Natural Gas Price Forecast – natural gas markets grind sideways

Natural gas markets have been very bullish as of late, even breaking above the $3.10 level which of course is a very strong sign. At this point, I think that it’s important to recognize that we have just broken out of an overall consolidation area between $2.95 and the $3.10 level. That’s a very bullish sign, but we are also a bit overextended when it comes to the longer-term range that this market typically trades in. I do think that there are a lot of things lining up at the same time that could be bullish for natural gas, not the least of which we are starting to trade contracts in the futures markets that focus on the coldest part of the year for the United States, and this seasonality is something that’s well-documented. Keep in mind that the short-term pullbacks should be short-term buying opportunities, and therefore it’s going to be a bit difficult to short this market anytime soon.

I think at this point, it’s likely that the buyers will return multiple times, and it does look like the $3.10 level should be supportive. If we break down below there, then we could fall as low as $2.95 where we would see more buyers coming back. On the upside, I believe that every $0.05 level will continue to be reactive in the market, so short-term trading is probably as good as it gets over the next couple of months. If we were to turn around and break down below the $2.95 level, then I think we could break down rather significantly.

NATGAS Video 03.10.18

Crude Oil Price Forecast – crude oil markets settle in at high levels

WTI Crude Oil

The WTI Crude Oil market was slightly negative during the early hours of the trading session on Tuesday, as we continue to dance around the $75 level. That of course has a certain amount of psychological support built into it, but perhaps we have gotten ahead of ourselves. If the oil markets pull back, I anticipate that there will be a lot of buyers down near the $74 level, an area that was previously resistive and has yet to be retested. It has been a very volatile session, so keep in mind that the normal choppiness continues.

Brent

Brent markets also when sideways initially during the day with a slightly negative bias as we continue to struggle with the idea of breaking above the $85 handle. By doing so, I think this shows that the market certainly has a natural upward proclivity, but I think we are simply digesting the gains from the last couple of sessions. If we can break to a fresh, new high, then I think the Brent market goes looking towards the $90 level next which is the next psychological barrier. There are a lot of pundits out there looking for $100 barrel pricing, and quite frankly there’s nothing on this chart to suggest it can’t happen. $83 is essentially the “floor” right now, so it’s not until we break down below there that I consider selling this contract. Buying on dips to pick up a little bit of value makes a lot of sense.

Oil Forecast Video 03.10.18

Gold Price Forecast – Gold markets power higher on Tuesday

The Gold markets broke above the $1200 level during the trading session on Tuesday and kept going. The market looks likely that it is going to continue to go higher, and I think at this point it’s probably best to start buying pullbacks. The $1200 level should be support now, as it was a significant support and resistance barrier many times in the past. I do think that we are a bit overdone for the day, but I think that it’s only a matter of time before we find buyers based upon value. It’s an obvious move on high-volume that we are going higher, so I think in less the US dollar strengthens dramatically, gold should continue to benefit from this move.

The EUR/USD pair fell during the day, but found support at the 1.15 level, meaning that the US dollar will probably only be somewhat strong, and doesn’t look ready to take off, which of course would work against Gold if it were to happen. At this point, I think that gold is ready to continue climbing and I think that the $1215 level will be a target. Short-term pullbacks continue to be buying opportunities, and I would not be concerned about gold until we break down below the beginning of the significant push higher at the $1195 level. If we broke down below there, that would of course wipe out a lot of the bullish pressure, but with the volume that we have seen during the day I think that is very unlikely.

Price of Gold Video 03.10.18

Natural Gas Price Prediction – Natural Gas Surges on Cold Weather Forecast

Natural gas prices surged higher on Tuesday as colder than normal weather is expected to cover most of the mid-west bringing temperatures in the high 40’s to the upper mid-west which should significantly increase natural gas demand over the next 2-weeks. With inventories below the 5-year average range, prices could spike if the winter is colder than normal. Prices are currently below the 5-year average prices, which has put a floor under prices.

Technical Analysis

Natural gas prices broke out on Tuesday and are poised to hit target resistance near the 2018 highs at 3.60.  Support is seen near former resistance near the June highs at 3.05. Additional support is seen near the 1-day moving average at 3.03. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI moved higher in tandem with price action which reflects accelerating positive momentum. The current reading of 68 remains below the overbought trigger level of 70 which could foreshadow a correction.

