Oil Price Fundamental Daily Forecast – Supply Shortage Fears Driving Brent into $77.39 to $77.86

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher early Tuesday after a late session sell-off on Monday led to the markets giving back their earlier gains.

Prices are being supported by looming U.S. sanctions against Iran’s petroleum industry. However, gains are being capped by signs that increased supplies by other major producers, including the United States and Saudi Arabia, could make up for the disruptions from Iran.

At 0832 GMT, October WTI crude oil futures are trading $67.84, up $0.30 or +0.44% and December Brent crude oil is trading $77.60, up $0.68 or +0.88%.

There is evidence that the U.S. planned sanctions against Iran that are supposed to begin in November are already weighing on exports from the country. Washington is threatening severe penalties against any nation that fails to comply with its sanctions. Close allies like South Korea and Japan are already complying. India is also beginning to show signs of falling in line.

Despite the supply tightening, however, there are still worries that Saudi Arabia and Russia will fill in any supply shortages.

On Monday, U.S. Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih in Washington, the U.S. Energy Department said. The meeting was designed to encourage the Saudis to keep producing at high levels ahead of the renewed sanctions.

Perry is scheduled to meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

Forecast

The early price action suggests traders are continuing to bet on supply tightening. The upside target for Brent crude is $77.39 to $77.86. It is currently testing this zone. Trader reaction to this area will set the tone of the market the rest of the week.

The October WTI target zone is $69.13 to $69.66. On the downside, the support zone is $67.65 to $66.76.

Brent is being supported by potential supply shortages due to the Iran sanctions. WTI’s gains are being limited by worries over U.S. supply after the rig count failed to increase last week. Furthermore, investors may be sitting on the sidelines ahead of Tuesday’s American Petroleum Institute weekly storage report and Wednesday’s U.S. Energy Information Administration weekly inventories.

Gold Trades Flat As USD Gains Momentum from Trade War Woes & Rate Hike Expectations

Gold price remains relatively neutral on Tuesday as the dollar was boosted by expectations U.S. interest rate will rise this month and by worries the Sino-U.S. trade war could escalate. Strong U.S. payrolls data last week cemented expectations that the U.S. Federal Reserve will raise interest rates in September, in what would be its third hike this year, with expectations of one rise more in December. Higher rates increase bond yields, making non-yielding bullion less attractive, and tend to boost the dollar. With the greenback supported by expectations of higher U.S. interest rates, short term outlook remains bearish for Gold market. Spot Gold XAUUSD is currently trading flat at $1196.05 an ounce up 0.01% on the day, while US Gold futures GCcv1is trading at $1201.50 an ounce up 0.13% on the day.

Turkey, Iran & Russia Have Decided to Conduct Bilateral Trades in Their Own Currencies To Avoid Use of USD

The US Greenback is also supported by President Donald Trump’s comments from last week as he mentioned that he was ready to impose tariffs on virtually all Chinese imports to the United States. While China has promised to retaliate in equal force in case tariff is implemented by US, investors are flocking to USD as many continue to believe that the United States has less to lose from a trade war – making dollar-priced precious metals more expensive for non-U.S. buyers. Investors caution on trade war related proceedings has resulted in funds being moved out of Precious metals. Spot Silver XAGUSD is trading at $14.197 an ounce up 0.14% on the day.

Crude oil futures were stable to higher during mid-morning trade in Asian market hours today amid expectations that latest US crude stocks data will show a decline and participants monitored geopolitical tensions and developing hurricanes in the US. The impact of US sanctions on Iran continued to dominate market attention Tuesday, with Turkey, Russia and Iran reaching an agreement to conduct bilateral trades in their own currencies to avoid the use of US dollars, Turkey’s state-owned Anatolia news agency reported. This announcement follows a meeting between Iranian President Hasan Ruhani, Turkish President Tayyip Erdogan and Russian President Vladimir Putin in Tehran on Friday. At the same time a Reuters report suggests that Saudi Aramco will supply additional crude to at least two Asian buyers in October after they asked for more supplies. Saudi is also resuming higher crude oil exports to the United States to regain market share and keep a lid on oil prices and U.S. gas prices, at least until the mid-term elections in November. Spot Crude WTIUSD is trading at $67.97/b up 0.24% on the day.

Crude Oil Price Update – Trading Inside Contract Retracement Zone at $65.15 to $70.86

U.S. West Texas Intermediate crude oil futures settled lower last week. The market rallied early in the week due to speculative buying related to hurricane concerns, but worries about demand because of trade tensions and a stronger U.S. Dollar triggered a break. Weaker equity markets also drove investors out of crude oil.

Last week, November WTI crude oil settled at $67.75, down $2.05 or -2.94%.

WTI Crude Oil
Weekly November WTI Crude Oil

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly chart. A trade through the main top at $71.10 will signal a resumption of the uptrend. The main trend will change to down on a trade through $62.48.

The contract’s 50% to 61.8% zone is $65.15 to $70.86. This is the zone controlling the longer-term direction of the market. You can see that the market has basically been trading inside this zone for about 4 months.

