Speculators Rotate Towards Crude Oil and Natgas

A week that saw continued stock market weakness and rising bond, albeit at a much reduced pace after Jerome Powell pledged to do what’s necessary to reduced inflation while at the same time prolonging the economic expansion. The dollar traded weaker ahead of last Wednesday’s, thereby supporting a strong rally in commodities led by energy and industrial metals.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The Bloomberg Commodity Index jumped 2.2% during the reporting week to January 11 with a 6.3% gain in energy and 1.2% in industrial metals offsetting weakness across the agriculture sector which with the exception of coffee and cocoa saw broad losses led by sugar and hogs. Responding to these developments, money managers accumulated fresh longs across the energy sector, not least in crude oil, while cutting back on exposure across all other sectors.

In crude oil, the combined net long in Brent and WTI jumped by the most since November 2020 to reach 538k lots or 538 million barrels, still well below the most recent peak at 737k lots from last June. A US cold blast helped send natural gas up by 14% and the net long up by 30% to 163k lots.

In the other sectors of metals and agriculture, speculators opted to reduce their exposure with the few exceptions being soybeans, cocoa and coffee. Rangebound HG copper as an example saw its net long reduced by 15% to 22.2k lots, primarily due to increased short selling, some of which were probably stopped out during the failed breakout attempt above $4.47 towards the end of last week. Gold and silver both saw net selling , while the platinum short jumped 86%.

In agriculture, speculators increased their long positions in all three soybeans contract, the corn long was cut by 6% while the CBOT wheat short jumped by 40% to an 18-month high. In softs, the sugar long continued to be cut, this time by 61.6k lots to 76.5k lots, and since hitting a cycle peak last August the net long has now been reduced by 72% to a near 18 month low. Cocoa flipped back to a small net long, the coffee long rose 4% while the cotton long was cut by a similar percentage.

Market comments from today’s Market Quick Take:

Crude oil (OILUSFEB22 & OILUKMAR22) trades mixed with Brent crude oil briefly challenging the double-top at $86.75, a seven-year high, before having a rethink as China GDP and retail sales slowed amid ongoing measures to curb the spreading of the omicron variant.

The prompt spreads in WTI and Brent remain elevated at 63 and 74 cents per barrel, thereby signaling rising tightness. Later this week monthly Oil Market Reports from OPEC on Tuesday and IEA on Wednesday will shed some further light on the current situation. Speculators, a little late to the recent rally, boosted bullish oil bets in WTI and Brent bets by the most in 14 months last week.

Copper (COPPERMAR22) slid the most in seven weeks on Friday as weaker-than-expected U.S. economic data (see below) together with weakness in China added to concerns that global growth may slowing amid rising inflation and the spreading virus. High Grade’s drop back below $4.50 triggered some stop loss selling from recently established longs before stabilizing overnight after China, the world’s top consumer, cut rates to support its economy. The worry over tight supplies, however, has not gone away and should cushion any short-term weakness.

Gold (XAUUSD) remains resilient despite Friday’s renewed surge in bond yields as the market continues to price in the prospect of rising US interest rates, potentially at a more aggressive pace than previously expected. Support continues to build in the $1800-area while a break above $1830 could see it target $1850 ahead of the November peak at $1877.

Forex

In forex, the major flow was selling of JPY, where the net short increased by 25.3k lot or the equivalent of $2.7bn. Additional selling of AUD (-2.1k lots) took the net short to a fresh record short at 91.5k lots. The EUR position flipped back to a net long after speculators bought 7.6k lots while the GBP short was reduced by 26%. Overall, the dollar long against ten IMM currency futures and the Doller Index rose by a small 1% to $23.5 billion.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Monday, Jan. 17 – Gold Price Goes Sideways

The gold futures contract lost 0.27% on Friday, Jan. 14, as it continued to fluctuate within a short-term consolidation. Recently gold price was gaining in a reaction to the weakening U.S. dollar, among other factors, and the market got close to the previous highs again. On Jan. 3 gold reached the local high of $1,833 before reversing lower, and on Friday, Jan. 7 it traded as low as $1,781.30. This morning the yellow metal is trading slightly above its last Friday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.1% higher this morning, as it is trading within a short-term consolidation. What about the other precious metals? Silver is 0.1% higher, platinum is 0.2% lower and palladium is 0.2% higher. So the main precious metals’ prices are virtually flat this morning.

Friday’s Retail Sales release has been much worse than expected at -1.9%. Today we will likely see low volatility market because of a bank holiday in the U.S.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, January 17

  • Tentative, Japan – BOJ Outlook Report, Monetary Policy Statement, BOJ Policy Rate
  • All Day, U.S. – Bank Holiday
  • All Day, Eurozone – Eurogroup Meetings

Tuesday, January 18

  • 5:00 a.m. Eurozone – German ZEW Economic Sentiment
  • 8:30 a.m. U.S. – Empire State Manufacturing Index
  • 10:00 a.m. U.S. – NAHB Housing Market Index
  • 4:00 p.m. U.S. – TIC Long-Term Purchases
  • Tentative, Japan – BOJ Press Conference
  • All Day, Eurozone – Eurogroup Meetings

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Here’s Why The Current Commodity Supercycle Will Be Much Bigger Than Ever Before

That’s the common view, amongst a long list of Wall Street banks from Goldman Sachs to JPMorgan. Last week, the world’s largest asset manager – Blackrock also joined the list with their prediction that Commodities will be the best performing asset class in 2022.