Demand declined in the previous week as most was still from electricity.  Withy the cold weather coming it will likely switch to heating demand. The EIA reported that total U.S. consumption of natural gas fell by 2% compared with the previous report week. Natural gas consumed for power generation declined by 10% week over week with cooler weather moving in this week. Industrial sector consumption increased by 2% week over week, while combined residential and commercial sector consumption increased by 22%. Natural gas exports to Mexico decreased 2%.

Overall supply is flat. According to the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 89.2 Bcf per day. Dry natural gas production grew by 1% compared with the previous report week, averaging 84.4 Bcf per day. Average net imports from Canada decreased by 2% from last week.

Gold Price Prediction – Prices Rebound as Inflation Starts to Rise

Gold prices moved higher on Tuesday despite a rally in the dollar. Gold prices surged against the Euro, as it appears that inflation is on the rise. Fed Chair Gerome Powell in a speech in Boston said that the Fed has been able to keep inflation in check by managing expectations.  Amazon raise its minimum wage to $15 per hour on Tuesday which could be the large increase in wage inflation the Fed was finally looking for.

Technical Analysis

Gold prices moved higher rising up to trend line resistance that comes in near 1,208.  Support on the yellow metal is seen near the 10-day moving average near 1,196. Additional support is seen near an upward sloping trend line that comes in near 1,182. Short-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy 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 is printing in the black with a rising trajectory which points to higher prices.

Powell Believes in Phillips Curve

The Fed believes that the decline in unemployment should be accompanied by a rise in inflation, mainly from wage inflation.  The last few years has seen the drop in unemployment down to 3.8% but no associated surge in wages. Wages are rising at 2% year over year and current interest rates and sentiment are holding wages down. Powell still believe in the Phillips Curve even though the relationship seems to have broken down. Powell said the model isn’t dead. While the Fed has been watching employment costs there have been few pressures from the tariff. On Tuesday Amazon announced that it would be raising it minimum wage to $15 per hour. This is a clear sign of wages on the rise which will likely be match by competitors.

Crude Oil Price Update – Could Be Setting Up Closing Price Reversal Top with Downside Target $73.79 to $73.69

U.S. West Texas Intermediate crude oil futures are trading higher shortly after the regular session opening, but the market is trending water. Although it posted a higher-high on the daily chart, there was very little follow-through to the upside. This suggests the start of a possible transition period.

Given the prolonged move up in terms of price and time, the early price action has also put the market in a position to post a closing price reversal top. This won’t mean the trend is changing to down, but it will indicate the selling is greater than the buying at current price levels. This could lead to the start of a 2 to 3 day correction.

At 1235 GMT, November WTI Crude Oil futures are trading $75.45, up $0.15 or +0.20%.

WTI Crude Oil
Daily November WTI Crude Oil

Daily Technical Analysis

The main trend is up according to the daily swing chart. Today’s early price action signaled a resumption of the uptrend. A trade through $67.79 will change the main trend to down.

Although a change in trend is highly unlikely, a trade under yesterday’s close at $75.30 will put the market in a position to form a closing price reversal top.

The minor trend is also up. A trade through $71.47 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is $71.47 to $75.91. Its 50% level or pivot at $73.69 is the first downside target.

Daily Technical Forecast

Based on the early price action, the direction of the November WTI Crude Oil market on Tuesday is likely to be determined by trader reaction to yesterday’s close at $75.30.

A sustained move over $75.30 will indicate the presence of buyers. If this generates enough upside momentum then look for a breakout potential breakout over $75.91.

A sustained move under $75.30 will put the market in a position to form a closing price reversal top. On an intraday basis, this move could drive the market into a support cluster at $73.69 to $73.69.

WTI Crude Oil
Weekly November WTI Crude Oil

Alternative Analysis:  Based on the weekly chart, the direction of the November WTI crude oil market will be determined by trader reaction to a long-term downtrending Gann angle at $75.52.

Gold Price Futures (GC) Technical Analysis – October 2, 2018 Forecast

Gold futures are trading higher on Tuesday shortly before the regular session opening. The market is in a position to breakout to the upside after confirming Friday’s closing price reversal bottom. However, the buying volume is extremely light with buyers likely being spooked by the firmer U.S. Dollar. Gold could get support later in the session if demand for risky assets continues to fall and if Treasury yields continue to drop.

