Natural Gas Inventory Report – Prices Drop but Hold Support Ahead of Inventory Report

Natural gas prices continued to trend lower, ahead of Thursday’s inventory report. Expectations are for a 95 Bcf build in natural gas inventories according to surveyor Estimize. Traders continue to unwind a large squeeze higher that has led to a selloff in natural gas. Both the 6-10 and 8-14 day forecasts are milder than normal which will likely reduce cooling demand and overall natural gas residential demand. Both Tropical storm Karen and Hurricane Lorenzo are in the middle of the Atlantic and are expected to have no effect on the US.

Technical Analysis

Natural gas prices declined 1.4% on Tuesday but rebounded at trend line support near an upward sloping trend line that comes in near the session lows at 2.30. Resistance is seen near the 10-day moving average at 2.48. 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 below the MACD signal line (the 9-day moving average of the MACD line). Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading of 6, is below the oversold trigger level of 20 which could foreshadow a correction.

Supplies Continue to Rise

The EIA reports that supply rises slightly, buoyed by stronger than normal production. According to data the EIA the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 6% from last week.

Silver Price Forecast – Silver markets bounce from major level

Silver markets hit the $17 level during trading on Tuesday as we continue to see support underneath. As I stated yesterday, even though it was a very negative look in the short term, there should be plenty of support in various levels underneath as we are in a strong uptrend. That being the case, it’s very likely that this market will continue to be bullish overall, and that there should be plenty of value hunters out there looking to pick up silver “on the cheap.”

SILVER Video 02.10.19

The ISM number came out weaker than anticipated, and that gave Silver a bit of a boost during the day to turn things around. That being said though, the 50 day EMA is just above and it could offer a bit of resistance. Clearing that EMA is the next technical signal that the market is going to continue to go higher, perhaps reaching towards the $18.00 level. Above there, the market is likely to go towards the $18.75 level next. I do believe in the longer-term uptrend and silver, because central banks around the world continue to cut interest rates and loosen monetary policy through various schemes. It is in this scenario that I find myself buying silver on dips and adding to a core position as silver has much higher to go. The pullback has been rather brutal, but keep in mind that the market had risen 15% during the month of August alone. At that point, a bit of a pullback was inevitable.

Please let us know what you think in the comments below

Crude Oil Price Forecast – Crude oil markets look vulnerable again

WTI Crude Oil

The WTI Crude Oil market tried to rally a bit during the trading session on Tuesday, but ran into trouble just below the $55 level, an area that has featured a short-term uptrend line as well. At this point, the market looks likely to see a bearish pressure, and now we are looking at the market trying to figure out where to go next, but certainly it looks like it’s probably going to be lower. If we can break down below the lows of the trading session from the previous day, that would in fact be a selling signal, perhaps sending this market down to the other uptrend line, and then eventually the $52.50 level.

Oil Forecast Video 02.10.19

Brent

Brent markets also tried to rally but ran into a bit of trouble at the $60 level as we continue to see a serious concern as to whether or not there is significant demand out there for energy. At this point, I like the idea of fading rallies, and believe that the market will continue to struggle going forward. The $57.50 level will cause support, just as the $55 level will. The 50 day EMA above at the $61.80 level should continue to offer significant resistance, and therefore after the bearish candlestick from Monday, I believe that somewhere between here and there the sellers will overwhelm any buying pressure unless of course something fundamentally changes. I remain bearish, but I also recognize that we are probably going to have small ranges from which to trade.

Please let us know what you think in the comments below

Natural Gas Price Forecast – Natural gas markets continue to drift lower

Natural gas markets have fallen a bit during the trading session on Tuesday, breaking below the $2.30 level and by extension the 61.8% Fibonacci retracement level. That being the case it is typically a very negative sign but at this point we are starting to think about trading the colder months in the year and that almost always means higher prices. Granted, most of the United States hasn’t seen overly cold weather, but it is most certainly coming soon. With that, I have been talking about the $2.25 level being a potential support level as well, so as I stated yesterday, we need to see the correct daily candle stick in order to take advantage of this run.

NATGAS Video 02.10.19

At this point, it’s very difficult to short this market this time a year, although the temperatures haven’t been cooperating. They will soon enough and the pop is almost always brutal. There is a concern about the global growth right now, and that of course will possibly drive down demand for natural gas as well. Don’t get me wrong, there is more than enough natural gas out there to satiate demand for the longer-term, but there is a certain amount of cyclical bullish pressure coming down the road. To the upside, the 50 day EMA will cause resistance, just as the $2.50 level will. Once this market breaks above the 200 day EMA again, that would be a very strong sign that we are heading towards the $3.00 level even the $3.50 level after that.