The short-term range is $71.10 to $62.48. Its 50% level or pivot falls inside this zone. It provided support last week.

The main range is $54.50 to $71.10. Its retracement zone at $62.80 to $60.84 is the primary downside target.

Weekly Swing Chart Technical Forecast

Based on the recent price action, the direction of the November WTI crude oil futures contract is likely to be determined by trader reaction to the short-term pivot at $66.79.

A sustained move over $66.79 will indicate the presence of buyers. If this move can generate enough upside momentum then look for a potential run into the major Fibonacci level at $70.86. This is followed by last week’s high at $70.98 and the main top at $71.10. The latter is a potential trigger point for an acceleration to the upside.

A sustained move under $66.79 will signal the presence of sellers. The next downside target is the major 50% level at $65.15. This is the trigger point for a potential acceleration into the main 50% level at $62.80 and the main bottom at $62.48.

The trend will change to down on a move through $62.48. This could lead to a further break into the main Fibonacci level at $60.84.

Gold Price Futures (GC) Technical Analysis – Weekly Chart Strengthens Over $1222.70, Weakens Under $1194.30

Gold futures closed lower last week with the selling pressure attributed to safe-haven buying of the U.S. Dollar and a jump in Treasury yields fueled by stronger-than-expected U.S. Non-Farm Payrolls data. The selling could have been worse, however.

Bullish speculators seem to believe that the Fed is moving closer to neutrality, which means the dollar is not likely to strengthen very much. Additionally, safe haven buyers are also taking positions in the Japanese Yen and Swiss Franc. If you trade the relationship between gold and the Dollar Index and your bullish gold, all you’re hoping for is a rally in the Euro.

Also if money speaks louder than words then gold could be heading lower because hedge funds and money managers increased their bearish positions in Comex gold to the biggest on record up until September 4.

Last week, December Comex Gold settled at $1200.40, down $6.30 or -0.52%.

Comex Gold
Weekly December Comex Gold

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The market isn’t in any position to change the main trend to up. A trade through $1167.10 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend will change to up on a move through $1278.20. This will also shift momentum to the upside.

The short-term range is $1167.10 to $1221.40. Its 50% level or pivot at $1194.30 is controlling the price action. Is has been providing support for four weeks.

The intermediate minor range is $1278.20 to $1167.10. Its 50% level at $1222.70 is the first upside target.

Another intermediate range is $1325.40 to $1167.10. Its 50% level at $1246.30 is the next upside target.

The main range is $1388.10 to $1167.10. Its retracement zone at $1277.60 to $1303.70 is the primary upside target.

Weekly Swing Chart Technical Forecast

Based on last week’s price action, the direction of the December Comex Gold market the rest of the week is likely to be determined by trader reaction to the short-term pivot at $1194.30.

A sustained move over $1194.30 will indicate the presence of strong counter-trend buyers. If this move creates enough upside momentum then look for buyers to go after the next 50% level at $1222.70. This is a potential trigger point for an acceleration to the upside with $1246.30 the first target.

A breakout over $1246.30 could fuel an even stronger rally with $1277.60 to $1278.20 the next target area.

A sustained move under $1194.30 will signal the presence of sellers. This could trigger a potential acceleration into $1167.10, followed by $1162.00.

Silver Price Forecast – Silver markets continue to trade range bound

Silver markets rallied a bit to kick off the week on Monday, but at this point the market participants don’t seem overly enthusiastic about putting a lot of money to work. The $14.30 level has been resistance, while the $14.10 level has been support. The $14 level underneath is even more significant support, based upon longer-term charts. Because of this, I think that the market is trying to decide what it can do next. This will either be a “rectangle bottom”, or it will be a pause before the next leg lower. If we break down below the $14 level, then the choice is obvious: we can only sell this market. However, if we can break above the $14.35 level, the market is very likely to go looking towards the $14.50 level after that.

A lot of this is going to come down to what the US dollar does, as per usual. Right now, European currencies are going better against the US dollar because of a statement from an EU official that suggested a Brexit could be realistically achieved within two months, which of course has people buying the British pound and the Euro. However, that doesn’t necessarily being that the US dollar is going to be on its back foot for long. It may be true for the British pound, but the Euro, which is roughly half of the US Dollar Index, might be a completely different story. At this point, I think the biggest driver of US dollar strength against precious metals would be the concern of struggling emerging markets. Until that clears up, silver is probably going to struggle to keep gains for large moves.

SILVER Video 11.09.18

Crude Oil Price Forecast – crude oil markets pop to start the week

WTI Crude Oil

The WTI Crude Oil market rallied to kick off the week on Monday, gaining 1% at the open of pit trading. The market does look a bit confused right now though, as there are several different things moving oil, but with a falling US dollar, that had people somewhat optimistic. I believe that the $69 level is going to offer a significant amount of resistance, but if we can clear that area we could continue to go higher. On the daily chart, Friday had formed a hammer which of course is a bullish sign. That doesn’t mean that we have to go higher, just that obviously there are value hunters underneath willing to step in and pick up the contract.