There are plenty of reasons why the world’s most powerful financial institutions are “extremely bullish” on commodities. These include rapidly surging global inflation, tightening supply vs soaring demand, logistical bottlenecks to ever growing supply chain issues – all combined with a very disruptive economic recovery from the pandemic that shows no signs of fading anytime soon.

And let’s not forget the switch toward a greener world, which is fuelling fierce demand for Commodities such as Aluminium, Copper, Cobalt, Nickel, Lithium and Uranium as economies race to decarbonize the world by 2030.

In fact, the early signs already look promising.

Last week, Aluminium prices hit an all-time record high. Whilst Nickel prices surged to a decade high. Elsewhere, Oil prices skyrocketed above $84 a barrel to hit an eight-year high.

The previous two supercycles took place in the 1970s and the 2000s. In both cases, the commodities sector resembled the identical tell-tale signs, as it’s displaying again right now.

All in all, the evidence is mounting that a new commodity supercycle is underway. It goes without saying, that commodities are definitely one of the hottest and most exciting asset classes to watch in 2022.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Gas Markets Lead Broad Commodity Strength in 2022

Commodities extended their strong start to the year this week and once again the energy sector was the main focus with tighter-than-expected supply driving crude oil higher while extreme roller-coaster rides best describe what unfolded in the natural gas market, both in the US and especially in Europe. Gold traded steady with easing yields and a weaker dollar supporting a surprisingly robust start to the year. The industrial metals sector jumped to a three-month high driven by rapidly declining inventories, supply disruptions and the prospect for Chinese stimulus.

On the macroeconomic front the commodity sector received some additional tailwind from a weaker dollar and softer bond yields after data showed US consumer prices reached a forty-year high at 7% in December, in line with expectations. China, in contrast, saw its CPI cool, and together with weak lending data it raised the prospect for the Chinese government speeding up the pace of some of the 102 major projects outlined in its 2021-25 development plan. Many of the areas pinpointed will required industrial metals in some sort as they focus on energy security, affordable housing, infrastructure developments and logistics.

Industrial metals sector

The industrial metals sector jumped to a three-month high on the prospect of rapidly declining inventories, supply disruptions and the mentioned prospect for Chinese stimulus raising the potential for a renewed upside push. Nickel led from the front after reaching a decade high on worries Indonesia, the world’s biggest shipper, will introduce export taxes on raw nickel exports to focus on expanding more profitable refining activities at home. The move by Indonesia, together with solid demand towards the production of electrical-vehicles batteries, may trigger a large supply deficit in 2022.

Following months of sideways trading, copper showed signs of breaking higher with the move above the $4.47-50 area of resistance-turned-support being driven by the prospect for rising demand towards electrification, tight supplies and signs China is stepping up its policy response to support a slowing economy, thereby off-setting recent macro risks, especially those stemming from China’s beleaguered property sector.

Agriculture sector

The agriculture sector has seen a mixed start to the year with tight supply markets such as coffee, cotton and soybeans trading higher while weakness in wheat has continued this month. Gathering pace after the USDA raised its forecast for world inventories, and after the International Grains Council forecast record world production in the upcoming 2022-23 season. Adverse weather developments in Brazil continues to negatively impact supplies of coffee and most recently also soybeans, although some beneficial rains are now expected in the growing areas.

Natural gas

Another roller-coaster week unfolded in global gas markets. The US natural gas first month futures contract jumped 14% on Wednesday to a six-week high, in response to frigid freezing weather before collapsing by 12% the following day on the prospect for weather turning milder and after the weekly stock draw was in line with expectations. Adding to this was the recent surge in LNG shipments to Europe and the once-insulated US market has become much more exposed to international developments, all of which supported the biggest weekly rise since November.

Meanwhile in Europe, the energy crisis rumbles on and despite an armada of LNG ships delivering increased supplies, prices remain at punitively and, for some, unaffordable prices. The mentioned arrival of LNG shipments and so far mild January weather has reduced the risk of blackouts and gas storage running empty, but uncertainties regarding the Nord Stream 2 pipeline and Russia’s intentions in Ukraine continue to trigger sudden spikes and high volatility.

On Thursday, the Dutch TTF benchmark gas future briefly traded below €70/MWh in response to the mentioned mild weather and strong overseas LNG supplies, before suffering a sharp reversal higher back above €90/MWh after Russia-US talks failed to ease fears of military action in Ukraine, a crossing point for around one-third of Russian gas to Europe.

Crude oil

Crude oil continues its month-long rally and while the early January jump was driven by temporary worries about supply disruptions in Libya and Kazakhstan, a bigger and more worrying development has become apparent during this time. Besides the surging Omicron variant having a much smaller negative impact on global consumption, it is the emerging sign that several countries within the OPEC+ group are struggling to raise production to the agreed levels that has supported prices this month.

For several months now we have seen overcompliance from the group as the 400,000 barrels per day of monthly increases was not met, especially due to problems in Nigeria and Angola. However, in their latest production survey for December, SP Global Platts found that 14 out of the 18 members, including Russia, fell short of their targets. According to Platts, the 18 members in December produced 37.72 million barrels a day, some 1.1 million barrels below their combined quota.

The rising gap between OPEC+ crude oil quotas and actual production has already been felt in the market with front month futures prices in both WTI and Brent having rallied stronger than later-expiring contracts. The spread or so-called backwardation between the first and the second Brent futures contract has risen from a low point at 20 cents a barrel in early December, when Omicron worries sparked a sharp correction, to 70 cents a barrel currently.

