Gold Price Prediction – Prices Break Out on Dollar Break Down

Gold prices surged higher on Thursday as the dollar headed south. U.S. Treasury yields moved lower despite a decline in jobless claims. Initial claims for unemployment benefits fell sharply last week, sinking below 500,000 for the first time since the Covid crash.

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Technical analysis

Gold prices moved higher on Thursday breaking out above trend line resistance. Support is now seen near former resistance, a downward sloping trend line near 1,799. Target resistance is seen near the Fibonacci retracement level of 38.2%, which is seen near 1,828. Additional support is seen near the 10-day moving average at 1,783 and then the 50-day moving average at 1,745. The 10-day moving average has crossed above the 50-day moving average, meaning that a short-term uptrend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs when the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Claims Fall More than Expected

First-time claims for unemployment insurance fell below 500,000 for the first time since the pandemic crisis. Initial claims totaled 498,000 for the week ended May 1, against the estimate of 527,000. That was down from the previous week’s total of 590,000, which saw a substantial upward revision from the initially reported 553,000. However, continuing claims actually ticked higher last week, rising 37,000 to just below 3.7 million. The four-week moving average for claims edged down to 3.68 million, the lowest since March 28, 2020, just as mass layoffs were beginning to combat the spreading coronavirus.

Natural Gas Price Prediction – Prices Whipsaw Ahead of Inventory Report

Natural gas prices whipsawed on Wednesday, closing lower on the session, unable to push above resistance. This movement comes ahead of the Thursday inventory report from the Department of Energy. Expectations are for 65 Bcf build-in stockpiles, according to survey provider Estimize.

Technical Analysis

Natural gas prices moved higher lower on Wednesday after testing resistance levels and failing. Target resistance is seen near the February highs at 3.06. Short-term resistance is seen near an upward sloping trend line that comes in near 2.98. Support is seen near the 10-day moving average at 2.91. The 10-day moving average crossed above the 50-day moving average, which means that a medium-term uptrend is now in place. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is positive but decelerating as the MACD (moving average convergence divergence) histogram prints in positive territory with a sliding trajectory which points to consolidation.

The total supply of natural gas remains mostly flat. According to data from the EIA, the average total supply of natural gas rose slightly by 0.3% compared with the previous report week. Dry natural gas production grew by 0.9% compared with the previous report week. Average net imports from Canada decreased by 9.5% after a large increase last week. Net imports from Canada averaged 4.7 Bcf per day this week compared with 5.1 Bcf per day last week.

Gold Forecast – Gold Prices Breaking Out Above $1800 Confirming Next Up leg

Gold is above $1800 and confirmed last week’s outlook for a crucial 40-day cycle low. Prices remain on track for a retest of the $2000 level by July. The next 40-day low is not due until late June, so we see plenty of room for upside near-term.

GOLD FUTURES DAILY: The mid-term gold cycle bottomed on day 37, and prices are just 5-days into a new upswing. With futures clearly above $1800, the uptrends in metals in mines should begin to accelerate.

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Note- The 40-day cycle in gold bottomed on day 37 – slightly early but not surprising given the previous cycle extended to 41-days. On average, we see cyclical turning points about every 39-days.

GOLD MINERS (GDX): After an agonizing 7-month decline, gold miners formed a major bottom in March. In fact, we believe GDX may never return to the $30.00 level again for the remainder of this 10-year bull market.

Currently, miners are attacking the April high ($36.83) and the all-important 200-day MA ($36.99). Once prices push above $37.00, then I think there is a good chance shorts will begin to cover, and we could get the 5%+ bullish recognition day I’ve been expecting. Prices overwhelmingly confirmed last week’s 40-day cycle low, and we are only 4-days into a new upcycle.

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bullish recognition day is when the market suddenly acknowledges a trend change. Traders that were still looking lower get caught on the wrong side and frantically begin to cover. In GDX, this usually looks like a robust 5%+ up day on big volume.

We see tremendous value in high-quality gold producers. These miners are minting money (real money – not Dogecoin) and are incredibly undervalued, in our opinion. Our favorite producer currently is Kirkland Lake.