Brent

Brent markets also rallied during the day, gaining over 1% during the same timeframe. The $78 level looks to be resistive, and if we can break above there it would complete a bit of a “rounded bottom” on the hourly chart, perhaps sending this market as high as $79.50 next. I do believe that there is a certain amount of support at the $77 level as well, so I don’t think shorting is necessarily the best of ideas. Buying short-term dips will probably work if we can stay above that $77 handle, but if we were to break down below that I think the market would “reset” closer to the $76 level. Expect volatility, but in the end I think the buyers are still rather persuasive and committed when it comes to the petroleum markets.

Crude Oil Video 11.09.18

Natural Gas Price Forecast – natural gas markets drop on Monday

Natural gas markets drifted a bit lower during the early hours on Monday, testing the $2.75 level. The major support level below at the $2.70 level has been the scene of a lot of buying over the last several months, so I suspect that this point there is probably somewhat limited downside. If you are short-term trader, then you’re looking for short-term rallies to sell that show signs of exhaustion. However, if you are looking to place a trade for a little bit bigger move, you should be aware of the $2.70 level and its natural proclivity to bring in a lot of buyers.

At that point, you could see a return to the $3.00 level, which could light up quite nicely with the seasonality of natural gas as well, as futures markets are starting to look at some of the colder months in the United States. That’s not to say that you can simply buy here and hang on, far from it. What you need to see is some type of supportive daily candle in order to put money to work like that. In the short term though, scalping this market to the downside should continue to work, and I think that the $2.80 level will offer a bit of “ceiling” at the moment. The $2.75 level is minor support, so a bounce from there isn’t a huge surprise if it happens, but it should be temporary and an opportunity to start selling again.

NATGAS Video 11.09.18

Gold Price Forecast – Gold forming possible double bottom

Gold markets of course are very sensitive to the fate of the US dollar, which is getting sold off during trading on Monday as it has been stated by the EU official we may be within two months of the Brexit negotiated deal. If that’s the case, it would be very good for the Euro, and even better for the British pound. In other words, it should lead to more US dollar selling. However, we have the concern over emerging markets, which has kept the dollar elevated. All of this noise is contributing to a very choppy and difficult gold market.

Longer-term, I believe that the US dollar will continue its downward trajectory, but right now we obviously are doing that. So with that in mind, I like buying physical gold occasionally, as well as silver. But as far as leveraged products are concerned that’s an entirely different scenario. I think that the $1205 level and the $1210 level both could offer significant resistance. It now appears that the $1197 area is offering significant support. I think short-term scalping back and forth will probably be what this market continues to offer. I anticipate that we will go looking towards the $1205 level in the short term, but whether we can hang onto that movie is a completely different question. If we were to break down below the $1195 level, that could lead to even bigger selling as it would break the bottom of what could be the double bottom.

Gold Analysis Video 11.09.18

Natural Gas Price Prediction – Prices Rebound after Testing Support

Natural gas prices rebounded after attempting to push below trend line support, and surged nearly 1% into the close of the trading session. While support is flat demand appears to have dipped in the latest week with most of the losses coming in the electrical power space.

Technical Analysis

Natural gas price rebounded as prices tested trend line support and bounded.  Support is seen near the upward sloping trend line that comes in near 2.76. Resistance is seen near the 20 and 50-day moving average at 2.84.  With the 20-day moving average crossing below the 50-day moving average a medium term downtrend could be in place. Negative momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in the red with a flattening trajectory which points to consolidation. The relative strength index (RSI) which is a momentum oscillator that measures accelerating and decelerating momentum, is move higher forming a bottom, which reflects declining negative momentum. The current reading on the RSI is 42, which is on the lower end of the neutral range.

Overall supply is flat

According to data from the EIA, the average total supply of natural gas remained the same as in the previous report week, averaging 87.9 Bcf per day. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 7% from last week.

Overall demand is down with decreases in the electric power, residential/commercial sectors. Total U.S. consumption of natural gas fell by 2% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation declined by 3% week over week with cooler temperatures across much of the Lower 48 states. In the residential and commercial sectors, consumption declined by 3%. Natural gas exports to Mexico increased 2%. Industrial sector consumption stayed constant, averaging 19.7 Bcf per day.

Gold Price Prediction – Prices Consolidate Ahead of CPI and Retail Sales

Gold prices continued to trade sideways forming a doji day which is where the open and close are at the same level.  Prices action was muted as many celebrated the Jewish new year which reduced volatility and liquidity. Jobs data initially buoyed the greenback, but that trend lost ground on Monday.

Technical Analysis

Gold prices moved sideways, as prices where unable to recapture resistance near the 10-day moving average at 1,198. Support on the yellow metal is seen near the August lows at 1,160. Short-term momentum remains negative as the fast stochastic prints in the red with a declining trajectory after recently generating a crossover sell signal.