Global oil demand is not expected to peak anytime soon and that will add further pressure to available spare capacity, which is already being reduced monthly, thereby raising the risk of even higher prices. This supports our long-term bullish view on the oil market as it will be facing years of under investment with oil majors diverging some of their already-reduced capital expenditures towards low carbon energy production.

The timing of the next move up hinges on Brent’s short-term ability to close above $85.50/b, the 61.8% retracement of the 2012 to 2020 selloff, followed up by a break above the double top at $86.75. First though, the chart below increasingly points to the need for a period of consolidation or perhaps even a correction. But with firm fundamentals in play only a bigger than expected omicron development and stronger production can send the price sharply lower.

Gold

Gold traded higher thereby almost reversing the losses seen during the first few days of the month, when surging US bond yields triggered some weakness. Gold’s ability to withstand the 0.3% jump in US ten-year real yields at the start of the year has surprised some, but not us, given our focus on gold’s relative cheapness to real yields that had been rising since last July.

Having seen that misalignment disappear, gold then received additional support this week from a weaker dollar, not only against the JPY as risk sentiment rolled over, but also against the big EURUSD pair which managed to break free of sub-1.1400 resistance after US CPI jumped to the highest in decades.

Several hawkish comments from Fed members, led by Fed Vice Chair nominee Lael Brainard who said she was open to a March rate move, had limited impact on gold, the most interest and dollar sensitive of all commodities. It highlights our view that the gold market has by now fully priced in a succession of US rate hikes starting this March, and with the bond market being torn between a Fed-driven increase in bond yields against the rising risk of a bond-friendly economic slowdown, we see a much more balanced risk-reward situation emerging in gold.

Silver’s recent outperformance faded in response to some end-of-week profit taking among the industrial metals. For silver to shine and move higher towards the $23.90 resistance area, it first needs to break above $23.41, the 50% retracement of the November to December selloff. Gold meanwhile has once again established some support in the $1800 area ahead of key support at $1777. A break above the $1830-35 area could see it target $1850 ahead of the November peak at $1877.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Friday, Jan. 14 – Gold’s Short-Term Consolidation

The gold futures contract lost 0.32% on Thursday after gaining 0.5% on Wednesday, as it fluctuated following the recent advance and another breakout above the $1,800 level. Gold price was gaining in a reaction to the weakening U.S. dollar, among other factors, and the market got close to the recent highs again. Last week on Monday gold reached the local high of $1,833 before reversing lower, and on Friday it traded as low as $1,781.30. This morning the yellow metal is trading along its yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is virtually flat this morning, as it is trading within a three day-long consolidation. What about the other precious metals? Silver is 0.1% lower, platinum is 0.9% higher and palladium is 0.1% lower. So the main precious metals’ prices are virtually flat this morning.

Yesterday’s Producer Price Index release has been lower than expected at +0.2% m/m and the Unemployment Claims number release has been higher than expected at 230,000. Today we will get the important Retail Sales release, among others.

Where would the price of gold go following last Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, January 14

  • 8:30 a.m. U.S. – Retail Sales m/m, Core Retail Sales m/m, Import Prices m/m
  • 8:30 a.m. Eurozone – ECB President Lagarde Speech
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Preliminary UoM Consumer Sentiment, Preliminary UoM Inflation Expectations, Business Inventories m/m
  • 11:00 a.m. U.S. – FOMC Member Williams Speech

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Will Silver Prices See A Massive Short Squeeze Again In 2022?

There are plenty of reasons why Commodities are on the move from rapidly surging global inflation, tightening supply vs soaring demand, logistical bottlenecks to ever growing supply chain issues – all combined with a very disruptive economic recovery from the pandemic that shows no signs of end in sight.

At the same time, the switch toward a greener world is creating fresh demand for metals such as Copper, Lithium, Nickel and Silver, which are all key to the green energy revolution.

Copper, Lithium and Nickel prices have surpassed decade highs in recent months, amid an ongoing energy crisis, global supply chain issues and booming demand from China in their aggressive drive to ensure blue skies for the Winter Olympics.

However, Silver has a habit of lagging behind the rest of the commodities complex for extended periods of time – but once it gets going, it really gets going.

With Silver prices currently trading near $23 an ounce – it’s one of the most undervalued metals on earth right now and presents the biggest upside potential. In my opinion, Silver is definitely the best trade right now and the one to watch in 2022.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

Daily Gold News: Thursday, Jan. 13 – Gold Extended Gains After the CPI Release

The gold futures contract gained 0.48% on Wednesday after gaining over 1% on Tuesday. The market got closer to the recent local highs again following slightly higher than expected Consumer Price Index release. Last week on Monday gold reached the local high of $1,833 before reversing lower, and on Friday it traded as low as $1,781.30. This morning the yellow metal is trading within its yesterday’s daily trading range, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.1% lower this morning, as it is fluctuating following the recent advance. What about the other precious metals? Silver is 0.4% higher, platinum is 0.5% lower and palladium is 0.9% lower. So the main precious metals’ prices are mixed this morning.

The markets will be waiting for the Producer Price Index release at 8:30 a.m. We will also have the Unemployment Claims release at 8:30 a.m.