At 1200 GMT, December Comex Gold futures are trading $1295.00, up $3.30 or +0.29%.

Comex Gold
Daily December Comex Gold

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum shifted to the upside earlier today following the confirmation of Friday’s closing price reversal bottom. The main trend will change to up on a trade through $1215.80. A trade through $1184.30 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The short-term range is $1215.80 to $1184.30. Its 50% level or pivot at $1200.10 is the first upside target.

The intermediate range is $1167.10 to $1220.70. Traders are trying to turn its retracement zone at $1193.90 to $1187.60 into support.

The main range is $1244.70 to $1167.10. Its retracement zone at $1205.90 to $1215.10 is the primary upside target and major resistance.

Daily Technical Forecast

Based on the early price action, the direction of the December Comex Gold futures contract today is likely to be determined by trader reaction to the intermediate 50% level at $1193.90.

A sustained move over $1193.90 will indicate the presence of buyers. If this move creates enough upside momentum then look for a move into an uptrending Gann angle at $1199.10 and the short-term pivot at $1200.10.

The pivot at $1200.10 is the trigger point for a potential acceleration into $1205.90. Taking out this level could extend the rally into $1215.10 to $1215.80.

A sustained move under $1193.90 will signal the presence of sellers. This could trigger a break back into $1187.60. The next target is a support cluster at $1184.30 to $1183.10. Look for an acceleration to the downside if $1183.10 fails as support.

Price of Gold Fundamental Daily Forecast – Price Action Being Driven by Technical Factors, Who is Buying?

Gold futures are trending higher early Tuesday for no particular reason. The U.S. Dollar Index is trading higher with support coming from a weaker Euro, Australian Dollar and New Zealand Dollar. U.S. equity markets are drifting lower. Silver is also posting a gain.

Technical factors could be playing a role. On Friday, the market produced a potentially bullish chart pattern, which was confirmed earlier today. Although the market hasn’t cleared any important resistance areas, the price action suggests that shorts are covering.

At 0842 GMT, December Comex Gold is trading $1198.00, up $6.30 or +0.53%.

There is news, but nothing that would support developing strength in the gold market. Perhaps buyers see value at current levels, much like silver traders, who drove the market higher last week. Perhaps it’s just time for a good old-fashioned commodity market rally, given the strength in the crude oil market.

Forecast

It looks like the focus should be on the technical side of the gold market today. The reason for the early strength may be found out later in the session. The key area to watch is the psychological $1200 level. This could be the pivot price that determines whether the next move is $15 higher or $15 lower.

If gold is moving higher for technical reasons then prices should increase further if the short-term fundamentals shift enough to provide additional support for higher prices.

Factors that could underpin gold today are a drop in demand for higher-yielding assets like stocks. A decline in U.S. Treasury yields. They could fall, for instance, if Italy becomes an issue and investors seek shelter in Treasury bonds.

According to reports, top Euro Zone officials warned Italy on Monday its plan to borrow billions of extra Euros to fund spending pledges could tip the bloc back into crisis, vowing to pressure Rome to change course.

We’re not going to try to find a story behind gold’s strength at this time. But if momentum is shifting to the upside, I assure you that someone will find the reason. All we can go by is the price action and it looks as if there is a buyer in there. The market may move as high as the bidding allows it. However, if the buying persists then this may spook some of the weaker shorts. This could signal the start of a meaningful rally because bull markets can’t start until the shorts are taken out.

If you’re a strict fundamental trader or one that won’t play the long side in gold unless the dollar is moving lower then stay away from the market today. However, if you believe that the technicals precede the fundamentals then today may be a good day to trade.

Oil Price Fundamental Daily Forecast – Vertical Price Action Suggests Speculators Taking Control

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on light volume early Tuesday. Light profit-taking and position-squaring is probably behind the moves since there have been no major changes to the predominately bullish fundamentals.

Brent is trading near its four-year high reached on Monday and WTI is just tagging along mostly because of the uncertainty created on the supply side of the business nearly a month before the U.S. sanctions on Iran are scheduled to begin.

At 0757 GMT, November WTI crude oil futures are trading $75.54, up $0.24 or +0.32% and December Brent crude oil is at $84.86, down $0.12 or -0.18%.