Jobs Data Increased Rate Hike Chances

The jobs data released on Friday has practically solidified that the Fed will increase interest rates when they meeting in September.  At the end of August, the Fed fund futures contracts were predicting a 95% chance that the Fed would raise rates. The chances of a hike have moved up 3% to 98%, all but baking in the cake a rate hike.  The jobs report has helped increase the chances of a December rate hike which is now 80% from 67% at the end of August.

Wages Where the Focus for the Markets

The US jobs data released on Friday was mixed. The headline number was better than expected by revision took some of the luster away from the robust number. Hourly earning seemed to steel the show and pushed yields higher. The unemployment rate and the decline in the participation rate, point to some minor weakness. The unemployment rate held near low of 3.9% percent, according to a Bureau of Labor Statistics report Friday. Expectations were for a decline to 3.8%. Expectations were for a 190K rise in the headline figure. Additionally, and most importantly, the 2.9% year over year uptick in hourly earnings was stronger than the 2.7% increase expected. On a month over month basis hourly earnings jump a robust 0.4%. The wage growth was the highest since April 2009. The participation rate fell to 62.7%, matching the lows since mid-2016.  This means that less people were looking for jobs than any time in the past 2-years.

Crude Oil Price Update – Set-up for Test of Short-Term Retracement Zone at $69.13 to $69.66

U.S. West Texas Intermediate crude oil futures are being underpinned by concerns over the tight supply situation, a weaker U.S. Dollar, which is supporting increased foreign demand and firmer U.S. equity indexes.

At 1256 GMT, October WTI crude oil is trading $67.89, up $0.14 or +0.21%.

WTI Crude Oil
Daily October WTI Crude Oil

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $71.40 will signal a resumption of the uptrend. A move through $63.89 will change the main trend to down.

The minor trend is also up. A new minor bottom was formed at $66.86. A trade through this level will change the minor trend to down and shift momentum to the downside.

The main range is $63.89 to $71.40. Its retracement zone at $67.65 to $66.76 is support. This zone stopped the selling at $66.86 on September 7.

The minor range is $71.40 to $66.86. Its retracement zone at $69.13 to $69.66 is the primary upside target. This zone is very important to the structure of the market. Aggressive short-sellers could come in on a test of this zone in an effort to form a secondary lower top, or buyers could take it out, making $66.86 a new main bottom.

Daily Technical Forecast

Based on the early price action, the direction of the October WTI crude oil market is likely to be determined by trader reaction to the uptrending Gann angle at $67.89.

A sustained move over $67.89 will indicate the presence of buyers. If this move creates enough upside momentum then look for a potential rally into the 50% level at $69.13, followed by a downtrending Gann angle at $69.40. Watch for aggressive counter-trend sellers on the first test of this area.

A sustained move under $67.89 will signal the presence of sellers. This could lead to a quick test of the 50% level at $67.65. Crossing to the weak side of a steep downtrending Gann angle at $67.40 will put crude oil in a position to challenge the minor bottom at $66.86, followed by the Fib level at $66.76.

Traders are likely to play the two retracement zones at $67.65 to $66.76 and $69.13 to $69.66 over the near-term.

Gold Price Futures (GC) Technical Analysis – September 10, 2018 Forecast

Gold futures are trading higher shortly after the regular session opening on Monday. Gold is trading higher in reaction to a weaker U.S. Dollar against a basket of major currencies. The move is being primarily supported by a rally in the Euro.

At 1436 GMT, December Comex Gold futures are trading $1202.50, up $2.10 or +0.17%.

Comex Gold
Daily December Comex Gold

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $1220.70 will signal a resumption of the uptrend. A move through $1189.50 will change the main trend to down.

The minor trend is down. This is controlling the downside momentum. A trade through $1195.10 will indicate the selling is getting stronger. A move through $1212.70 will change the minor trend to up and shift momentum to the upside.

The main range is $1244.70 to $1167.10. Its retracement zone at $1205.90 to $1215.10 is resistance. This zone is also controlling the near-term direction of the market.

The minor range is $1167.10 to $1220.70. Its retracement zone at $1193.90 to $1187.60 is the primary downside target and potential support zone.

Daily Technical Forecast

Based on the early price action, the direction of the December Comex Gold futures contract is likely to be determined by trader reaction to the uptrending Gann angle at $1199.10.

A sustained move over $1199.10 will indicate the presence of buyers. If this move can create enough upside momentum then look for the rally to extend into the 50% level at $1205.90, followed by the downtrending Gann angle at $1210.70 and the Fibonacci level at $1215.10.

The Fib level at $1215.10 is the potential trigger point for an acceleration to the upside with the main top at $1220.70 the first target, followed by another downtrending Gann angle at $1227.70.

A sustained move under $1199.10 will signal the presence of sellers. This could lead to a test of the short-term retracement zone at $1193.90 to $1187.60. Inside this zone is the main bottom at $1189.50.

Be careful selling weakness under $1189.50 because of the Fib level at $1187.60.