Where would the price of gold go following Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, January 13

  • 8:30 a.m. U.S. – PPI m/m, Core PPI m/m, Unemployment Claims
  • 1:01 p.m. U.S – 30-y Bond Auction

Friday, January 14

  • 8:30 a.m. U.S. – Retail Sales m/m, Core Retail Sales m/m, Import Prices m/m
  • 8:30 a.m. Eurozone – ECB President Lagarde Speech
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Preliminary UoM Consumer Sentiment, Preliminary UoM Inflation Expectations, Business Inventories m/m
  • 11:00 a.m. U.S. – FOMC Member Williams Speech

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Industrial Metals Off to a Strong Start on China Stimulus Signs

The prospects for rising electrical vehicle demand, tight supplies and signs China is stepping up its policy response to a slowing economy have all helped reduce some of the macro risks that has weighed on the market in recent months, especially those stemming from China’s beleaguered property sector.

In my December 1 update I highlighted the reasons why we see further upside for copper and other industrial metals in 2022, not least driven by the prospect for inelastic supply struggling to meet green transformation demand towards electrification. In another update from November 19, Peter Garnry, our head of Equity Strategy also highlighted how copper is an essential metal in our green transformation push driven by electric vehicles and upgrades to our electric grid infrastructure. 

In addition, the ongoing urbanisation in the world is also driving construction which is one of the key demand drivers for copper. Apart from describing how to get exposure to copper through futures, CFD’s and ETF’s, he also published a list of mining stocks topped with the six miners with the highest exposure to copper.

While the decarbonisation of the world remains a key long-term driver for industrial metals demand and with that the risk of even higher prices, the short-term focus remains squarely on China where decades of high growth has paused with some economists seeing growth falling below 5% in 2022. Chinese authorities are widely believed to have set their sights on a growth rate of at least five percent for this year, and the policy response to ensure that is now under way. Not least considering how economic and social stability are very important to the Communist Party in the run-up to its 20th National Congress, 2022, a key party meeting held every five years and due sometime during the second half.

China’s cabinet has already signaled a desire to speed up the pace of 102 major projects outlined in its 2021-25 development plan. Many of the areas pinpointed will required industrial metals in some sort as they focus on energy security, affordable housing, infrastructure developments and logistics. 

All developments that are likely to drive increasingly tight market conditions across the sector, not least nickel which has reached a decade high as demand from battery producers, due to strong EV trends, has put the spotlight on a tightening supply outlook. Despite months of worrying about the Chinese property market, copper stocks have remained low and as a result exposed to a pickup in demand. 

High Grade Copper has broken out of its recent range, and the move higher may now attract renewed momentum buying from money managers, who following months of sideways trading have cut their HG copper long to 26,000 lots, well below the 2020 high at 91,600 lots, and the record high from 2017 at 125,000 lots. If successful in defending the breakout above $4.47 per pound, only $4.56, the 61.8% retracement of the October to December selloff, and which is already being tested, stands in the way for a renewed upside attempt, initially towards the October high at $4.82/lb.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Wednesday, Jan. 12 – Gold’s Consolidation Ahead of Inflation Data

The gold futures contract gained 1.10% on Tuesday, as it got back above the $1,800 level again. The market was gaining in a reaction to the Fed Chair Powell’s testimony. Last week on Monday gold reached the local high of $1,833 before reversing lower, and on Friday it traded as low as $1,781.30. This morning the yellow metal is trading along its yesterday’s daily close, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% lower this morning, as it is fluctuating following Tuesday’s advance. What about the other precious metals? Silver is 0.3% lower, platinum is 0.1% lower and palladium is 0.5% lower. So the main precious metals’ prices are slightly lower this morning.

The markets will be waiting for the important Consumer Price Index release at 8:30 a.m. We will also have the Beige Book release at 2:00 p.m.

Where would the price of gold go following Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, January 12

  • 8:30 a.m. U.S. – CPI m/m, Core CPI m/m
  • 1:01 p.m. U.S. – 10-y Bond Auction
  • 2:00 p.m. U.S. – Beige Book, Federal Budget Balance

Thursday, January 13

  • 8:30 a.m. U.S. – PPI m/m, Core PPI m/m, Unemployment Claims
  • 1:01 p.m. U.S – 30-y Bond Auction

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

All Eyes On U.S Inflation Data For Clues On Gold’s Next Big Move – What’s Next?

That view was echoed by Federal Reserve Chair Jerome Powell on Tuesday, during his testimony before the U.S. Senate Banking Committee.

“This year, we see an economy where the labor market is recovering rapidly and inflation is well above 2%. This tells us is that the economy no longer needs or wants the highly accommodative policies we had in place to deal with the pandemic,” said Powell.

He also warned that “a recession is possible if the Central Bank tightens too much too quickly”.

Those comments by the Fed chief sent Gold prices rallying to a one-week high, as traders scrambled for safe havens.

Looking ahead, traders have now shifted their attention to Wednesday’s Consumer Price Inflation reading for clues on the markets next big move. The reading is expected to show a record setting gain of 7%, which would be the largest year-over-year jump in consumer inflation since the early 1980s.

Right now, Gold prices are trading sideways in a tight range, which ultimately indicates a big move is on the horizon. The only question now, is which way.

Daily Gold News: Tuesday, Jan. 11 – Gold Is Slightly Higher Ahead of Powell’s Testimony

The gold futures contract gained 0.08% on Monday, as it fluctuated following the recent rebound. On Friday the market reacted to mixed monthly jobs data release. On Monday a week ago gold reached the new local high of $1,833 before reversing lower, and on Friday it traded as low as $1,781.30. This morning the yellow metal is above the $1,800 level again, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% higher this morning, as it is trading closer to its Thursday’s daily high. What about the other precious metals? Silver is 0.5% higher, platinum is 0.8% higher and palladium is 0.7% higher. So the main precious metals’ prices are higher this morning.