Please let us know what you think in the comments below

Gold Price Forecast – Gold markets test major support

Gold markets have broken below the uptrend line initially during the trading session on Tuesday, only to turn around and show signs of support. At this point, the market looks likely to go to the upside given enough time, which makes quite a bit of sense considering that the geopolitical situation around the world continues to be a complete mess, and the ISM numbers during the trading session came out very poor, perhaps giving the Federal Reserve yet another reason to consider a loose monetary policy.

Price of Gold Video 02.10.19

The market is going to face a bit of resistance at the 50 day EMA which is currently testing the $1490 level. At this point, if we were to break above there then the next test will be the $1500 level. Keep in mind that even though we have sold off rather drastically over the last week or so, we are still very much in and uptrend and this trendline seems to be confirming that. Even if we were to break down below here the $1450 level should also offer support going forward.

Until the world suddenly becomes a much “safer place”, it’s hard to imagine a scenario where gold sells off with any lasting momentum. This doesn’t mean that the move higher is going to be easy, rather that we should go higher given enough time and therefore buying on the dips continues to be a strategy that most longer-term traders employee. I certainly feel that pullbacks offer value in this market, and therefore should be looked at as an opportunity to build a core position.

Please let us know what you think in the comments below

Price of Gold Fundamental Daily Forecast – US Manufacturing PMI Data Likely to Set Tone

Gold futures are under pressure for a fifth straight session on Tuesday on long-liquidation and fresh shorting pressure amid a surge in the U.S. Dollar to multi-year highs. The pressure on gold is also being fueled by increased demand for risky assets, stronger-than-expected U.S. economic data and firmer Treasury yields.

At 09:07 GMT, December Comex gold is trading $1469.60, down $3.30 or -0.22%.

The catalysts behind the selling pressure are optimism over U.S.-China trade relations and the notion that the Federal Reserve will hit the pause button on a third consecutive rate cut at its October 29-30 monetary policy meeting.

US-China Trade Exerting Most Influence

Gold was supported throughout the third quarter by tensions between the U.S. and China that cast a shadow over the global economy. Furthermore, aggressive rate cuts by the major central banks, an inverted U.S. Treasury yield curve and fears of a recession, all came together to drive gold prices to multi-year highs.

The current leg down in gold has been primarily fueled by the announcement of the resumption of trade talks between the two economic powerhouses on October 10-11. Recently, both sides have been playing nice, with China offering to buy more soybeans and the U.S. granting a delay in new tariffs until October 15, after the meeting.

The price action in gold and equity markets suggests investors are betting on the hopes of a compromise. While some investors believe the situation between the two countries won’t resolve itself before year end, others believe both sides will accept a partial settlement that could be good news. This is doubtful, however, especially after President Trump said last week, he would not accept a “bad deal”.

Daily Forecast

We’re looking a busy day if the slew of economic reports and scheduled Fed speakers is any indication.

The key report is ISM Manufacturing PMI. It is expected to come in at 50.4, up from 49.1. It’s very important that this report come in above 50.0 because a reading under this level will indicate a contraction in the manufacturing sector.

Currently, investors have low expectations for an October rate cut. However, a weak Manufacturing PMI report could raise the chances. This would weaken the dollar and likely fuel a short-covering rally in gold.

Traders will be watching the Fed speakers to see if they support another rate cut in October, or if they believe the Fed should “wait and see” until December.

Technically speaking, the daily chart indicates the gold market is vulnerable to a more than $60 plunge over the near-term.

Oil Price Fundamental Daily Forecast – Supported by Quarterly Production Declines from Major Players

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher early Tuesday. Some traders are saying that production declines at the world’s largest oil producers during the third quarter are underpinning prices. Others say we could be looking at technically-fueled short-covering after a 10-day sell-off, or position-squaring ahead of today’s American Petroleum Institute (API) weekly inventories report.

At 08:27 GMT, November WTI crude oil is trading $54.71, up $0.64 or +1.20% and December Brent crude oil is at $59.96, up $0.71 or +1.20%.

On the other side of the coin, gains are likely being capped by a resumption in Saudi supply and demand concerns due to a global economic slowdown caused by the lingering U.S.-China trade war.

Quarterly Output Declines in US, Russia, OPEC

U.S. crude oil output fell 276,000 bpd in July to 11.81 million bpd as federal offshore Gulf of Mexico production weakened, according to a U.S. Energy Information Administration (EIA) monthly report released on Monday.