Natural Gas Price Fundamental Daily Forecast – Needs to Stay Under $2.799 to Sustain Downside Bias

Natural gas futures are slightly lower early Monday. The market is trading inside Friday’s range, which suggests investor indecision and impending volatility. Nat gas finished the week sharply lower, but produced a potentially bullish closing price reversal on the daily chart. This suggests the buying may be greater than the selling at current price levels. It does not mean the trend is getting ready to turn up. But it could mean we’re setting up for a short-covering rally designed to alleviate some of the oversold pressure.

At 1052 GMT, October Natural Gas is trading $2.769, down $0.007 or -0.25%.

The price action is expected to be driven by the notion that despite the supply deficit, cooler temperatures and rising production will help tighten the storage deficit before the winter season begins in November.

The market is also trading on the weak side of several technical retracement zones. This is creating the downside momentum that could lead to a challenge of a series of former bottoms at $2.751, $2.703 and $2.688.

Weekly Storage Report

According to the U.S. Energy Information Administration, U.S. natural gas in storage increased by 63 Bcf to 2.568 Tcf for the week-ended August 31. The build was slightly more than the consensus calling for a 60-Bcf addition.

The injection was also more than the 60-Bcf build reported during the corresponding week in 2017 but less than the five-year average addition of 65 Bcf, according to EIA data.

As a result, stocks were 643 Bcf, or 20%, less than the year-ago level of 3.211 Tcf, and 590 Bcf, or 19%, less than the five-year average of 3.158 Tcf.

Weather

According to NatGasWeather.com for September 10 to September 16:  “A weather system with showers and thunderstorms will track across the Ohio Valley and Northeast Monday, but then warming the rest of the week. The South will see a slow moving weak weather system produce showers, while a cooler system will impact the Northwest. Temperatures remain hot over the Southwest and Southeast with upper 80s to 90s, 100s over SW deserts. As the week progresses, warm high pressure will strengthen over most of the country with 80s to near 90F becoming widespread besides the Northwest. Hurricane Florence is likely to impact the Carolina Coast late in the week with heavy rain and dangerous winds. Overall, national demand will be moderate.

Forecast

Prices are likely to remain under pressure until all the long speculators have been driven out of the market. At that point, we’re likely to see a short-covering rally.

I don’t expect to see aggressive shorting on weakness because there still is a supply deficit. However, it’s also too early to start betting on a rally. Therefore, we’re likely to see a sideways to lower trade over the near-term unless hot weather return unexpectedly. Hurricanes in the Gulf of Mexico could play a role if they target natural gas platforms and facilities. But as we saw last week in the crude oil market, any spike higher in prices could end quickly once the situation is assessed.

According to Platts Analytics, even with slightly better builds over the next two weeks, they will still be below the five-year average and will further widen the deficit.

Platts is also saying it expects “storage to peak at approximately 3.3 Tcf before the switch to withdrawals in early November. If so, it would be the lowest level to start the heating season since 2005, when stocks peaked at 3.2 Tcf. A colder-than-normal winter could push up prices due to the low inventory despite production gains.”

Time is the biggest factor driving prices. There is no doubt we’re going to start the winter heating season with a deficit. However, the timing isn’t right yet for any aggressive buying. Furthermore, if you want to play a winter rally, you have to move out to the December to March futures contracts.

The key area to watch on the upside is the retracement zone at $2.799 to $2.833. Look for a downside bias as long as the market remains under $2.799. Neutral between $2.799 and $2.833. We could see the market strengthen on a sustained move over $2.833. This will be short-covering and it should be met with fresh shorting pressure.

Price of Gold Fundamental Daily Forecast – Threat of Additional Tariffs Holding Traders Hostage

Gold futures are lower early Monday, continuing the move from Friday that was fueled by a stronger-than-expected U.S. Non-Farm Payrolls report and fears of an escalation of the trade dispute between the United States and China. Overall, it’s a firmer U.S. Dollar that is weighing on gold prices today. Expectations of higher interest rates is helping to make the U.S. Dollar a more attractive investment.

At 0945 GMT, December Comex Gold is trading $1199.50, down $0.90 or -0.07%.

Gold weakened on Friday as the dollar resumed its rally versus a basket of major currencies after stronger than expected payrolls data solidified expectations of a third interest rate increase in September this year.

According to the U.S. Labor Department, job growth steamed forward in August, with wages posting their largest annual increase in nine years, strengthening views the economy was so far weathering the escalating trade war with China.

The greenback was supported by safe-haven buying related to concerns over new tariffs against China that could be imposed at any time. However, gains were somewhat weakened as money also flowed into the safety of the lower risk Swiss Franc and Japanese Yen.

According to reports, now that the public consultation period for proposed U.S. tariffs on an additional $200 billion of Chinese imports ended at 0400 GMT on Friday, the Trump Administration could put new tariffs into place at any moment, though there is no clear timetable.

Gold is also being pressured by the threat of additional rate hikes by the Fed beyond the widely expected September increase. Treasury yields are moving higher with the yield on the benchmark two-year Treasury note jumping to its highest level in more than 10 years Friday.