From a technical standpoint, the markets have gone vertical which usually makes them ripe for profit-taking due to overbought conditions so a short-term pullback wouldn’t be too much of a surprise. With the hedge funds net long the markets, any weakness is likely to be position-squaring because it is going to take a major shift in the fundamentals to spook the big money controlling the price action at this time.

Looking at the bigger fundamental picture, the markets are being driven sharply higher due to the looming U.S. sanctions against Iran’s oil industry. Recent data shows that at its peak, the country was supplying as much as 3 percent of the world’s supply.

Short-term, bullish traders are celebrating the announcement of the trade deal between the United States, Mexico and Canada. Traders liked this news enough on Monday to fuel an acceleration to the upside. This is because it raised hopes that the current trade disputes would not hurt demand by sending the world into recession. Furthermore, demand could actually increase if business returns to usual.

Forecast

The bullish narrative is expected to remain the same at the start of regular session trading on Tuesday. That is, the supply side of the oil market is fragile and vulnerable to any unexpected supply disruptions from Venezuela, Libya, Nigeria or even the North Sea.

Furthermore, there is too much uncertainty in the market at this time over the Iranian sanctions. While uncertainty may drive assets like stocks lower, it carries bullish ramifications in the oil market.

Traders still don’t know how much oil will be taken off the market. They still aren’t sure how many countries are going to go along with the U.S. order to boycott Iranian oil and thirdly, no one knows if Saudi Arabia and Russia will produce enough oil to offset any lost supply.

With this in mind, speculators and professionals have been buying with both hands. Additionally, several investment banks have been throwing out $100 per barrel forecasts. This time, they have real reasons to make these forecasts.

If the market starts to look toppy, or if we see unexpected weakness, then this may signal that the White House is negotiating for more oil to be released. However, the question remains, where will it come from?

Natural Gas Price Fundamental Daily Forecast – Maintenance, Weather Driving Surprise Short-Term Rally

Buyers have returned early Tuesday, putting more upside pressure on natural gas prices well ahead of Tuesday’s regular session opening and after yesterday’s 2.78% jump in prices. Traders are blaming the surprise surge in prices on a rare combination of maintenance and weather issues.

Higher-than-usual natural gas demand for this time of year caught the short-sellers off-guard, forcing them to cover their positions aggressively on Monday. This was due to heavy maintenance of nuclear power plants. Furthermore, the weather forecasts changed unexpectedly and are now showing a possible surge in demand before the end of this year’s shoulder season.

At 0726 GMT, November Natural Gas futures are trading $3.119, up 0.025 or +0.81%.

The Supply/Demand Numbers

“U.S. power burn is set to rise 1.1 Bcf and stand at 29.4 Bcf Monday, up 22.3 Bcf compared to the same day last year”, according to S&P Global Platts Analytics. “The bulk of the increase is likely to come from the Northeast, with the National Weather Service calling for warmer-than-usual temperatures across much of the eastern U.S., over the next six to 10 days.”

Platts Analytics estimates show “power burn is likely to climb to 31.1 Bcf/d over the next week, likely on rising cooling demand.”

“Heating demand may also see a boost over the next seven days, likely due to cooler-than-normal temperatures across much of the Northern and Western U.S.” Additionally, Platts Analytics projects “residential and commercial demand to tick up and average 15.3 Bcf over the next two weeks, largely in line with demand seen over the same time last year.”

Platts also said, “On the supply side, U.S. dry gas production is estimated to drop 2.2 Bcf on day and stand at 81.7 Bcf Monday”, the data showed. “Much of the decline are likely to result from drops in the Northeast, Southeast and Texas region. Output was last seen at this level on August 16.”

Forecast

We’re in a news and technical momentum driven market with prices not seen in months. However, it’s still too early for this kind of move so chasing prices higher at this time of year carries some huge risks. The weather we can deal with and once the nuclear power stations finish their maintenance, supply is expected to increase so we think the best opportunity will be on the short side, once a short-term top is reached.

We’re going to be bullish going into the winter heating season, but we’d like to see more favorable prices. Unfortunately, everyone will be looking to buy a dip. Potential downside targets are former tops at $3.033 and $2.986. However, the best value zone remains $2.825 to $2.691. I not confident, however, that we’ll see prices in that range over the near-term.