Silver and platinum are also primed and could explode higher over the coming weeks. Our Premium Metals Portfolio has been accumulating quality miners throughout the pullback and is well-positioned for this next advance.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

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

Silver Price Forecast – Silver Markets Continue Bullish Pressure

Silver markets initially drifted a little bit lower during the trading session on Thursday but then broke higher to reach towards the $27.35 level. The market certainly looks as if it is on its way to the $28 level, but it is obvious that the market has a lot of noise involved in it. After all, the silver markets do tend to be very choppy to say the least, so it does make quite a bit of sense that we would continue to see volatility. With that being the case, the market is likely to continue seeing short-term pullbacks as potential buying opportunities and of value.

SILVER Video 07.05.21

Underneath, we have the 50 day EMA sitting at the $26 level, and that could of course attract a lot of support and buyers get involved. If we break down below the $26 level, it could open up a move down to the 200 day EMA underneath. We are in an uptrend, there is nothing on this chart that tells us that we should be looking for buying opportunities only, and a break above the $28 level would open up the possibility of a move to the $30 level. All things been equal, I do think that we get there and perhaps even higher as we continue to play the “reflation trade.” Silver has a major industrial component built into it, so it certainly makes a bit of sense that we would be looking at a “buy on the dips” type of scenario. I have no interest whatsoever in shorting this market, as we have such bullish pressure and of course a huge fundamental driver of price.

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

Crude Oil Price Forecast – Crude Oil Continue to Pressure Upside

WTI Crude Oil

The West Texas Intermediate Crude Oil market has pulled back a bit during the trading session on Thursday, as we sit right at the $65 level. The $65 level of course is a large, round, psychologically significant figure that would attract a certain amount of attention, but part of what has caused the market pull back a bit is that the demand for gasoline in the United States has fallen for the second week in a row. That being said, the ascending triangle that formed previously does suggest that we have more upward pressure going on than down, as we have been in an uptrend anyway. If we do pull back from here it is likely that we would see plenty of support at both the 50 day EMA and the uptrend line that has been part of that ascending triangle.

Crude Oil Video 07.05.21

Brent

Brent markets also look very much the same as you would expect, after forming the same kind of ascending triangle. The $70 level above does offer a certain amount of psychological resistance, so if we can break above there then it is likely that the market would continue to go much higher. A lot of this comes down to the “reopening trade” that a lot of people pay close attention to, so therefore it does make a certain amount of sense that value hunters will be looking to get involved. Once we can clear the $70 level on a daily close, it is very likely that we go much higher, perhaps making a move towards the $72.50 level initially, followed by a move to the $75 level. I have no interest in shorting the market anytime soon.

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

Silver to $300

No, I haven’t lost my mind. After all, it’s a metal that’s known for massive rallies.

You see, when silver went trough its 1970s bull market, it started from a low of $1.31 in October 1971. By the time it reached its peak in 1980, silver had run all the way up to $49. That was a 37x return.

If we consider that silver was priced at $4.20 in late 2001, a 37x return would take it to about $155. However, I think this bull market could be an order of magnitude larger for a number of reasons, the main ones being debt, credit and money printing.

As a result, I think silver’s ultimate peak could be $300, and I won’t rule out possibly even higher.

Bullish Silver Fundamentals

Most developed and many developing nations have been in multi-year or even multi-decade deficit scenarios. This now looks to have become a permanent state, at least until we reach some sort of global financial reset.

The Institute of International Finance explains how the COVID-19 pandemic response added $24 trillion to the global debt mountain last year, to reach a new all-time record high of $281 trillion.

And interest rates being maintained at 5,000-year lows will only encourage more debt. Couple that with many countries borrowing to meet interest payments, and central banks soaking up much of that new sovereign debt, and inflation havens like precious metals gain strong appeal.

Silver in particular has the added benefit of 50% of its demand being industrial. With unprecedented economic stimulus programs, many favoring green energy, silver is uniquely positioned to profit. What’s more, according to Metals Focus, silver supply was down 4% in 2020 by 42M ozs. According to the Silver Institute, total supply will rise by 8% this year, though total demand will rise nearly twice as much, by 15%, led by industrial, jewelry and physical demand.

So the fundamental side of silver demand is looking strong, but the technical side is also very bullish.

Bullish Silver Technicals

Let’s consider the gold silver ratio.

As a quick refresher, the gold silver ratio is calculated by simply dividing the spot price for one gold ounce by the spot price of one silver ounce. That’s it. Naturally the higher the ratio, the more silver ounces are needed to buy one gold ounce, and vice versa. The most bullish scenario is when the ratio is falling from a high level, ideally from above 80, and the silver price is rising.