In other news, investors increased their bearish stances in Comex Gold contracts to the biggest on record in the holiday-shortened week to September 4, data showed.

Forecast

Gold traders are going to remain focused on the U.S. Dollar. This is because it’s being influenced by the threat of additional tariffs and rising Treasury yields. The market is being held hostage by this latest round of tariff threats because they can be imposed at any time. This can cause a volatility spike because of the element of surprise.

As far as Treasury yields are concerned, they are expected to remain firm over the near-term because Friday’s payroll data likely cemented expectations that the U.S. Fed will raise interest rates in September, in what would be its third hike this year.

It’s a light day as far as economic data is concerned. FOMC Member Raphael Bostic is scheduled speak. In early August, he said he was in favor of only 1 more rate hike this year. However, last week, he turned hawkish when he said with the U.S. economy at full employment, inflation at the Federal Reserve’s 2-percent goal, and the economic risks balanced, the U.S. central bank needs to keep raising interest rates.

Oil Price Fundamental Daily Forecast – Supported by Tight Supply Concerns, but Gains Likely Limited by Demand Worries

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher early Monday. The U.S. futures contract is making a nice rebound after testing a key technical retracement area. The Brent contract did not complete an exact 50% to 61.8% retracement, nonetheless, buyers still came in to stop the price slide last week and continuing to press prices higher early Monday.

At 0859 GMT, October WTI crude oil futures are trading $68.49, up $0.71 or +1.03% and December Brent crude oil is at $77.51, up $1.04 or 1.38%.

According to traders, the catalysts for the rally are worries about tighter supply conditions once Washington’s sanctions against Iran’s crude oil exports kick in beginning in November, and stable U.S. production due to a flattening of the rig count last week.

Firstly, there are new signs that several major Iran customers like India, Japan and South Korea were already scaling back on purchases of Iran crude. These countries are complying with the U.S. mandate to stop all Iran oil purchases or face severe financial penalties.

Secondly, according to energy services firm Baker Hughes, U.S. energy companies cut two oil rigs last week, bringing the total count to 860. Furthermore, there is evidence that the U.S. rig count has been flattening for nearly four months, after mounting a huge recovery since 2016.

Forecast

After last week’s demand related sell-off, bullish traders are making their presence known early Monday. Additionally, the presence of “backwardation” pricing strongly suggests the market is tightening. This condition occurs when nearby futures contract are priced higher then deferred futures contracts. It is also gives traders an incentive to sell oil immediately instead of storing it.

Despite the early strength, the key question that remains is how demand develops amid the trade dispute between the United States and China, as well as general emerging market weakness. Last week, oil ministers from two major Middle Eastern producers expressed concerns over future demand from China.

So today, we’re looking for strength because of technical factors and concerns over tight supply, however, gains are likely to be limited by worries over future demand.

As far as the weather is concerned, there are two hurricanes in the Atlantic Ocean and one tropical storm. So far they are not a threat to any Gulf of Mexico energy operations so we’re not likely to see any risk premium priced into the market at this time. However, September is peak hurricane season in the region so conditions should be monitored daily.

Gold Loses Ground on Strong USD Owing to Positive U.S. Macro Data

Gold fell for a second straight session on Monday as expectations of an interest rate hike by the U.S. Federal Reserve in September and fears of an escalation in U.S.-China trade tensions kept the dollar firm. US Dollar on Friday gained additional bullish support as Employment data was better than expected and wages data saw significant increase which resulted in US Treasury yields seeing a spike resulting in positive momentum for US Dollar in broad market. As of writing this article, Spot Gold XAUUSD is currently trading at $1195.51 down 0.04% on the day while US Gold futures GCcv1 is trading flat at $1200.50 up 0.008% on the day. While gold investors had priced in some downside movement owing to positive expectations for US macro updates, the outcome had significantly higher impact on market as the readings were far better than expected essentially putting a stop to temporary momentum gained by precious metals last week.

Trade War Woes To Influence Yellow Metal’s Momentum in Near Future Trading Sessions

Moving forward EM currency crisis and Sino-U.S trade war proceedings are expected to remain in focus as investors await updates on tariff with Trump commenting last week that he is planning tariff for additional $200btotaling upto nearly $500b worth of goods if implemented. USD continues to gain momentum as investors keep flooding greenback with funds as they await update on implementing the $200b worth of tariff’s announced earlier. Precious metals are expected to continue downtrend movement as long as Dollar remains strong but the main question that prevails among investors and analysts alike is “How long will US markets be capable of weathering the impact of the trade war as retaliatory tariffs will negatively impact US exports as well”. Meanwhile Spot Silver XAGUSD is trading at $14.21 up 0.29% on the day.