Russia’s output declined to 11.24 million bpd in September 1-29, down from 11.29 million bpd in the previous month, sources said, although it is still above the quota set in an output deal between Russia and OPEC.

OPEC’s output fell to the lowest in eight years in September at 28.9 million bpd, down 750,000 bpd from August’s revised figure and the lowest monthly total since 2011, a separate Reuters survey found. The drop was likely fueled by the shutdown of Saudi Arabian oil production due to the attacks on their oil facilities on September 14.

Saudi Aramco Restored to Full Capacity

Saudi Aramco last week restored to full capacity to the level before the attacks on its oil facilities, Ibrahim Al-Buainain, chief executive officer of its trading arm, said on Monday at a conference in the United Arab Emirates.

The world’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day (bpd) after the attack knocked out 5.7 million bpd of the kingdom’s output, sources told Reuters last week.

Daily Forecast

With the Saudi’s restoring capacity to pre-attack levels, it makes sense that Brent and WTI crude oil are trading at or near levels last seen on September 13. Now with market fears of broader escalating tensions in the Middle East fading somewhat, additional upside pressure is likely to ease. This is likely to keep a lid on prices. At the same time, the lower production numbers are likely to provide some support. This suggests a sideways or rangebound trade.

However, don’t forget about the demand picture. We’re likely to get more clarity on that following the US-China meeting on October 10-11. Positive developments at that time could trigger a short-covering rally, while another collapse in talks will keep a steady flow of downside pressure on prices.

Later today at 20:30 GMT, the API will release its latest weekly inventories figures. The report is expected to show that U.S. crude oil stockpiles likely rose 1.1 million barrels the week-ending September 27, while distillate stocks probably softened.

Out with a Whimper

The tech sector was the overnight winner as investors continue to debate the trade war spin after the Trump administration whitewashed the broadcasting that it is discussing imposing limits on U.S. portfolio investment in Chinese companies. As a result, the markets accomplished little more than retracing Fridays sell-off overnight.

However, the latest markets shimmy is just the preliminary stages before the big dance contest October 10 when high-level trade negotiations restart. In the meantime, investors will go through their daily ritual of putting a finger in the air to test the trade war wind direction

Oil markets

Oil markets had a dreadful quarter as the global economic tumult eclipsed middle east unrest and the unparalleled terrorist attack on Saudi Arabia’s major oil facility.

Global economic data continues to run cold, and while there was a glimmer of optimism cast on yesterday’s China PMI data that came out a tad better than expected. Oil markets were not so enamoured as the middling prints were perceived nowhere near convincing enough for commodity markets that continue to struggle amidst ongoing US-China tensions. The current run of economic data offers little reason for Oil investors to be optimistic over global demand.

Also, Saudi production is ramping up more quickly than anyone expected following the September 14 attacks. Only two weeks ago, it was thought to be months and even years that were bandied around as a repair timeline. So, with the repairs headed for completion well beyond anyone’s expectations, there’s likely ample redundant capacity in the supply chain that was put in play as a safety net proviso, so there’s possibly abundant prompt supply in the global oil complex that perhaps exceeds current demand.

The possibility of a middle east military escalation continues to recede, and while the war of words is expected to extend, it’s unlikely to have a significant impact on oil prices. Moreover, neither will the US patriot missile system which is expected to be deployed for defensive measures only, as President Trump knows that any perceived offence military escalation in the middle east could send US crude prices soaring. Indeed, the Brent-WTI spreads are not suggesting traders are expecting a drastic drop in global oil supply.

The last thing President Trump wants is a rise in consumers fuel expenses which could harmfully impact broader US retail consumer spending habits. After all, the US consumer has singlehandedly bolstered the US economy for most of 2019.

Also, its possible oil traders woke up and smelled the coffee on Monday picking up on the fact that there may have been considerable downside volumes in play last week as the oil market has toggled bullish to bearish in fast order. While it’s possible at times to trade up a mean reversion storm in oil futures, however, consistently swimming against the tide in oil markets can be a hazardous proposition at the best of times.

Gold Markets

The $ 1480 trap door sprung which was thought to be a significant intersection of CTA second level stops, a critical technical resistance level and trigger point for fundamental analysts.

Gold struggled with little exacting news, but a massive shakeout like occurred overnight is usually a result of a confluence of events.

The latest commitment of trader’s report showed the most significant rise in the COMEX gold position since early August while gold ETF continued to make substantial advances. This position build confirms the market was extraordinarily unbalanced and possibly prone for a correction.