Yesterday’s Wholesale Inventories release has been slightly higher than expected at +1.4%. Today we will have a testimony from the Fed Chair Powell at 10:00 a.m. The markets will be also waiting for tomorrow’s Consumer Price Index release.

Where would the price of gold go following Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Tuesday, January 11

  • 5:20 a.m. Eurozone – ECB President Lagarde Speech
  • 6:00 a.m. U.S. – NFIB Small Business Index
  • 9:00 a.m. U.S. – FOMC Member Mester Speech
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • Tentative, U.S. – IBD/TIPP Economic Optimism

Wednesday, January 12

  • 8:30 a.m. U.S. – CPI m/m, Core CPI m/m
  • 1:01 p.m. U.S. – 10-y Bond Auction
  • 2:00 p.m. U.S. – Beige Book, Federal Budget Balance

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

Not another 70 years: Republicans seek to douse Queen Elizabeth celebrations

(Repeats with no change to text)

LONDON (Reuters) -British republicans said on Monday they would launch a campaign to end the monarchy in the run-up to celebrations to mark Queen Elizabeth’s 70 years on the throne.

Elizabeth, 95, the world’s oldest and longest-reigning monarch, will mark her seventh decade as sovereign next month and on Monday Buckingham Palace detailed plans for four days of celebrations for her Platinum Jubilee in June.

But anti-monarchy group Republic used the occasion to say it would begin a “Not Another 70” campaign to call for an end to the historic institution.

“While a vocal minority will want to celebrate the queen’s seventy year reign, we must all start looking to the future. The prospect of King Charles is not a happy one, and there is a good, democratic alternative on offer,” Republic’s Graham Smith said.

“It’s time to have a serious debate about our constitution, accept that Charles is not the best the country has to offer, and that as a nation we are quite capable of choosing our head of state.”

Polls indicate the vast majority of people in Britain support the monarchy and the queen herself is hugely popular. But there is not as much support for her eldest son and heir Charles, and surveys suggest there is growing republican sentiment among younger Britons.

(Reporting by Michael Holden; editing by Guy Faulconbridge)

Speculators Initial Reaction to Stock and Bond Market Rout

This COT report highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, January 4. A week where a rout in tech shares dragged US stocks from all-time highs on worries about higher interest rates amid a rout in US bonds. The commodity sector traded higher, primarily supported by the industrial metal and soft sector, with the best individual performances being crude oil, soybeans, coffee and cotton.

In terms of market action around New Year the Nasdaq lost 1.3% while the higher concentration of value stocks saw the S&P 500 trade close to unchanged. The dollar held steady while US ten-year yields jumped 17 basis points to 1.65%.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The commodity sector traded higher, primarily supported by the industrial metal and soft sector, with the best individual performances being crude oil, soybeans, coffee and cotton. Somewhat offsetting these were losses in natural gas, palladium, wheat and sugar.

Speculators reaction to these developments were relatively muted, most likely due to the time of year with books barely reopened before the reporting week ended last Tuesday. Overall the energy sector saw buying led by Brent crude oil and gasoline. Metals were mixed with gold selling being offset by silver buying, the platinum short  was halved while copper length rose by 27%.

The agriculture sector saw strong demand for soybeans in response to Brazil crop worries while ample supply saw the CBOT wheat short rise by 69% to a six-month high. In softs, selling of sugar took the net long to a 17-month low while the 7% increase in the cotton long lifted the long/short ratio to a very unhealthy 151 longs per each short.

Latest comments from today’s Market Quick Take:

Crude oil (OILUKMAR22 & OILUSFEB22) trades steady with focus on robust demand and so far, a limited fallout from the omicron surge, together with the prospect for OPEC+ struggling to deliver the promised production hikes as several producers have started to hit their limit, some due to lack of investments.

Countering the short-term threat of even higher prices are easing supply disruptions in both Libya and Kazakhstan, but overall, demand remains robust as signaled in the six-month futures spread in Brent which has more than doubled since the December, omicron demand worry low point. Focus this week on EIA’s STEO and US CPI, as well as omicron developments, especially in China where the zero-tolerance approach may hurt demand through lockdowns.

Gold (XAUUSD) had a relatively strong first week of trading with the massive 30 bp surge in US ten-year real yields to a six-month high at –0.78% being partly offset by a softer dollar and stocks as well as geopolitical risks, and rising inflation as seen through higher wage pressures in Friday’s US job report.

Yields have climbed further overnight with the market starting to price in four Fed rate hikes in 2022, starting as early as March. Silver (XAGUSD) meanwhile continues to find support around $22 ahead of the key double bottom at $21.42 while resistance can be found at $22.65. Gold remains challenged as long it stays below the triple top at $1830 and so far, $1783 has prevented an even deeper selloff.

Forex

In forex, the speculative flows were mixed resulting in the combined dollar long against ten IMM currency futures and the Dollar index holding steady at $23.2 billion, with buying of EUR, CHF and GBP being offset by selling of JPY and AUD.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Friday, Jan. 10 – Gold Price Still at $1,800

The gold futures contract gained 0.46% on Friday following Thursday’s decline of almost 2%. The market reacted to mixed monthly jobs data release. On Monday a week ago gold reached the new local high of $1,833 before reversing lower, and on Friday it traded as low as $1,781.30. This morning it is trading slightly higher, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.2% higher this morning, as it is trading along the $1,800 level again. What about the other precious metals? Silver is also 0.3% higher, platinum is 0.1% higher and palladium is 1.2% higher. So the main precious metals’ prices are slightly this morning.