Crude oil futures were higher during mid-morning trade in Asia Monday amid higher US oil rig count data and continuing focus on looming US sanctions on Iranian crude. The US oil rig count fell by two to 860 last week as operations in the country’s most active play, Permian Basin, continued to slow as takeaway capacity approached its limit, weekly data released by Baker Hughes showed Friday. Market attention also remained on the impact of Iranian crude flows ahead of US sanctions snapping back in November, particularly on the two largest importers of Iranian crude, China and India. China’s Iranian crude imports hit a monthly record 874,000 b/d in August, S&P Global Platts trade flow. However China is expected to remain the biggest buyer of Iranian crude as Beijing has said business with Iran will run as normal despite US sanctions. Meanwhile South Korea has become the first of Iran’s top-three oil customers to fulfill a hard-line U.S. demand that buyers cut imports to zero. Spot Crude WTIUSD is currently trading at $68..6/b up 0.72% on the day.

 

Natural Gas Price Fundamental Weekly Forecast – Patience is Key for Bullish Traders at This Time

Natural gas futures finished sharply lower last week. The price action was driven by the notion that despite the supply deficit, cooler temperatures and rising production will help tighten the storage deficit before the winter season begins in November. Besides the cooler weather forecast and record production, traders also responded to the release of a government report that showed a bigger-than-expected storage build.

For the week, October Natural Gas futures settled at $2.776, down $0.140 or -4.80%.

The market is also trading on the weak side of several technical retracement zones. This is creating the downside momentum that could lead to a challenge of the next major support at $2.688.

Weekly Storage Report

According to the U.S. Energy Information Administration, U.S. natural gas in storage increased by 63 Bcf to 2.568 Tcf for the week-ended August 31. The build was slightly more than the consensus calling for a 60-Bcf addition.

The injection was also more than the 60-Bcf build reported during the corresponding week in 2017 but less than the five-year average addition of 65 Bcf, according to EIA data.

As a result, stocks were 643 Bcf, or 20%, less than the year-ago level of 3.211 Tcf, and 590 Bcf, or 19%, less than the five-year average of 3.158 Tcf.

Front month futures have fallen about 18 cents over the past two weeks despite low storage inventory. The move has been fueled by generally cooler temperatures and record production levels.

Forecast

Prices are likely to remain under pressure until all the long speculators have been driven out of the market. At that point, we’re likely to see a short-covering rally.

I don’t expect to see aggressive shorting on weakness because there still is a supply deficit. However, it’s also too early to start betting on a rally. Therefore, we’re likely to see a sideways to lower trade over the near-term unless hot weather return unexpectedly. Hurricanes in the Gulf of Mexico could play a role if they target natural gas platforms and facilities. But as we saw last week in the crude oil market, any spike higher in prices could end quickly once the situation is assessed.

According to Platts Analytics, even with slightly better builds over the next two weeks, they will still be below the five-year average and will further widen the deficit.

Platts is also saying it expects “storage to peak at approximately 3.3 Tcf before the switch to withdrawals in early November. If so, it would be the lowest level to start the heating season since 2005, when stocks peaked at 3.2 Tcf. A colder-than-normal winter could push up prices due to the low inventory despite production gains.”

Time is the biggest factor driving prices. There is no doubt we’re going to start the winter heating season with a deficit. However, the timing isn’t right yet for any aggressive buying. Furthermore, if you want to play a winter rally, you have to move out to the December to March futures contracts.

Price of Gold Fundamental Weekly Forecast – Weak Dollar Could Trigger Breakout Over $1212.10

Gold prices fell last week, driven lower by a stronger U.S. Dollar and rising U.S. Treasury yields. The catalysts behind the move were trade worries and stronger-than expected U.S. economic data, which solidified the chances of additional rate hikes by the Fed. Trade worries drove investors into the dollar for safe-haven protection. Rising rates made the dollar a more attractive investment for foreigners.

For the week, December Comex gold settled at $1200.40, down $6.30 or -0.52%.

Gold was pressured and the dollar underpinned on escalating U.S.-Sino trade tensions, although the Greenback has lost some of its steam recently due to increases in rival safe haven currencies like the Japanese Yen and Swiss Franc.

Traders are on edge because a public consultation period for proposed U.S. tariffs on an additional $200 billion for Chinese imports ended at 0400 GMT on Friday and the Trump administration can impose those tariffs at any moment, though there is no clear timetable.

Rising Treasury yields also weighed on gold prices. The yield on the benchmark two-year Treasury note jumped to its highest level in more than 10 years Friday after the economy added more jobs than expected in August and wages posted their biggest increase of the post-recession period.

According to the Labor Department, nonfarm payrolls grew by 201,000 in August while average hourly earnings rose 2.9 percent for the month on an annualized basis. On a monthly basis, wages jumped 10 cents or 0.4 percent. Economists had expected payrolls to increase 191,000 and wages to increase 0.2%. The unemployment rate held steady at 3.9%.

Forecast

The focus for gold traders will remain on the U.S. Dollar. Those betting on higher gold prices are also betting on a lower U.S. Dollar. The dollar could struggle over the near-term because other central banks are becoming hawkish. Of particular concern is the British Pound and the Euro, which could firm because of central bank tightening.

