sentiment owing to multiple geopolitical issues such as US-Saudi crisis escalation, Italian budget crisis, Russia’s threat to retaliate in case of US government breaking the deal on manufacturing nuclear weapons and Brexit woes. The dollar index DXY, a gauge of its value versus six major peers, traded flat at 96.04 across morning trading session for the day and is expected to continue moving above $96 handle for a sustained breach to detach above its 200-week moving average of 95.792 on a multi-session basis.

Meanwhile, Spot Silver XAGUSD is currently trading at $14.68 an ounce up by 0.85% on the day. Oil prices dipped on Tuesday after Saudi Arabia pledged to play a “responsible role” in energy markets, although sentiment remained nervous in the run-up to U.S. sanctions against Iran’s crude exports that start next month.

There has been some concern that just as markets tighten with the start of the U.S. sanctions against Iran, Saudi Arabia could cut crude supply in retaliation for potential sanctions against it over the Khashoggi killing. Trying to dismiss such worries, Saudi Energy Minister Khalid al-Falih said on Monday that “there is no intention” for such action, and that Saudi Arabia would play a “constructive and responsible role” in world energy markets.

Spot Crude WTIUSD is currently trading at $68.92/b down by 0.73% on the day as Saudi has announced a possible partnership with Russia. This could prove detrimental to the US as both Russia & Saudi Arabia have the power to affect crude oil price dynamics in the global market.

Silver Price Forecast – Silver markets dropped as Americans come on board

Silver markets fell a bit during the early American trading hours as the market continues to gyrate. Silver of course is very volatile, so this shouldn’t be much of a surprise as the US dollar picked up a little bit of strength early. However, I believe that the $14.50 level should offer support underneath, and I think a bounce from there makes a lot of sense. If we do break down below there, then I suspect there are also buyers near the $14.30 level underneath. At this point, this is a market that continues to be very erratic, and I would of course be very cautious about my position size. Ultimately, I do believe that $15 is the target that silver traders will be looking towards, but it’s going to take some time to get there.

We need to see some US dollar weakness in my best guess to see this market rally significantly. Otherwise, if we break down below the $14.30 level, then we could go to the $14.25 level, and possibly even lower than that. Keep in mind that silver is very risk sensitive, so headlines of course can cause issues in this market. Keep your position size small but build the position as it works out in your favor. As far as shorting is concerned I’m not ready to do so quite yet, I believe that the buyers are still underneath looking to pick up value as we go along.

SILVER Video 23.10.18

Crude Oil Price Forecast – crude markets pulled back to support

WTI Crude Oil

The WTI Crude Oil market fell initially during trading on Monday, reaching down towards the $68.50 level in early trading. We are starting to trying to find some type of support there, but at this point it’s not clear as to whether or not that support will hold. Ultimately, I believe that the attitude of the markets continues to be very skittish, because we have so many moving pieces right now. When you look at the trade embargo with the Iranians, that should be good for oil prices, but at the same time there are reports that possible production boosts from both Saudi Arabia and Russia could be in the mix, and that of course would be very bearish for the market. Regardless, I think we are simply unwinding some of the over exuberance that we had seen. I do believe that eventually we are going to find some value hunters, so patients will probably be needed.

Brent

Brent markets also fell early in the day, reaching down to the $79 level. This is an area that has been supported in the past, and I think it should be supported in the future as well. I believe that the buyers could come back, but I’m not ready to put money to work quite yet, because markets are simply too skittish at this point. The attitude of traders continues to be one of unwinding, but I do think value will come into play rather soon. A break below the $79 level will more than likely send this market down to the $78 level next, which should be rather supportive as well. We’ve been in and uptrend for some time, so unwinding that uptrend would be very difficult.

Crude Oil Video 23.10.18

Natural Gas Price Forecast – natural gas markets continue to find support

Natural gas markets have fallen initially during trading on Monday, reaching towards the $3.15 level. That’s an area that has been supportive more than once, so if we bounce from here it would not be surprised at all to me. We are in the seasonably bullish time of year as we have seen a lot of buying on dips, so I would continue to look at this market as one that is almost impossible to short.