On the technical front, last week gold took out its 50-day moving average and parabolics reversed downwards.

The US dollar remains strong, indicating the greenback was hoovering up its fair share of haven flows and making gold more expensive to own globally.

Physical demand remains weak, which may have iced the rally and contributed to the 24-hour slide

Moreover, while the Trump administration talked down the broadcasting that it is discussing imposing limits on U.S. portfolio investment in Chinese companies, but that doesn’t explain the full extent of the move to the low $1460.

Possibly. Gold traders are now thinking the FOMC aggressive easing narrative may have reached its expiration date with traders now waking up to the fact that policy centrist like Fed Evans continues to double down on their hawkish rhetoric.

However, the most significant selling catalyst may have come from one of the most influential central bankers of this decade, coming on the heels of Mario Draghi in an FT interview. FT (paywall)

He said higher government spending was now more urgent than before to counter the global slowdown. More government support would help ease the pressure on the central bank as well as reduce the length of time extraordinary monetary policy remain in place

Draghi interview may have been interpreted as another central banker walking back from the zero lower bound abyss, which may have set the gold ball falling which was then exacerbated by the massive waves of stop losses triggered along the way.

This article was written by Stephen Innes, Asia Pacific Market Strategist at AxiTrader

Natural Gas Price Fundamental Daily Forecast – New Shorts Enter Market, Supported by Rising Production, Favorable Weather

Natural gas futures tumbled on Monday as weak weather-related demand encouraged short-sellers to press prices lower and lingering speculative longs to aggressively exit losing positions. Traders also continued to react to last week’s bearish weekly government storage report, while ignoring a jump in spot prices caused by a forecast for unusually hot temperatures at the start of the week.

On Monday, November natural gas settled at $2.330, down 0.074 or -3.08%.

Production Gains Weighing on Prices

Genscape revised higher its estimate of Lower 48 dry gas production to 92.32 Bcf/d for Friday, putting output back above the 92 Bcf/d mark for the first time in nearly a month.

“Production continued to hover around the 92 Bcf/d level through the weekend,” Genscape senior natural gas analyst Rick Margolin said. “Since Friday, production has been averaging more than 1.17 Bcf/d above the month-to-date average before Friday.”

Short-Term Weather Outlook

According to NatGasWeather for September 30 to October 5:  Unseasonably strong high pressure will dominate the southern and eastern US the next several days with very warm to hot highs of 80s to 90s. It will be hottest from Texas to the Southeast for relatively strong late season demand. Chilly temperatures have arrived across much of the West with lows dropping into the 20s to 40s for modest early season heating demand. Fresh cooling will spread across the northern US late in the week with lows of 30s and 40s including into the Northeast. Overall, stronger national demand this week versus last week due to a stronger mix of heating and cooling needs.

U.S. Energy Information Administration Weekly Storage Report

Last Thursday, the U.S. Energy Information Administration (EIA) reported a larger-than-expected weekly injection into U.S. natural gas stocks, topping even the highest estimates.

The EIA reported that domestic supplies of natural gas rose by 102 billion cubic feet for the week ended September 20.

Traders were looking for the EIA report to show an injection in the upper 80s or low 90s Bcf for the week-ending September 20.

A year ago the EIA reported a 51 Bcf build. The five-year average is a 74 Bcf injection.

Total stocks now stand at 3.205 trillion cubic feet, up 444 billion cubic feet from a year ago, but 47 billion below the five-year average, the government said.

Natural Gas
Daily November Natural Gas

Daily Forecast

A bearish chart pattern, supply outlook and weather forecast are expected to continue to exert pressure on November natural gas futures on Tuesday.

The main trend is down according to the daily swing chart. The main range is $2.185 to $2.745. The market settled on the bearish side of its 50% to 61.8% retracement zone at $2.440 to $2.368, putting it in a weak position. The daily chart suggests we could see an acceleration to the downside since there is no visible support until $2.185. On the upside, the nearest resistance is $2.368.

Traders are saying that supply is rising and that the next few reports should reveal whether last week’s bearish EIA surprise was a one-and-done or part of a bearish trend.

According to the National Weather Service (NWS), “A large temperature range is expected across the continental United States into Wednesday as an upper-level troughing dominates in the West, and upper-level ridging builds across the East.”

“Underneath the trough, daytime highs could be 20-30 degrees or more below average much of the Northwest…Meanwhile, east of the Rockies, temperatures will be much above average,” the NWS said.