Additionally, recent government data showed that professional traders are beginning to lighten up on their record net short positions in gold. Furthermore, a recovery in emerging market currencies could also weigh on the dollar, pushing gold prices higher.

Other headwinds for the dollar could come from a rising Japanese Yen. The Japanese currency was bolstered late last week after President Trump suggested he would next take up trade issues with Japan.

U.S. economic data could also influence gold prices this week. On Wednesday, the U.S. will release the Producer Price Index (PPI). It is expected to rise 0.2% from 0.0% last month. The Consumer Price index (CPI) is expected to show an increase of 0.3%. Core CPI is expected to rise 0.2%.

Core Retail Sales are forecast to have risen 0.5%. Retail Sales are expected to have risen 0.4%.

The charts indicate that December Comex gold is building a support base. The trigger point for an acceleration to the upside this week is $1212.10. This move, if helped by strong buying volume, could drive prices to $1250.60.

Oil Price Fundamental Weekly Forecast – Gasoline Glut, Iran Sanctions Balancing Prices

U.S. West Texas Intermediate and international benchmark Brent crude oil futures settled lower last week amid concerns over future demand. Worries flip-flopped from the prior week when traders were primarily concerned over supply issues. The shift in the price action and the fundamentals suggests traders are once again trying to find a balance point on the charts.

For the week, October WTI crude oil settled at $67.75, down $2.05 or -2.94% and December Brent crude oil closed at $76.47, down $0.93 or -1.22%.

Supply Worries

Throughout the week, the price action was influenced by concerns over rising supply from OPEC and the United States. Output from OPEC rose by 220,000 barrels per day (bpd) between July and August, to a 2018-high of 32.79 million bpd. The rise in output was fueled by a recovery in Libyan production and strong Iraqi exports.

Traders were saying that rising U.S. production could become an issue after Baker Hughes reported on August 31 that U.S. drillers added oil rigs for the first time in three weeks. The rig count increased by 2 units to 862. Furthermore, in August, the U.S. Energy Information Administration reported that U.S. crude oil production hit a record 11 million bpd.

Demand Concerns

One issue bothering bullish traders is the risk of declining Chinese demand for oil. According to CNBC, Middle East officials are worrying more about China at this time than Iran’s supply curbs as a result of U.S. sanctions.

Bahrain and Oman’s oil and gas ministers both told CNBC Monday that China’s demand for oil could decline on the back of its trade dispute with the U.S. that has seen tariffs imposed on a wide range of Chinese imports.

The bearish tone spilled over to Thursday with the release of the U.S. Energy Information Administration’s weekly inventories report.

Weekly EIA Inventories Report

On Thursday, the markets were driven lower by a two-sided government inventories report. The U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to August 31, the lowest since February 2015. This was the bullish news.

The bearish news, which drove prices sharply lower, was a 1.8 million barrel rise in gasoline stocks. Distillate stockpiles also contributed to the losses with a 3.1 million barrel increase during the week-ending August 31.

The EIA also said U.S. crude oil production last week remained at a record 11 million barrels per day (bpd), a level it has largely been at since July.

In other news, according to Baker Hughes, the total of active crude oil rigs fell by 2 to 860.

Forecast

The price action last week suggests that traders are still trying to find a balance point on the charts to satisfy both bullish and bearish traders. Since mid-August, crude oil has been driven higher by worries about a supply shortage and a weakening U.S. Dollar. Last week, prices were driven lower by too much supply and worries over global demand. A stronger dollar and weaker U.S. equity markets also weighed on prices.

I expect the headlines to continue to produce both bullish and bearish results so prices are likely to continue to be rangebound until the start of the Iran sanctions on November 1.

The wild card the next few weeks could be supply disruptions due to potential hurricane activity in the Gulf of Mexico. As of early Friday, traders are tracking as many as three tropical storms in the mid-Atlantic. It’s a little too early to tell if or when they will make landfall, but it is something to start watching.

Silver Weekly Price Forecast – Silver markets continue to grind lower

Silver markets broke down during the week again, as we continue to see a lot of bearish pressure. At this point, it is oversold, and we have seen support at the $14 level. By turning around the way we have, it looks likely to try to bounce from here, but quite frankly we need a bit of a break from US dollar strength. As long as the US dollar continues to strengthen, that will continue to weigh upon silver. However, I think there is a short-term bounce ready to happen. I think that the $15 level above will continue to offer resistance. If we can break above the $15 level, then the market could go much higher, perhaps reaching towards the $16 level after that. That’s an area that was previous support, and it should now be significant resistance. I would be surprised to see silver break above there anytime soon.

If we did break down below the $14 level, that would be a very ominous signal for the future of silver, perhaps sending it down to the $12 level rather quickly. At that point, I think there’s even more support based upon church going back several years. I expect to see a bounce over the next several weeks, but if we don’t get one it will be because of the greenback itself. Silver is getting hammered week in and week out, and a simple “dead cat bounce” is probably do. That doesn’t mean I would buy it in a leveraged form, just that you make it an opportunity to sell CFDs at higher levels.

SILVER Video 10.09.18