Keep in mind that the United States is entering the colder time of year, and that of course will drive up value. This is a short-term phenomenon, probably lasting through the beginning of January but we now have to worry about El Niño making its appearance, as the phenomenon is possibly heading  towards the US. If that’s the case, and quite often will make for mild winters, which of course will drive down the demand for natural gas. From a longer-term perspective, natural gas is more than abundant in the United States, so therefore it’s very difficult to imagine natural gas exploding to the upside much further than it already has. I think the $3.35 level will continue to be massive resistance, and I think it will be very difficult to break above there.

This is a market that is very noisy, and of course short-term focused. At this point though, I do think that a bounce is probably coming and we will more than likely go towards the $3.25 level above. If we do break down below the $3.15 level, then I think the market find support again at the $3.10 level.

NATGAS Video 23.10.18

Gold Price Forecast – Gold markets drift a bit lower on Monday

Gold markets of course are highly influenced by the US dollar, so keep that in mind before placing any types of trades. At this point, I think that the market probably looks at the $1220 level as massive support. At this point, I believe the Gold markets are a bit extended for the short term, but I would be willing to take a small position at $1220 as it has been somewhat reliable. The keyword here of course is going to be “small”, as Gold markets do tend to be a bit volatile.

If we were to break below the $1220 level, then I think that the market will probably go looking towards the $1210 level, followed by the much more significant $1200 level after that. Ultimately, this is a market that continues to struggle with momentum at the moment, but it’s obvious to me that we still have a certain amount of buying pressure underneath, perhaps due to global uncertainty, perhaps due to US dollar fluctuations. I think at this point it’s likely that we will continue to see participants look towards Gold as a way to express their value against global risk and of course the greenback.

If we were to break down below the $1200 level, that would be an extraordinarily negative sign, and that should send this market much lower. I believe the Gold is trying to reach the $1250 level over the longer-term, but it will be very noisy to say the least.

Gold Price Video 23.10.18

Crude Oil Price Update – Trade Through $69.84 Confirms Monday’s Minor Reversal Bottom

U.S. West Texas Intermediate crude oil futures are trading slightly lower early Tuesday. Gains are being capped by Saudi Arabia’s reiteration that OPEC stands ready to provide enough supply to offset the production lost from the sanctions on Iran. Top crude oil exporter Saudi Arabia has pledged to keep markets supplied despite its increasing isolation over the killing of Saudi journalist Khashoggi.

At 0327 GMT, December WTI crude oil is trading $69.17, down $0.19 or -0.26%.

WTI Crude Oil
Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since October 4. A trade through $68.46 will indicate the selling is getting stronger. A move through $67.74 will change the main trend to down. This is followed by the next main bottom at $66.50.

On Monday, the market posted a lower-low, higher-close. This wasn’t quite a stronger closing price reversal bottom, however, a move through yesterday’s high at $69.84 could trigger a breakout to the upside. This move will confirm the chart pattern.

The main range is $66.50 to $76.72. Its retracement zone at $70.40 to $71.61 is controlling the direction of the crude oil market. Trading below this zone is helping to give the market a downside bias. This zone is resistance.

The short-term range is $76.72 to $68.46. Overcoming $71.61 could trigger a rally into its retracement zone at $72.59 to $73.56.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and today’s early trade, the direction of the December WTI crude oil market on Tuesday is likely to be determined by trader reaction to yesterday’s high at $69.84.

A sustained move under $69.84 will indicate the presence of sellers. If this creates enough downside pressure then look for a possible test of yesterday’s low at $68.46.

Taking out $68.46 could trigger a break into $67.74. Taking out this bottom will change the main trend to down with $66.50 the next likely downside target.

A sustained move over $69.84 will signal the presence of buyers. This could trigger a rally into the Fibonacci level at $70.40. This is also a potential trigger point for an acceleration into the 50% level at $71.61.

Gold Price Futures (GC) Technical Analysis – Setting Up for Volatile Breakout

Gold futures are trading slightly higher early Tuesday after finishing lower on Monday due to a spike to the upside by the U.S. Dollar. Traders have been looking for clues as to the next major move after rallying to a multi-month high over a week ago. However, a mixed trade by U.S. Treasurys and U.S. equity futures has encouraged many gold traders to take a “wait-and-see” approach.