Crude Oil Price Update – Momentum Driven Market Needs to Sustain Move Over $75.77

U.S. West Texas Intermediate Crude Oil futures are trading slightly higher early Tuesday after surging more than 2.70% the previous session. The rally was led by international-benchmark Brent Crude Oil futures which are rapidly approaching a 4-year high. The catalyst behind the strength continues to be concerns over tighter supply once the U.S. sanctions against Iran begin next month.

At 0510 GMT, November WTI Crude Oil is trading $75.52, up $0.22 or +0.29%.

WTI Crude Oil
Daily November WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $75.77 will extend the rally. The main trend changes to down on a trade through $67.79, which means the uptrend is safe for now. However, this is the 12th day up from the last main bottom, which puts the market inside the window of time for a closing price reversal top.

The formation of a closing price reversal top will not mean the trend is getting ready to change to down, but it could lead to a 2 to 3 day break, primarily designed to alleviate some of the upside pressure. Since the main trend is up, buyers are likely to come in on any weakness so don’t look for a prolonged move down in terms of price and time unless there is surprise bearish news.

The minor trend is up. A trade through $71.47 will change the minor trend to down. If $71.47 to $75.77 becomes a minor range then its 50% level or pivot at $73.62 will be the first downside target.

The major support remains the long-term Fibonacci level at $70.86.

Daily Swing Chart Technical Forecast

Based on Monday’s close at $75.30 and since the rally is being driven by momentum, the direction of the November WTI Crude Oil futures contract on Tuesday is likely to be determined by trader reaction to yesterday’s high at $75.77.

Bullish Scenario

If buyers can take out $75.77 with conviction then look for another price surge because the next objective is the November 21, 2014 main top at $80.10.

Bearish Scenario

The failure to take out $75.77 will signal the lack of buyers or the return of sellers. This is likely to only be profit-taking or position-squaring.

Taking out $75.77 then closing lower for the session will be a more serious sign of a short-term top. This closing price reversal chart pattern could trigger the start of a 2 to 3 day correction with the first target $73.62.

Gold Price Futures (GC) Technical Analysis – Trade Through $1198.00 Confirms Closing Price Reversal Bottom

Gold futures are inching higher early Tuesday after Monday’s lower close and inside trading range. The price action suggests investor indecision and impending volatility following Friday’s dramatic closing price reversal bottom.

Despite the potentially bullish chart pattern, traders seem reluctant to buy strength due to expectations of rising interest rates and increasing demand for risky assets. However, it may be necessary to confirm the closing price reversal bottom.

At 0428 GMT, December Comex Gold futures are trading $1195.20, up $3.50 or +0.29%.

Comex Gold
Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, Friday’s closing price reversal bottom may have stopped the selling pressure, at least temporarily. A trade through $1198.00 will confirm the closing price reversal bottom. This won’t change the trend to up, but it could lead to a 2 to 3 day counter-trend rally. It will also indicate the buying is greater than the selling at current price levels.

A trade through $1215.80 will change the main trend to up. A move through $1184.30 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is $1167.10 to $1220.70. Its retracement zone is $1193.90 to $1187.50. Buyers are trying to establish support inside this zone.

The minor range is $1215.80 to $1184.30. Its retracement zone at $1200.00 to $1203.70 is the first upside target. Since the trend is down, sellers could come in on a test of this zone.

The next major upside target is the retracement zone at $1205.90 to $1215.10. Another major 50% level comes in $1222.70.

The $1215.10 to $1222.70 retracement zone has stopped three rallies since mid-August.

Daily Swing Chart Technical Forecast

Based on today’s early price action, the direction of the December Comex Gold market the rest of the session is likely to be determined by trader reaction to the 50% level at $1193.90.

Bullish Scenario

A sustained move over $1193.90 will indicate the presence of buyers. If this generates enough upside momentum then look for a possible surge into $1200.00 to $1205.90. The market could begin to really take-off if buyers can overcome $1205.90 with conviction.

Bearish Scenario

A sustained move under $1193.90 will signal the presence of sellers. If the move is accompanied by strong volume then look for the selling to extend into $1187.50, followed by $1184.30.