Gold Price Futures (GC) Technical Analysis – Could Be Setting Up for $60 Break Under $1461.30

Gold prices plunged on Monday after the U.S. Dollar hit multi-year highs, making the dollar-denominated metal more expensive for foreign investors. So-called safe-haven buyers likely bailed out of their positions, triggering a slew of sell stops, as once again that trading strategy failed to yield any fruit.

Throughout the year, we’ve seen gold investors burned several times chasing the headlines. Each time, gold has rebounded, but those moves have been fueled by the thought of aggressive rate cutting by the central banks, especially the Fed.

At this time, the dollar is the safe-haven asset. Furthermore, talk that the Fed may hit the pause button on a third rate cut at the end of October could be the first sign that other central bank’s may pullback back on the aggressive monetary policy strategy and try to get their respective governments to provide fiscal stimulus.

On Monday, December Comex gold settled at $1472.90, down $33.50 or -2.22%. For the month, the December futures contract closed $56.50 lower or -3.69%.

Comex Gold
Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers took out the previous main bottom at $1490.70. The main trend will change to up on a trade through $1543.30.

The market is currently trading inside a series of retracement levels, which could determine the next major move in the market.

The main range is $1396.40 to $1566.20. Its retracement zone is $1481.30 to $1461.30.

The intermediate range is $1412.70 to $1566.20. Its retracement zone is $1489.20 to $1471.00.

These levels form a potential support cluster at $1481.30 to $1471.00. The market closed at $1472.90, inside this zone.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at $1472.90, the direction of the December Comex gold futures contract on Tuesday is likely to be determined by trader reaction to the intermediate Fibonacci level at $1471.00.

Bearish Scenario

A sustained move under $1471.00 will indicate the presence of sellers. This could trigger a break into the main Fibonacci level at $1461.30.

The daily chart is wide open under $1461.30 so don’t be surprised by another acceleration to the downside. The next major target is $1412.10, followed by the July 1 bottom at $1396.40.

Bullish Scenario

Holding above $1471.00 will signal the presence of buyers. This could trigger a labored rally with targets at $1481.30 and $1489.20.

The trigger point for a breakout to the upside is $1489.20. If this move gains traction then look for a retest of $1518.40.

Strong U.S. Dollar Weighing on Dollar-Denominated Commodities

Commodities and currencies finished lower on Monday, which is likely the result of the extremely strong U.S. Dollar. A rising dollar tends to drive down foreign demand for dollar-denominated assets like gold and crude oil. This, and other factors likely contributed to their more than 2% declines on Monday. A favorable interest rate differential driven by improving U.S. economic data and the increasing chances the Fed may pass on an October rate cut also made the U.S. Dollar a more attractive asset.

A weaker Euro was primary responsible for the dollar’s gains against a basket of currencies. This is because the single-currency represents 57% of the dollar index.

Euro Falls on Weak German Inflation Data

The Euro fell to its lowest level in 28-months against the U.S. Dollar on Monday as concerns about Euro Zone growth weighed on the single-currency, while the greenback benefited from a seasonal demand and uncertainty arising from the U.S.-China trade war, German annual inflation unexpectedly slowed for a third consecutive month in September, data showed on Monday.

German Growth Forecasts Revised Lower

Germany’s leading economic institutes have also revised down their growth forecast for Europe’s biggest economy for this year, two sources with knowledge of their decision told Reuters on Monday.

Seasonal Demand for Dollars Rising

Demand for dollars heading into the last quarter of the year is also boosting the greenback. According to Bipan Rai, North American head of FX strategy at CIBC Capital Markets, “In Q4 we tend to see strong seasonal demand for the U.S. dollar, and given the fact that Euro/Dollar is the most frequently traded pair in the foreign exchange market, that certainly means that we could be seeing some further downside in the Euro going forward.”

Safe-Haven Demand for Greenback

Some of dollar’s strength is being attributed to safe-haven buying due to uncertainty around the outcome of an impeachment inquiry into President Donald Trump and general nervousness ahead of the start of trade talks between the U.S. and China on October 10-11.

Divided Fed May Mean No Rate Cut in October

The U.S. Dollar is also be supported by the divided Fed and several key Federal Open Market Committee (FOMC) members who suggested last week that the central bank may have to hit the pause button on an additional rate cut at the end of October.

In September, the Fed cut interest rates for the second time in two months, but the latest forecasts of Fed officials showed just how divided they are on the need for future rate cuts. Five wanted deeper cuts, five didn’t want any cuts and another seven were happy with the Fed’s action.