At 0252 GMT, December Comex Gold futures are trading $1226.50, up $1.90 or +0.16%.

Comex Gold
Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1236.90 will signal a resumption of the uptrend with $1244.70 the next upside target. The main trend will change to down on a trade through $1184.30.

The main range is $1278.20 to $1167.10. Its retracement zone at $1222.70 to $1235.80 is controlling the near-term direction of the market. Gold has been trading inside this zone for nine consecutive sessions.

The next resistance zone is $1246.30 to $1264.90.

The short-term range is $1184.30 to $1236.90. Its retracement zone at $1210.60 to $1204.40 is the primary downside target. Since the main trend is up, look for buyers to come in on a test of this zone.

Daily Swing Chart Technical Forecast

Based on yesterday’s close at $1224.60 and the early price action, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the main 50% level at $1222.70.

A sustained move over $1222.70 will indicate the presence of buyers. If this creates enough upside momentum then look for a potential rally into $1235.80 to $1236.90.

Overcoming $1236.90 could trigger a breakout into $1244.70 to $1246.30. The latter is the trigger point for a steep rally with $1264.90 the next target.

A sustained move under $1222.70 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the next target $1210.60 to $1204.40. Watch for buyers on the first test of this zone.

Natural Gas Price Prediction – Prices Drop on Mild Weather Forecast

Natural gas prices dropped 3.3% on Monday as the weather forecast turn more mild, taking some of the upward volatility out of prices. The trajectory of inventories is still flat and well below the 5-year average which should keep prices buoyed. Hedge funds remain long NYMEX natural gas but reduced some of their length according to the latest industry report. A warmer than expected winter would likely lead to a long liquidation by hedge funds.

Technical Analysis

Natural gas prices tumbled 3.3% on Monday, and are forming a topping pattern. Prices are below the 5-year average, ahead of withdrawal season, but hedge funds length is capping upward momentum. Support on natural gas is seen near the 50-day moving average at 3.005. Resistance is seen near the October highs at 3.37. 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 below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a declining trajectory which points to lower prices.

Hedge funds Are Long Natural Gas

According to the latest commitment of trader’s report released for the date ending October 16, hedge funds are nearly 6-times longer futures and options related to short position held in natural gas contracts. This could lead to a substantial long liquidation if the weather turns warmer.  In the latest week managed money reduced long positions in futures and options by 10K contracts while also reducing short position in futures and options by nearly 3K contracts. Managed money is currently long 301K contracts while short 57K contracts. The offset is in other reportable which does not include swap dealers which are generally offset by commercials who deal directly through swap dealers.

Gold Price Prediction – Gold Consolidates and Hedge Funds Remain Short

After trading sideways for more than 2-months from mid-August to mid-October, many had hoped that the surge in gold prices on October 11, was the beginning of the breakout. While prices continue to form a bull flag pattern, which is a pause that refreshes, the sideways price action is draining. Yields in the US have stabilized with the 10-year near the 3.18 handle, which has levels the dollar creating a new trading range for gold. While the technicals still favor higher prices, neutral momentum could quickly send bulls for the exits. There were large scale exits from short position in futures and options during the week ending October 16, which lead to the rally on the 11th.

Technicals

Gold prices continue to trade sideways forming a bull flag pattern. Prices have moved out of a prior range but are now consolidating those gains.  Support is seen near the 20-day moving average at 1,206. Resistance is seen near the July highs at 1,266. The 20-day moving average crosses above the 50-day moving average which shows that a medium term up trend is now in place. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flattening trajectory which points to consolidation.

Hedge Funds Exit Short Positions

The most recent commitment of traders report released for the date ending October 16, 2018 showed that managed money exited short positions while adding to long position in futures and options. According to the CFTC hedge funds reduced short position by 45K contracts while increasing long position in futures and options by 20.6K contracts. Hedge funds who are short still outnumber hedge funds that are long by 37K contracts, 107K long to 144K short. A  second break out which would culminate if a bull flag pattern, will likely lead to an additional short covering in gold prices.