Silver Price Forecast – Silver markets selloff to kick off the week

To begin with, if you are silver traitor you recognize that volatility is a daily issue. At this point, it’s obvious that the $14.40 level is support, as it has been resistance in the past. I think that support runs down to at least the $14.20 level, perhaps even the $14 level after that. While I would not jump in front of the selloff, but I think at this point it’s likely that the buyers will return eventually. You should pay attention to the US dollar, because I think it is the biggest driver of precious metals going forward. If the EUR/USD pair rallies, that typically means that the US dollar will fall against most currencies, and then by extension, precious metals.

At this point, I believe that simply waiting for some type of support to come in and pick up silver markets. I would be cautious about doing it here though, I would simply wait for 24 hours of stability to start looking for the trade. This market can move rather viciously, and therefore you don’t want to have too much in the market if it goes against you. At this point, I do believe that the buyers will continue to jump into this silver market between here in the $14 level, an area that has been historically important. If we were to break down below that level, it’s likely that the selling would increase, pressing this market down to the $12 level. I anticipate that short-term buying opportunities should continue to present themselves.

SILVER Video 02.10.18

Crude Oil Price Forecast – crude oil markets take off on Monday

WTI Crude Oil

The WTI Crude Oil market rallied rather significantly during the trading session on Monday, the kick off the week with a very strong move. It looks as if the market is going to continue to reach towards the $75 level above, and I think that’s only a matter of time. Beyond that, I think that we will eventually break above $75 and even reach towards the $80. However, we do need to see the occasional pullback to take advantage of value. By doing so, we can go with the overall attitude of the market and pick up value occasionally. At this point, buying at these levels is simply “chasing the trade.”

Brent

Brent markets also rallied during the day, breaking above the $84 level, and looking very much like they are going to reach $85 in a very short amount of time. At this point, I think that the market will continue to find reasons to go higher, and I look at the $83 level as a bit of a “floor” now. Any pullback close to that area should invite fresh buying, just as a break above the $85 level should send this market even higher. There are a lot of pundits out there talking about $100 a barrel, I don’t know if we get there, but clearly that’s the direction we are heading if nothing else. If we were to turn around and break down below the support region at the $83 level, then I think we probably go down to the $82 level.

Crude Oil Video 02.10.18

Natural Gas Price Forecast – natural gas markets rally to kick off the week

Natural gas markets rallied significantly on Monday, reaching towards the $3.10 level. Overall, I think that the market continues to grind back and forth, but obviously we have more of an upward proclivity as of late. The question now is whether or not we can break out? I think we may eventually, and I think that the markets are certainly starting to show that we are trying to, but ultimately this is a market that I think will continue to be extraordinarily choppy, but that’s nothing new for natural gas traders. If we are to break above the $3.10 level, we probably go looking towards the $3.20 next.

However, if we pull back from here I think we continue to hang out in this range overall with the $2.95 level underneath being the “floor” of general consolidation. This is a market that moves on short-term weather forecasts, so keep in mind that you need to be on top of those, and of course the inventory numbers are come out weekly as well. If we were to turn around and break down below the $2.95 level, that would be an extraordinarily negative sign, triggering a selloff that was a lead by a shooting star from the previous weekly chart. However, right now it looks like we are trying to break the back of resistance, so I would be cautious about trying to short until that happens. Expect a lot of back and forth, but a fresh, new high certainly could be an enticing buying opportunity.

NATGAS Video 02.10.18

Gold Price Forecast – Gold markets very choppy on Monday

The Gold markets continue to be very choppy overall, and therefore it’s not a huge surprise that we struggled a bit during the trading session on Monday. I think we continue to go back and forth, and it’s likely that we will see quite a bit of noise overall. I do like buying short-term pullbacks, but if we were to break down below the $1185 level, then I think we go looking towards the $1175 level. From a shorter-term perspective, when I look at this market I also recognize that the five dollar levels continue to be important as well. In other words, short-term traders will continue to bounce back and forth between these large figures.

Longer-term, I love gold. I buy gold in its physical form quite often, recognizing that leverage can be difficult to hang onto. Overall, I think that the markets will eventually turn around but we need to see the US dollar fall apart first. The US dollar has been rather strong, and with the strengthening interest rate cycle from the Federal Reserve in a time of low rates around the world, we may be waiting a while before we see the US dollar helps gold. Overall, I think that the market will eventually find its footing, but in the short term you need to think about this market as being one that is traded off the 15 minute chart or something as such. If we were to break down below the $1175 level, I think we will break down to the $1100 level given enough time.