Last week, Fed Vice Chair Richard Clarida said U.S. inflation expectations are currently in line with the central bank’s 2% goal, and indication that he does not see a pressing need for new rate cuts to boost inflation.

Also last week, Dallas Fed President Robert Kaplan said even though the world economy was going through a “fragile” period, odds of a U.S. recession over the next year remain “relatively low.”

Outlook

Generally speaking, as long as the U.S. Dollar remains strong, dollar-denominated assets like gold and crude oil are going to have a hard time finding foreign buyers, which should keep a lid on gains. Furthermore, the widening of the spread between U.S. Government bond yields and other major government bond yields in Germany, the U.K. and Japan, will also continue to make the U.S. Dollar a more attractive asset.

Crude Oil Price Update – In Position to Test Last Bottom Before Price Spike at $53.93

U.S. West Texas Intermediate crude oil futures fell on Monday on an easing of concerns over supply shortfalls due to tensions in the Middle East, following the September 14 attack on Saudi Arabian oil facilities. Nonetheless, the market posted a large quarterly loss on demand fears due to the escalating U.S.-China trade war.

On Monday, November WTI crude oil futures settled at $54.07, down $1.84 or -3.29%.

WTI fell 1.9% in September. For the third quarter, WTI dropped 7.5%, as concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on oil demand growth.

WTI Crude Oil
Daily November WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is clearly to the downside. A trade through $53.93 will change the main trend to down.

The market is in no position to signal a resumption of the uptrend. However, today’s session begins with the market down 11 sessions from its last main top. This puts it inside the window of time for a closing price reversal bottom. While this chart pattern won’t change the trend, it could trigger the start of a 2 to 3 day counter-trend rally.

The main range is $50.48 to $63.89. The market is currently trading on the weak side of its retracement zone at $55.60 to $57.19, making the area new resistance.

Daily Swing Chart Technical Forecast

Based on Monday’s price action and the close at $54.07, the direction of the November WTI crude oil futures contract on Tuesday is likely to be determined by trader reaction to the Fibonacci level at $55.60.

Bearish Scenario

A sustained move under $55.60 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the next main bottom at $53.93. This will change the main trend to down and could even extend the selling into the next main bottom at $52.71. This price is a potential trigger point for an acceleration to the downside with the August 7 bottom at $50.48, the next major target.

Bullish Scenario

Overtaking and sustaining a move over $55.60 will indicate the return of buyers. If this is able to generate enough upside momentum then look for a rally to possibly extend into the main 50% level at $57.19. Taking out this level could shift sentiment to the upside at least temporarily.

Gold Price Forecast – Head & Shoulder Top Confirmed

The post-Fed bounce terminated last Tuesday at $1543.30. A head and shoulder topping pattern emerged, and a breakdown below the pattern neckline at $1490 would establish a minimum price objective of $1410. 

Gold Daily

COT UPDATE: Commercial hedgers added 26,746 shorts last week bringing their total net short position to a record setting -345,145 contracts. Generally, I like to see shorts cut in half before I start looking for the next 6-month low. To shave off 172,000 contracts will take several weeks, and we may get a false bottom or two as gold works down these positions. 

BACKTEST POSSIBLE: The June breakout in gold above $1400 confirmed a new bull market. However, the record number of outstanding shorts is concerning and could trigger a backtest of the $1360 – $1380 breakout level in Q4 of 2019. If established, that may become one of the last great buying opportunities

Gold Weekly

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 Prediction – Prices Drop on Declining Demand

Natural gas prices continued to trend lower, as projected supplies are outpacing forecasted demand. Traders are unwinding a large squeeze higher that has led to a selloff in natural gas. Both the 6-10 and 8-14 day forecasts are milder than normal which will likely reduce cooling demand and overall natural gas residential demand. Both Tropical storm Karen and Hurricane Lorenzo are in the middle of the Atlantic and are expected to have no effect on the US. After experiencing a huge squeeze in short positions in futures and options managed money is now selling again.

 

Technical Analysis

Natural gas prices declined 3% on Monday following a drop of 4.9% last week. Target support is seen near an upward sloping trend line that comes in near 2.3. Resistance is seen near the 10-day moving average at 2.52. 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 below the MACD signal line (the 9-day moving average of the MACD line). Short term momentum continues to remain negative as the fast stochastic tumbled, falling to a reading of 7, below the oversold trigger level of 20 which could foreshadow a correction.