Natural Gas Price Prediction – Prices Eased on Weather Change

Natural gas prices eased Friday as traders took profit following an in line inventory report released earlier in the day by the Department of Energy.  The trajectory of injections remains subdued which will put the US at a year over year deficit when the withdrawal season begins on November 1. There are no tropical cyclones in the Atlantic or the Caribbean.  The weather is expected to be colder than normal for most of the mid-west and east coast for the next 2-weeks according to the latest forecast from NOAA.

Technical Analysis

Natural gas prices reversed course mid-day on Thursday following an inventory report from the Department of Energy. Prices dropped losing all of Wednesday’s gains, as prices failed near resistance levels at a downward sloping trend line that comes in near 3.37. Prices sliced through support which is now short-term resistance near the 10-day moving average at 3.23. Momentum is neutral as the MACD (moving average convergence divergence) prints near the zero index level with a flat trajectory which  points to consolidation. The relative strength index (RSI) moved lower in tandem with prices forming a topping pattern which reflects accelerating negative momentum. The current reading of 57, is in the middle of the neutral range and also reflects consolidation.

Natural Gas Inventories Where In Line with Expectations

The Energy Information Administration reported that working gas in storage was 3,037 Bcf as of Friday, October 12, 2018. This represents a net increase of 81 Bcf from the previous week. Expectations were for an increase of 82 Bcf for the week. Stocks were 601 Bcf less than last year at this time and 605 Bcf below the five-year average of 3,642 Bcf. At 3,037 Bcf, total working gas is below the five-year historical range. The decline below this long term range is troubling and should put upward pressure on natural gas prices.

Precious Metals Erase Early Gains and is on Steady Decline over Strong US Greenback

Gold prices edged higher on Monday towards a 2-1/2-month peak hit last week as the dollar eased and worries over rising political tensions and slowing global economic growth lent support to the metal. However yellow metal lost all its gains and took a steep bearish nose dive as US Greenback regained strength in broad market in late Asian market hours.

As of writing this article, Spot Gold XAUUSD is trading at $1222.86 an ounce down by 0.28% on the day while US Gold futures GCCv1 is trading at $1225.90 an ounce down by 0.22% on the day. While it is unlikely for Gold price action to go on sudden steep upward, short-term outlook has a potential for a bull run in yellow metals price action owing to factors such as global economic slowdown and geopolitical uncertainties.

Brent Crude Back Above $80/b On Escalating Tensions Between US & Saudi Arabia

The outlook for global growth in 2019 has dimmed for the first time, according to Reuters polls of economists who said the U.S.-China trade war and tightening financial conditions would trigger the next downturn. Meanwhile, concerns including tensions between Saudi Arabia and the West over the killing of journalist Jamal Khashoggi, developments related to Brexit, and Italy’s budget woes are keeping investors interested in gold, analysts said. Since gold is seen as a safe store of value during political and economic uncertainty there is a high possibility that gold price could get back.

Trade concerns between the U.S. and China remain elevated and the ongoing U.S.-Saudi tensions are likely to continue to underpin a bid tone for precious metals over the near-term. Spot Silver XAGUSD is currently trading at $14.60 an ounce down 0.25% on the day.

Oil edged above $80 a barrel on Monday, lifted by nervousness over a worsening diplomatic crisis between Saudi Arabia and the West, just two weeks before U.S. sanctions potentially choke off Iranian crude supplies. Saudi energy minister Khalid al-Falih told Russia’s TASS news agency that his country had no intention of unleashing a 1973-style oil embargo on Western consumers but rather was focused on raising output to compensate for supply losses elsewhere, such as Iran.

Several U.S. lawmakers have suggested imposing sanctions on Saudi Arabia over the killing of Saudi journalist Jamal Khashoggi, while the kingdom, the world’s largest oil exporter, pledged to retaliate to any sanctions with “bigger measures”. Benchmark Brent crude oil futures rose 45 cents on the day to $80.23 a barrel by 0900 GMT, while U.S. crude futures rose 31 cents to $69.43 a barrel. As of writing this article, spot Crude WTIUSD is currently trading at $69.28/b down 0.17% on the day.

Natural Gas Price Fundamental Daily Forecast – Traders Looking for Consistency in Weather Forecasts

Natural gas futures are trading lower shortly before the regular session opening on Monday, which likely means the week-end weather was warmer than expected, or there have been changes in this week’s forecast calling for more average temperatures over the near-term. It is also possible that production numbers are starting to come in higher than expected.