Friday’s U.S. Nonfarm Payrolls release has been worse than expected at +199,000 and the Unemployment Rate release has been better than expected at 3.9%. Today we will get the Wholesale Inventories release at 10:00 a.m., but the markets will be waiting for tomorrow’s ECB’s and Fed’s speeches.

Where would the price of gold go following Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The first chart shows price paths 5 days before and 10 days after the NFP release. The last three cases are marked with dashed lines. Gold gained 1.18% in December and in November it gained 1.92%.

The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, January 10

  • 10:00 a.m. U.S. – Final Wholesale Inventories m/m

Tuesday, January 11

  • 5:20 a.m. Eurozone – ECB President Lagarde Speech
  • 6:00 a.m. U.S. – NFIB Small Business Index
  • 9:00 a.m. U.S. – FOMC Member Mester Speech
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • Tentative, U.S. – IBD/TIPP Economic Optimism

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Where Are Commodity Prices Heading In 2022?

As we head into 2022, that trend is definitely set to continue.

Last week, Goldman Sachs signalled in their latest report that “the best place to be in 2022 is commodities” – forecasting huge gains ahead for the entire sector amid a supercycle that has the potential to last for a decade.

There are plenty of reasons why a long list of Wall Street banks are “extremely bullish” on commodities. These include rapidly surging global inflation, tightening supply vs soaring demand, logistical bottlenecks to ever growing supply chain issues – all combined with a very disruptive economic recovery from the pandemic that shows no signs of fading anytime soon.

The previous two supercycles took place in the 1970s and the 2000s. In both cases, the commodities sector resembled the identical tell-tale signs, as it’s displaying again right now.

If history is anything to go by, then the stage is almost certainty set for commodity prices to skyrocket and reach new all-time highs in the months ahead.

Looking ahead, the major macro event that traders will be watching closely this week for clues on the markets next big move will be U.S Consumer Price Inflation data. The reading is expected to show a record gain of 7%, which would be the largest year-over-year jump in consumer inflation in over 40 years.

Also on the radar will be Producer Price Inflation data as well as Fed Chair Jerome Powell’s nomination hearing before U.S. Senate Banking Committee, which always has the potential to move the markets significantly.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

From puddings to trees, palace sets out queen’s Jubilee celebrations

LONDON (Reuters) – Inventing puddings and planting trees are just some of the things Britons are invited to do for Queen Elizabeth’s Platinum Jubilee, events to mark her 70th anniversary on the throne that culminate in a “blockbuster weekend of celebrations” in June.

The 95-year-old, the longest-reigning monarch in British history, will add another milestone when she marks her Platinum Jubilee in February, with the government planning four days of celebrations from June 2-5.

Buckingham Palace said Britons aged 8 and over were encouraged to apply for a baking competition to find the “perfect Platinum Pudding recipe” dedicated to the queen, while some could also “plant a tree for the Jubilee”.

During the long holiday weekend in June, people will be able to see the trooping the colour https://www.reuters.com/world/uk/uks-queen-joined-by-cousin-trooping-colour-event-2021-06-12 in her birthday parade, a service of thanksgiving in London’s St Paul’s Cathedral, a party at the Palace among other events.

In November, culture minister Oliver Dowden said the four days of celebrations would be “a celebration to remember”.

Elizabeth, who is also the world’s current oldest and longest-reigning monarch, became queen on Feb. 6, 1952, on the death of her father George VI.

In September 2015, she overtook the length of time her great-great-grandmother Queen Victoria had spent on the throne, remarking that the historical moment was “not one to which I have ever aspired”.

The plans are similar to those which marked the queen’s 60th anniversary in 2012 when Britain held four days of events in her honour, including a huge flotilla on the River Thames and capped off with a star-studded concert at Buckingham Palace.

(Reporting by Elizabeth Piper; Editing by Frank Jack Daniel)

Surging Energy and US Yields the Early 2022 Focus

The energy sector meanwhile remained immune to these developments with tight supply driving crude oil and gas sharply higher while industrial metals traded mixed with focus on developments in China, where the zero-tolerance policy on Covid-19 could stifle consumer spending at a time where the economy is already slowing.

NOTE: This week’s update was written and published before Friday’s US job report

Turbulent best described the first few trading days of 2022, and just like the nervous start to 2021, it was a sharp rise in US Treasury yields that provided the initial directional inspiration across the different asset classes, including commodities such as gold and silver. The energy sector meanwhile remained immune to these developments with tight supply driving crude oil and gas sharply higher while industrial metals traded mixed with focus on developments in China, where the zero-tolerance policy on Covid-19 could stifle consumer spending at a time where the economy is already slowing.  

The jump in sovereign bond yields from Japan to Germany and the UK gathered momentum after minutes from the Fed’s December meeting raised expectations for an accelerated pace of Fed rate hikes to combat inflation while the FOMC also discussed ways to outright reduce its balance sheet, thereby further removing some of the oxygen that had been driving stock markets sharply higher during the past three years. 

These moves signaled an interest from the Fed to guide bond yields higher, not only at the front but across the whole curve. The benchmark ten-year yield jumped to within touching distance of the 1.77% high from last April.

Precious metals

Precious metals with gold in particular being one of the most interest rate-sensitive commodities, traded lower, but not to the extent that the 0.3% jump in US ten-year real yields would otherwise dictate. Part of the explanation being gold’s relative cheapness to real yields during the past six months while a softer dollar, increased stock market fluctuations as well as virus and geopolitical risks also helped off-set what otherwise could have been a very challenging start to the year.