Demand Declines

Demand declines, more than expected driven by the power sector. Total US consumption of natural gas fell by 3% compared with the previous report week, according to data the EIA. Natural gas consumed for power generation declined by 6% week over week. Industrial sector consumption stayed constant, averaging 21.1 Bcf per day. In the residential and commercial sectors, consumption increased by 7%. Natural gas exports to Mexico increased 6%.

Gold Price Prediction – Prices Drop; Managed Money is Ultra-long and Poised to Liquidate

Gold prices tumbled on Monday breaking through short term support and poised to test lower levels. Prices dropped slightly more than 1.5% on Monday, as traders eyed the most recent commitment of traders report that showed that managed money increased their long position in futures and options. This has placed managed money offside and could be the impetus for a long liquidation in gold. China reported stronger than expected September PMI, which failed to cap the rise in the dollar which paved the way for lower gold prices.

Trade gold with FXTM

 

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Technical Analysis

Gold prices tumbled lower dropping 1.5% slicing through support near the 50-day moving and a horizontal trend line at 1,487 which is now seen as short-term resistance. Additional resistance is seen near the 10-day moving average at 1,504. Support is now seen near the 100-day moving average at 1,425. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in the middle of the neutral range. Medium-term momentum has turned negative again. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for the yellow metal.

Managed Money is Offsides

Prices can fall a long way as hedge funds attempt to liquidate following a technical breakdown. According to the most recent commitment of traders report released for the date ending September 24, 2019, managed money increase its long positions in futures and options by 29K contracts while keeping short positions unchanged. Currently managed money that is long futures and options outnumbers the total contracts that are short by 292K contracts, which had set the market up for long liquidation.

Separately, China reported stronger than expected September PMI readings.  Official manufacturing PMI came in at 49.8 versus expectations of 49.6 while Caixin China manufacturing PMI, which is a private reading, came in at 51.4 versus 50.2 expected.

Silver Price Forecast – Silver markets break major support level

Silver markets have had a negative session on Monday, gapping lower and then simply falling apart from there. That being the case, the $17.00 level underneath is massive support and a psychological standpoint. If that level can hold, then the market is very likely to turn around and recover. Otherwise, this is a market that could drop down to the 200 day EMA which is closer to the $16.15 level.

SILVER Video 01.10.19

Don’t get me wrong, I think that longer-term Silver continues to go higher but obviously there has been a pretty negative turn of events here as of late. Perhaps it is a bit of hope being shown in the market due to the US/China trade relations, perhaps there has simply been a lot of profit taking, or perhaps it’s just the usual “back and fill” type of behavior that longer-term trends tend to show. Either way, it suddenly looks rather bearish and likely to test major psychological and structural support.

Looking at the chart, you can see that we have made a “lower high” as of late, and five candles ago even made a “hanging man.” Obviously, that is a very negative candle stick and will attach a lot of parapsychology to the marketplace. Ultimately, I think that we will find buyers given enough time but Silver markets had rallied 15% during the month of August, and of course some of that needed to be given back. We are getting close to an area that could be crucial, but all things being equal we need to see some stability before we step in and start buying.

Please let us know what you think in the comments below

Crude Oil Price Forecast – Crude oil markets continue to show weakness

WTI Crude Oil

The West Texas Intermediate Crude Oil market has fallen rather hard during the trading session on Monday, testing the $55 level underneath which of course was the scene of the bottom of the gap from the Saudi drone strike. At this point, the market looks as if it is trying to break down and the fact that we are testing a couple of hammers suggests that the market is hell-bent on breaking below. However, there is a ton of support underneath so I suspect that we will see another bouncer to be for the market can truly break down. To the upside I suspect that the blue 200 day EMA is essentially the “ceiling” in the marketplace.

Crude Oil Video 01.10.19

Brent

Brent markets broke down significantly during the Monday session as well, as we continue to test the $60 level. That’s an area that has been a very supportive level and of course the scene of where the gap occurred from the drone strike. Now that we are testing the bottom of this gap, one would expect some type of bounce but the fact that we have been so resilient about breaking down tells me that eventually we probably will. If we do, $57.50 would be your initial target, possibly even the $56 level. To the upside, I suspect that the 200 day EMA which is currently trading at the $64.69 level is a bit of a “ceiling” here as well, just as the WTI market has. I am bearish, but I feel a little bit better about fading rallies at this point.