At 0945 GMT, December Natural Gas futures are trading $3.278, down $0.031 or -0.94%.

To recap last week’s U.S. Energy Information Administration report, on Thursday, the EIA announced an injection of 81 Bcf into storage for the week-ended October 12. This figure put the current national stocks at 3.307 Tcf. Inventories now stand 601 Bcf lower than year-ago levels and 605 Bcf lower than the five-year average of 3.642 Tcf.

Thursday’s number fell largely in line with the 83 Bcf build forecast by a consensus of analysts. The five-year average build for the same time period is 79 Bcf.

Forecast

Traders will be especially sensitive to changes in the near-term forecast based on the price action late last week. Bearish traders responded to a change in the weather report on Thursday by selling. The new report raised temperature expectations. Prices rose sharply on Friday when the forecast shifted back to colder than average temperatures. Early Monday, prices are lower so the forecast driving the price action may be indicating warmer-than-expected temperatures.

We could see some volatility early this week as traders look for more consistency in the forecast and whether the cold will linger through the end of October/early November.

According to NatGasWeather.com, for October 22 to October 28, “Cool conditions will cover much of the Midwest to Northeast this week with lows dropping into the 20s to lower 40s as reinforcing cool shots sweep through. The West and Southeast will be warm with highs of 60s to 80s, while the Southwest and Texas will see increasing heavy rains as tropical moisture arrives in the coming days. Cool conditions will continue over the Midwest and East next weekend with strong demand. Overall, national demand will be high.”

Looking ahead to Thursday’s Energy Information Administration (EIA) report, early estimates range from 50 Bcf to 72 Bcf. This week’s report will be very important to market sentiment to see how record production fared against colder-than-normal conditions across much of the U.S. last week.

The daily chart indicates momentum may be shifting to the downside with the formation of a lower top at $3.384. A trade through $3.202 will change the main trend to down.

The first support zone is $3.228 to $3.185. The second support or major support zone is $3.125 to $3.057.

On the upside, the pivot is $3.306. Taking out this level will reaffirm the upside bias.

Price of Gold Fundamental Daily Forecast – Prices Being Suppressed by Stock Market Strength

Gold futures are trading lower after an attempt to rally earlier in the session failed to attract enough buyers to continue the move. The dollar is easing against a basket of currencies but this hasn’t helped gold futures because a 4.5% gain in China’s stock market could be a sign of an easing of tensions over the ongoing trade dispute between the United States and China.

At 0813 GMT, December Comex gold futures are trading $1228.20, down $0.60 or -0.05%.

Gold has been rangebound since last Monday when it surged to nearly a three-month high. The buying was fueled by speculation of another rout in the stock market but this didn’t happen and prices retreated into a range.

Gains were also limited last week by the hawkish Fed minutes which indicated the central bank would stay the course and raise rates gradually since this strategy was the best for the economy.

The bulls are trying to build a case for higher prices on the back of geopolitical uncertainties including a global economic slowdown, the U.S.-China trade conflict, tensions between Saudi Arabia and the West over the killing of journalist Jamal Khashoggi, developments related to Brexit, and Italy’s budget woes.

In other news, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.39 percent to 745.82 tonnes on Friday.

According to the Commodity Futures Trading Commission (CFTC), gold speculators cut their net short position in COMEX gold contracts by 65,637 contracts to 37,372 contracts, the smallest since late July, in the week to October 16, data showed.

Forecast

Based on the early price action, it looks as if gold investors will be mainly focused on the stock market today, or demand for risky assets. If stocks continue to strengthen, led by a strong performance in China, then we could start seeing some profit-taking in gold.

There are plenty of potentially bullish developments on the fundamental side, but they may be only enough of a concern to underpin prices or prevent a rapid sell-off instead of launching a rally.

Looking at the chart pattern, clearly, December Comex Gold is being hemmed in by resistance at $1235.80 and support at $1222.70.

It’s going to take another steep sell-off in stocks or an escalation in one of the geopolitical events to trigger a breakout over $1235.80.

If stocks recover enough to encourage gold buyers to book profits after the recent run-up then look for a break through $1222.70.