Silver meanwhile was troubled by the slump in risk appetite as well as the weakness in bellwether industrial metals such as copper. After showing some end-of-year strength, the white metal succumbed to fresh technical selling which helped lift its relative cheapness to gold to a three-week high above 81 ounces of silver to one ounce of gold.

The outlook for 2022 remains clouded with most of the bearish gold forecasts being driven by expectations for sharply higher real yields. Real yields have, as seen below, throughout the past few years shown a high degree of inverse correlation with gold, and it’s the risk of a hawkish Fed driving yields higher that currently worries the market.

In our first precious metal update for the year titled “Gold and silver may spring a 2022 surprise” we highlighted the reasons why gold’s negative performance last year was on balance a good one from a relative perspective and what needs to happen for the metal to spring an upside surprise in 2022.

Gold remains stuck around $1800 within a wide $1740 to $1860 range, and key to the short-term direction is how it balances the opposite pulls mentioned from surging yields and raised market uncertainty.

Industrial metals

Industrial metals were mixed with HG copper trading lower in response to the general loss of risk appetite and continued worries about the outlook for the Chinese property market, as well as the short-term growth impact from surging omicron cases leading to shutdowns across China. Aluminum, one of the most energy-intensive metals to produce, rose as recent supply disruptions added further fuel to expectations of a growing supply deficit this year. Not least considering the outlook for slowing capacity growth in China as the government steps up its efforts to combat pollution, and ex-China producers for the same reasons being very reluctant to invest in new capacity.

While the energy transformation towards a less carbon-intensive future is expected to generate strong and rising demand for many key metals, the outlook for China is currently the major unknown, especially for copper where a sizable portion of Chinese demand relates to the property sector.

Considering a weak pipeline of new mining supply, we believe the current macro headwinds from China’s property slowdown will begin to moderate through the early part of 2022. Not least considering the prospect of the PBOC and the government, as opposed to the US Federal Reserve, is likely to stimulate the economy, especially with focus on green transformation initiatives that will require industrial metals. With inventories of both copper and aluminum already running low, development could in our opinion be the trigger that sends prices back towards and potentially above the record levels seen last year. Months of sideways price action has cut the speculative length close to neutral, thereby raising the prospect for renewed buying once the technical outlook improves.

Crude oil

Crude oil traded higher throughout the first few trading days, thereby extending the end of December rally, while also going against the general trend of risk aversity seen across other commodities and asset classes. Supply disruptions in Libya, down more than 400,000 barrels a day compared with 2021, and geopolitical risks associated with rising fuel protests in Kazakhstan, a 1.9 million barrels a day producer, helped off-set any short-term demand worries related to surging virus cases around the world. Not least in China, where its aggressive handling of its worst Covid-19 outbreak since Wuhan could drive some short-term demand weakness.

OPEC+ agreed to maintain the current pace of monthly increases of 400,000 barrels a day and the market, despite the outlook for an emerging supply surplus this quarter, rose with the prospect of several producers not being able to meet their production targets. Besides the prospect of a global supply surplus, according to both the International Energy Agency as well as OPEC, emerging during the early parts of 2022, the futures market is also sending a signal about reduced participation.

The open interest which measures the total exposure, long and short, held by traders in WTI and Brent has fallen to the lowest in more than five years, and since the December 1 low point it has dropped further in recent weeks despite a price rally close to 20%. Perhaps a sign that many investors and traders remain skeptical about oil’s upside potential, at least during the early parts of 2022.

However, despite these signals we maintain a long-term bullish view on the oil market as it will be facing years of likely under investment with oil majors losing their appetite for big projects, partly due to an uncertain long-term outlook for oil demand, but also increasingly due to lending restrictions being put on banks and investors owing to a focus on ESG and the green transformation.

Global oil demand is not expected to peak anytime soon and that will add further pressure on spare capacity, which is already being reduced on a monthly basis, courtesy of OPEC+ production increases. Adding to this the prospect for a resumption of inventory declines into the second half and the risk of higher energy prices keeping inflation elevated, is the most likely route prices will take in 2022.

European enery crysis

The European energy crisis shows no sign of finding a solution with the direction of gas and with that power prices remaining at the mercy of weather developments, the level of Russian supplies as well as the pace of LNG shipments reaching Europe.

During the past couple of weeks, the gas market has witnessed an extreme roller coaster ride. Before Christmas, very cold weather across Europe and the UK helped send EU benchmark gas to a level that was ten times higher than the long-term average. This was followed by a 65% price collapse in response to news that multiple LNG ships had changed course from Asia and South America to Europe in order to sell their gas at the highest price on the planet. A sudden turn towards milder-than-normal winter weather also helped, at least in the short term, to alleviate current concerns about very low stock levels of gas.

Into January and the price of gas has resumed its ascent, again with the prospect of colder weather driving increased demand for heating and unseasonably very low supplies from Russia, especially via two important pipelines through Poland and Ukraine. Whether Russia is deliberately keeping supplies down due to Nord Stream 2 pipeline approval delays and the Ukraine border crisis is difficult to say. But it highlights failed energy and storage policies in Europe and the UK which have left the region very dependent on imports of gas, especially given the still unreliable level of power generation from renewable sources.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Daily Gold News: Friday, Jan. 7 – Gold Remains Below $1,800 Before NFP Release

The gold futures contract lost 1.97% on Thursday following Wednesday’s gain of 0.6%, as it retraced its recent advance after breaking above the $1,800 level. The market reacted to the recent economic data releases and stock markets’ sell-off. On Monday gold reached the new local high of $1,833 before reversing lower. This morning it is trading along its yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.1% higher this morning, as it is trading trading slighlty below the $1,800 level. What about the other precious metals? Silver is also 0.1% higher, platinum is 0.2% higher and palladium is 1.4% higher. So the main precious metals’ prices are virtually flat this morning.