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Natural Gas Price Forecast – Natural gas markets gapped lower to kick off week

Natural gas markets continue to pull back after the initial pop higher, as initially we rallied with the thought of trading the November contract. However, the reality is that cold weather isn’t quite here yet in the northern hemisphere, so people will continue to be a bit skittish. That being said, it’s very likely that this market will pop, but now it’s simply a matter of finding the correct signal to start buying. Currently, we are getting close to an area that could cause some support, but we need to see the right daily structural candle to do so. Unless you are day trading natural gas, there isn’t much to do at this point.

NATGAS Video 01.10.19

As for myself, I’ll be waiting to see how the 61.8% Fibonacci retracement level, at roughly $2.30, reacts to price heading in that general vicinity. If we get a bounce from there I would be interested in buying. Otherwise, I believe the next support level is closer to the $2.25 level. Ultimately, this is a market that should eventually have buyers coming back into play, but until we get cold weather forecasts, it may be a bit messy. If you are a longer-term trader, or perhaps have access to the CFD market, you may have the ability to hang on through the volatility. As we head into the later part of the year, natural gas almost always rallies, and this is known to anybody who has traded this market for more than about five minutes. Because of this, the self-fulfilling prophecy should eventually be profitable.

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Oil Price Fundamental Daily Forecast – Breakdown Continues as Traders Dwell on Rising Supply, Falling Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower at the mid-session. Despite renewed optimism over U.S.-China trade relations, which could lead to higher demand, traders are reacting to the stronger U.S. Dollar, which tends to lower foreign demand for dollar-denominated crude oil. Rising supply is also a concern as Saudi Arabia continues to make improvements to its damaged infrastructure.

At 16:13 GMT, November WTI crude oil is trading $55.27, down $0.64 or -1.16% and December Brent crude oil is at $60.28, down $0.76 or -1.26%.

China at Forefront

China is at the forefront on Monday as we approach the start of renewed trade talks on October 10 -11.

While stock market traders remain optimistic about U.S.-China trade relations, crude oil traders don’t seem so positive. This may be because stock traders are discounting future events, and the end of the trade war would be a bullish event.

Meanwhile, crude oil traders are not so optimistic, while facing a wall of declining demand.

Additionally, comments on the stock market page of the news are saying the market is up because China’s official Purchasing Managers’ Index (PMI) rose to 49.8 in September, slightly better than expected and advancing from 49.5 in August.

Crude oil traders are dwelling on the negative side of the report saying, factory activity remains below the 50-point mark that separates expansion from contraction on a monthly basis, according to data from the National Bureau of Statistics showed. This is keeping a lid on prices and exerting pressure.

Saudi’s Infrastructure Repairs

According to Reuters, top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day after an attack on its processing facilities on September 14. However, sources also said that Saudi Aramco has yet to confirm its operations have been restored fully.

Daily Forecast

The price action suggests crude oil traders are trying to build a support base, but need some bullish news to turn the markets around. At this time, the news has been mostly negative about lower demand and rising supply.

Additionally, money managers cut their net long U.S. crude futures and options positions in the week to September 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

The markets are back to pre-Saudi Arabia attack levels so the risk premium has been eliminated. Traders are now likely to continue to monitor traditional supply/demand numbers.

If an attack on Saudi production facilities couldn’t produce a prolonged bull market then we’re not likely to see a meaningful rally unless a trade deal is announced.

Gold Price Forecast – Gold markets break support

Gold markets initially tried to “gap and go” to the downside during the trading session on Monday, but then turned around to fill that gap before falling yet again. Later in the day, the market broke down below the 50 day EMA which of course is very negative, and perhaps even more importantly for my standpoint, the $1490 level which had been so supportive. Now that the area is broken below, it’s likely that it will start to offer a certain amount of resistance. That being said, I do see a lot of support underneath so this may simply be a rather nice opportunity to pick up “Gold on the cheap.”

Gold Price Video 01.10.19

Notice how I haven’t mentioned selling yet. This is because if you are a day trader, then perhaps you have an opportunity to make some money. Otherwise, if you stick to higher time frames like most retail traders will, you will be looking for support underneath as the risk to reward ratio is favorable for the longer-term trader more than anything else. That being said, I believe that the $1450 level should offer a certain amount of support as it was the previous top of an ascending triangle. Beyond that, it is a large, round, psychologically significant figure, and the top of a gap that had formed. All things being equal I think we will probably have a wonderful buying opportunity down in that area. In the current environment, I am not comfortable trying to short this market, because it would only take one headline to send gold straight back up in the air. That being said though, there is a bit of a head and shoulders pattern that has just broken, so it’s possible we go looking towards that $1450 level regardless.

Please let us know what you think in the comments below