Gold Price Video 02.10.18

Natural Gas Price Prediction – Prices Surge on Cold Weather Forecast

Natural gas prices surged higher on Monday rising 3%, as colder than normal weather is expected to cover most of the Mid-west for the next 2-weeks according to the latest forecast from the National Oceanic Atmospheric Administration. With inventories below the 5-year average range, and well below the 5-year average, prices could spike to the $12-dollar per mmbtu level according to the Citigroup Natural gas Analyst.  There are currently no tropical storms in the Atlantic or Caribbean that could threaten US natural gas installations. Imports of natural gas are also on the rise, more than doubling the US exports from 2017.

Technical Analysis

Natural gas prices moved higher and hit a fresh 8-month high on Monday. Prices also closed at a 7-month high and are poised to test target resistance near the January highs at 3.6.  Support on natural gas prices are seen near the 10-day moving average at 3.01. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI (relative strength index) also moved higher in tandem with price action which reflects accelerating positive momentum.

Exports of Natural Gas Doubled

The EIA reported that during the period January through June of 2018, net natural gas exports from the United States averaged 0.87 billion cubic feet per day , more than double the average daily net exports during all of 2017. The United States, which became a net natural gas exporter on an annual basis in 2017 for the first time in almost 60 years, has continued to export more natural gas than it imports for five of the first six months in 2018.  With inventories as historically low level and imports on the rise attracting higher prices, natural gas will likely continue to increase as the demand component is likely undervalued.

Natural Gas Price Fundamental Daily Forecast – Short-Covering Driving Market Away from Value Zone at $2.929 to $2.886

Natural gas futures are trading sharply higher early Monday and rapidly approaching last week’s high at $3.111. The price action suggests there may be something cooking in the 8 to 14 day weather outlook that has spooked short-sellers into abandoning their positions established late last week following the release of the lower-than-expected injection into the storage during the week-ending September 21.

At 1207 GMT, November Natural Gas futures are trading $3.070, up 0.062 or +2.09%.

Short-Term Weather Outlook

NatGasWeather.com for Monday, October1, says, “Much of the country east of the Plains will be warmer than normal this week with highs of 80 to lower 90s across the southern U.S., with upper 60s to lower 80s over the Ohio Valley and Mid-Atlantic, including portions of the Northeast. Locally cooler conditions can be found near the Canadian border due to weak cool fronts. The West will cool this week, but still mostly comfortable with highs of 60s and 70s. The Southwest will be wet the next several days as tropical cyclone Ross tracks inland, easing hot conditions. Overall, demand will be light to moderate the next 7 days.

Mid-Term Weather Outlook

For October 1 to October 7, NatGasWeather.com says, “The West will see numerous weather systems bring showers but with mostly mild to only slightly cool conditions. Heavy rains are expected into the Southwest as tropical moisture from Rosa arrives. The southern U.S. will be very warm with highs of 80s to lower 90s. The East will be mild to warm with highs of 60s to lower 80s due to strong high pressure, although with cooler exceptions near the Canadian border as weather systems provide glancing blows. Overall, a mostly comfortable early October pattern with light to moderate demand.”

Forecast

Today’s early price action makes it genuinely tough for traders. In my opinion, it’s a little too early in the season to chase the market higher, especially the one that being driven by the spot market. The moves are generally too fast and short in duration.

Furthermore, chasing a market higher at this time of year leaves you with no out because a pullback below support will be looked at as a buying opportunity just as one who bought strength will be bailing out.

Given the current main range of $2.747 to $3.111, the best buying opportunity remains its retracement zone at $2.929 to $2.886.

We’re comfortable with the notion of a potential bull market this year due to the expected supply shortage. However, we’re not in favor of chasing a news driven rally at this time.

Price of Gold Fundamental Daily Forecast – Professional Traders Increase Net Short Positions

Gold is trading lower shortly after the regular session opening on Monday after failing to follow-through to the upside following Friday’s dramatic rebound into the close. The market continues to feel pressure from a stronger U.S. Dollar which is being supported by expectations of higher U.S. interest rates. Furthermore, increased demand for risk and the lack of follow-through to the upside by silver is also pressuring the precious metal.

At 1232 GMT, December Comex Gold is trading $1191.40, down $4.80 or -0.40%.