Yesterday’s U.S. Unemployment Claims release has been slightly worse than expected at 207,000, and the ISM Services PMI release has been worse than expected at 62.0. Today we will get the important monthly jobs data announcement.

Where would the price of gold go following today’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 40-month-long period of time that contains of forty NFP releases. The first chart shows price paths 5 days before and 10 days after the NFP release. The last three cases are marked with dashed lines. Gold gained 1.18% in December and in November it gained 1.92%.

The following chart shows the average gold price path before and after the NFP releases for the past 40 months. The market was usually advancing ahead of the release day and closing 0.26% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, January 7

  • 8:30 a.m. U.S. – Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m
  • 8:30 a.m. Canada – Employment Change, Unemployment Rate

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Daily Gold News: Thursday, Jan. 6 – Gold Price Continues to Fluctuate Along $1,800

The gold futures contract gained 0.58% on Wednesday after gaining 0.8% on Tuesday. The market retraced almost all of its Monday’s sell-off, as it bounced from the $1,800 level again. On Monday gold reached the new local high of $1,833 before selling off. This morning the yellow metal is trading lower again following stock markets’ declines, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.6% lower this morning, as it is trading along the $1,800 level again. What about the other precious metals? Silver is 2.4% lower, platinum is 0.9% lower and palladium is 0.4% higher. So the main precious metals’ prices are lower this morning.

Yesterday’s U.S. important ADP Non-Farm Employment Change release has been much better than expected at +807,000. But the stock markets sold off following the FOMC Meeting Minutes release. Today we will get the Unemployment Claims and ISM Services PMI releases, among others. Investors will be waiting for tomorrow’s monthly jobs data announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, January 6

  • 8:30 a.m. U.S. – Unemployment Claims, Trade Balance
  • 10:00 a.m. U.S. – ISM Services PMI, Factory Orders m/m

Friday, January 7

  • 8:30 a.m. U.S. – Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m
  • 8:30 a.m. Canada – Employment Change, Unemployment Rate

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

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

 

Minutes Reveal Interest Rate Hikes Are Coming Sooner and at a Faster Velocity

All three major indices had strong selloffs immediately following the release of the November minutes. Concurrently the dollar lost value and did both gold and silver.

Major indices sustain a substantial decline in value

The Dow Jones industrial average opened at 36,722.60 and traded to an intraday high of 36,952.65, a new record high before succumbing to selling pressure. By the time the dust settled the Dow had lost 1.07%, or 392.54 points, and is currently fixed at 36,407.11 points.

NASDAQ Composite daily chart

After reaching an all-time intraday high yesterday the Standard & Poor’s plummeted as the bullish market sentiment in U.S. equities quickly waned. The S&P 500 lost 1.94% today and the index is currently fixed at 4700.58. By far the greatest carnage in U.S. equities was found in the NASDAQ composite which lost 3.34% and is currently fixed at 15,100.17 points.

Precious Metals – lower prices in gold and silver, and higher palladium and platinum

Gold prices, daily chart

Gold prices had solid gains as trading began in New York this morning. After opening at $1815.20. the bullish market sentiment took gold as high as $1830 and then reversed to as participants bid the precious yellow metal lower. Any solid gains were short-lived as gold prices plummeted from $1830 to $1808.20. As of 5:42 PM EST gold futures basis, the most active February 2022 contract is down $5.10 and currently fixed at $1809.50. Silver lost 1.09% and like gold initially gained value after opening at $23.095. The precious white metal also sold off strongly immediately following the release of the November minutes. Silver is currently down 0.241 cents and fixed at $22.81.

Both platinum and palladium scored modest gains today with platinum gaining $11.60, and palladium gaining $8.30.

The price decline in multiple financial asset sectors such as stocks, gold, and silver reacted quickly as the statement revealed a more hawkish Federal Reserve. The new addendum showed a major change in their monitory policy.

In essence, said that interest rate hikes would begin quicker than anticipated, they also said that the rate hikes would be at a faster pace than they previously had expected.

In an interview with MarketWatch, Brien Lundin, editor of Gold Newsletter said that “The Fed minutes were hawkish, showing greater concerns that inflation would be persistent and generally indicating an accelerated schedule for rate hikes. Thus, they were bearish for gold, as confirmed by the immediate market reaction in the gold price.”

Recently there’s been strong support for gold pricing based upon real concerns about the surging cases of the Omicron variant of Covid-19. The spike is been so dramatic that yesterday it would be reported that approximately 1 million US individuals tested positive for the virus. However, the financial markets reacted to today’s minutes with much more intensity than their focus upon the potential economic effect due to the surging number of new infections.

On Friday market participants will once again intensely focus upon the Federal Reserve as they conclude their first policy meeting in 2022. In particular, they will attempt to glean subtleties in the change of language as well as information on the timelines giving more specifics to the Federal Reserve’s monetary policy moving forward.

Lastly, the minutes released today address the question that gave insight into the asset balance sheet of the Federal Reserve which is now swelled above $8.5 trillion. This is roughly double the assets in the Federal Reserve balance sheet after the last round of quantitative easing in 2013.

Balance Sheet

Wishing you as always good trading and good health,

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Gary S. Wagner