Here’s a chart of the gold silver ratio during the 1970s silver bull market.

To me it’s very intriguing to note how recessions, which are the grey vertical bars, tended to mark troughs and/or peaks in the ratio. What’s also interesting is that when silver reached its peak in 1980, the gold silver ratio ultimately bottomed around the same time at a level near 15, which was below the starting point near 20.

Let’s now move to the current silver bull market which I believe began in 2001. The following chart shows us silver prices since 2000, not adjusted for inflation.

Of course, silver had a tremendous run from $4.20 in 2001 to its 2011 peak at $49. It then corrected until late 2015, then moved sideways until bottoming near $12 last year in March. It had a tremendous move up to $30 within just 5 months and has been mostly consolidating since.

Now let’s examine the gold silver ratio action since 2001.

Again we see peaks and troughs tend to occur (though not exclusively) around recessions (grey bars). At silver’s peak in 2011, the ratio bottomed near 33. It then rose almost constantly up to its all-time peak last March at 125, then fell dramatically to its current level around 67, as silver started to significantly outpace gold. Consider that we know from history silver always outperforms gold in precious metals bull markets. So the current action is particularly exciting for silver.

Silver Targets

But what does it all mean for how high the silver price can go? Of course, no one knows for sure. But there are some indicators worth examining for clues and suggestions.

I believe the ratio will ultimately reach a low near 15. And given the inflationary path we’re on, I think gold could peak at $5,000 per ounce. That’s just 2.5 times last August’s peak near $2,000. In fact, I think there’s even a decent chance gold could reach $10,000, which is just 5 times last August’s peak. But if we stick with $5,000, and an ultimate bottom in the gold silver ratio of 15, we get ($5,000/15) $333 per ounce of silver.

Let’s look at silver price targets from another angle: inflation.

If we consider inflation-adjusted silver prices going back to 1970, we see that the peak reached in 1980 was actually $120/ounce in today’s dollars, and that’s using government sanctioned inflation statistics, which tend to be well below what we experience in everyday life.

Considering the old way of calculating inflation, which the U.S. abandoned decades ago and I reference below from Shadowstats.com, a realistic inflation rate would have averaged 7% – 8% since 1980 (triple official inflation), which would mean an equivalent silver price of $240-$360 dollars at the 1980 peak.

My gold silver ratio target for silver of $333 is comfortably within the range of $240-$360. If we take the mid-way point between $240 and $360, we get $300. I think that’s as good an estimate as any of where silver can peak in its current bull market.

On this basis, the silver price would need to be up by more than 10x from current levels to reach its ultimate high. Imagine for a moment, if silver were to soar tenfold from here, what the silver producers’ and silver explorers’ share prices would do. It’s not difficult to expect simply spectacular returns. Which is exactly why it’s so attractive to allocate to this space, while being diversified across several stocks, as it’s impossible to know which will do best. Still, odds are very good that if silver goes up by a factor of 10, the average silver stock should easily double that, and be up by a factor of 20, while the most successful juniors could gain 50x or more. That would simply be a repeat of previous bull markets.

Larger silver producers and royalty companies should be seen as core positions to be held for the long term. The more junior explorers should be treated more cautiously as speculations, on which to take profits when they materialize. Selling half of one’s position on a double would be especially sensible.

In any case, I believe it remains early days for silver and silver stocks. I expect to see much higher prices ahead in the metal and the equities. And in my view the current bout of weakness is an opportunity to buy or add to positions in this space. Remember, at $26 silver is still nearly 50% below its all-time nominal high, while gold is just 10% below its all-time nominal high. Silver is clearly the better relative bargain.

In the Silver Stock Investor newsletter, I provide my outlook on which silver stocks have the best prospects as this bull market progresses. Many offer 5x to 10x return potential in just the next few years, especially as silver heats up.

I think silver is currently at or very close to its bottom, but that its ultimate peak could well be in the $300 range.

Either way, silver is headed much, much higher.

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

Natural Gas Price Forecast – Natural Gas Markets Sit Sideways

Natural gas markets have gone back and forth during the course of the trading session on Thursday as we continue to look at the $3.00 level as massive resistance. That is an area that has been difficult for some time, and it should continue to be. Quite frankly, I think this is a market that will see a lot of choppy volatility, but it looks as if we are running out of momentum. The market breaking above the $3.00 level still faces a lot of noise based upon historical behavior, and of course psychological resistance.