Traders are also saying that the Golden Week celebration in China is also weighing on prices. Volume and volatility are down because of the Chinese holiday.

Gold is being pressured by rising U.S. Treasury yields as investors continue to respond to last week’s 25-basis point rate hike by the Fed. Although the move was widely expected, investors were caught off-guard somewhat by the Fed’s strong suggestion that rates would be raised again in December and perhaps as many as three times in 2019 and once in 2020.

The Fed’s removal of the word “accommodative” from its monetary policy statement is also encouraging investors to sell gold because this suggests the central bank may turn more aggressive in its efforts to stem the rise in inflation and reduce its balance sheet.

Demand for higher-yielding assets is on the upswing following the announcement that the United States and Canada had reached a trade deal on Sunday, thereby salvaging NAFTA and creating a trilateral agreement with Mexico. U.S. equity markets are up on the news as money flows back out of gold and into stocks.

In other news, gold speculators raised their net short position by 2,923 contracts to 77,313 contracts, the largest in three week, in the week to September 25, U.S. Commodity Futures Trading Commission (CFTC) data showed.

Forecast

Although the market may be subject to a few short-covering rally upswings, the fundamentals are bearish so the general direction of the gold market is expected to be down. Traders are being to look at $1200.00 as an important upside barrier and the August bottom at $1167.10 as the minimum downside target.

Later today, investors will get the opportunity to react to a slew of U.S. economic data including Final Manufacturing PMI, Construction Spending and Total Vehicle Sales. The major report is the ISM Manufacturing PMI. It is expected to come in at 60.1, slightly below the previously reported 61.3.

Federal Open Market Committee Member Bostic is also scheduled to speak. Recently, Raphael Bostic of the Atlanta Fed expressed worries about the potential for an inverted yield curve – short term rates higher than long-term rates – which could be a signal for an upcoming downturn as the inversion has preceded recessions in recent history.

Oil Price Fundamental Daily Forecast – Speculative Buyers Continue to Bet on Supply Shortage

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly higher early Monday as speculators continue to bet that the U.S. sanctions against Iran, which are expected to begin next month, will lead to a supply shortage.

Leading the rally is the Brent crude oil because it will be directly impacted by the sanctions which kick in November 4. WTI futures are being supported by Friday’s rig count report, which showed a drop last week and stagnant growth for the quarter. Furthermore, it points to a slowdown in U.S. crude production.

In other news, hedge funds increased their bullish wagers on U.S. crude in the week to September 25, data from the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday, increasing futures and options positions in New York and London by 3,728 contracts to 346,566 during the period.

There was also a report that China’s Sinopec said its halving loadings of Iranian crude oil this month. China is the biggest buyer of Iranian oil.

Additionally, U.S. President Trump called Saudi Arabia’s King Salman on Saturday, discussing ways to maintain sufficient supply once Iran’s exports are hit by sanctions.

At 0707 GMT, November WTI crude oil is trading $73.37, up $0.12 or +0.16% and December Brent crude oil is at $82.98, up $0.25 or +0.31%.

Forecast

The news is so bullish that ANZ bank is saying that “the market is eyeing oil prices at $100 per barrel”. They should’ve said bullish speculators because this is who has to buy with both hands in order drive Brent to this level.

Sure it’s possible especially because we still don’t know about compliance with the Trump administration’s order of zero exports from Iran. For example, if Chinese refiners do comply with U.S. sanctions more fully than expected, and India and Japan, then the market balance is likely to tighten even more aggressively.

Furthermore, I’m sure the Saudis would like to appease Trump, but where does he think they’ll get the oil? With November 4 coming up quickly and the market getting ready to lose about 1.5 million barrels per day, traders are going to find out rather quickly how much oil the Saudi’s can produce above their recent 10.5 million bpd output.

If you’re looking at only the supply side then $100 Brent is possible, however, there are also demand issues. Asia’s emerging markets could slowdown oil purchases if the dollar continues to rise. Inflationary pressures could also stunt demand growth.

Reports over the week-end point toward economic slowdown in China and Japan, blamed mostly on trade issues. Growth in China’s manufacturing sectors is already showing weakness. Business confidence in Japan is also falling.

Look for strength in the crude oil markets over the near-term, but it’s a little early to chase the market higher, no matter how aggressive the speculators get. Look for value on pullbacks.