NATGAS Video 07.05.21

Given enough time, I fully anticipate that this market will start to fall, perhaps trying to drop down to the $2.75 level initially, followed by the gap underneath it has yet to be filled. After all, we are going to be getting warmer temperatures in the northern hemisphere soon, despite the fact that it has been cooler than usual. With that being said, there will be less demand for natural gas, in a market that is already oversupplied. There has been an uptick in foreign demand for liquefied natural gas, but at this point in time it will be enough to change the market dynamics.

Commodities in general have been getting a bid, so natural gas has become overvalued. I think eventually the fundamentals come back into play and we fall apart. With this, I like the idea of selling at the first sign of a breakdown, because we have such a significant and obvious round figure just above the use as a barrier to determine which direction, we are going in. All things been equal, the spring temperatures will start to overtake the market.

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

Gold Price Forecast – Gold Markets Break 200 Day EMA

Gold markets have broken higher during the course of the trading session on Thursday as we have cleared the 200 day EMA and the $1800 level. At this point, the market is likely to continue going higher, perhaps reaching towards the $1850 level, and then after that the $1950 level. This of course is a market that has recently formed a bit of a “double bottom”, and that suggests that it has much further to go. It is interesting, because gold has disappeared from the inflation argument until recently, but now it appears that the traders finally starting to kick in.

Gold Price Predictions Video 07.05.21

To the downside, I see the 50 day EMA as offering support, and most certainly the $1750 level will as well. It is not until we break down below there that I would be concerned, but after the action that we have seen during the day on Thursday, it is very likely that the buyers will continue to push to the upside. The size of the candlestick is somewhat impressive, and therefore it looks like there is serious conviction in this market. If the US dollar continues to fall, that should continue to lift gold in general, and therefore I think that we have a “buy on the dips” type of mentality from short-term traders. Ultimately, this will be a very noisy move to the upside, but it certainly looks as if we have made major changes in attitude during the day, as we have been building up pressure for some time. I have no interest in shorting this market until we close below the $1750 level, something that does not look as likely now.

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

Gold & Silver Begin New Advancing Cycle Phase

Before going into detail regarding my latest research and cycle phases, I want you to think of these cycle phases as Advancing and Declining cycle trends.  They act as a “build-up of trend”, then an “unwinding of trend”.  In each instance, trends can be either Bullish, Bearish, or Neutral in nature.  My research team and I believe a new Bullish Cycle Phase has begun in Gold and Silver.  If our research is correct, the next Advancing Cycle Phase may prompt a broad rally in Gold and Silver.

Understanding Cycle Phase Analysis & Trends in Metals

We interpret these cycle phases as unique trend segments involved in a broader cycle scope.  For example, over a longer-term rally, we may see many Bullish Advancing and Declining cycle phases take place – one after another.  Conversely, we may see many Bearish cycle phases take place in an extended downtrend.  Another type of cycle phase can also exist, the Reversal Cycle Phase – where price Advances in one direction and Declines in the opposite direction.  This type of Rotation Cycle Phase exists as the current completed Cycle on the Gold chart, below.

As we are nearing the end of the current Declining Cycle Phase as seen in the chart below, we will soon begin the new Advancing Cycle Phase in Gold.  Gold’s Reversal Cycle Phase that took place between December 21, 2020, and May 10, 2021, will likely close higher than the midpoint (or Apex) of the total Cycle Phase.  This suggests a new bullish price trend has taken over and the price is more likely to move higher in the next Advancing Cycle Phase. If this trend continues, then the price will continue to rally higher in the Declining Cycle Phase as well – as we saw in the first Cycle Phase: between March 16, 2020, and August 3, 2020.

Gold & Silver Phase Tables – Will Price Continue A New Bullish Cycle Phase?

To help explain our Cycle research, we’ve put together these tables to detail the Cycle Phases and price logic we use to interpret each Advancing and Declining phase.  Each table entry consists of an Advancing, then Declining Cycle Phase.  Combined, they make up a complete Cycle Phase.  We are measuring price at the midpoint (Apex) of the Cycle Phase to determine if any Advancing or Declining Cycle Phase is Bullish or Bearish in trend.  If both Advancing and Declining Cycle Phases show the same trend direction, we define that completed Cycle Phase as Bullish or Bearish.  If they differ in trend types, we define that completed Cycle Phase as a Reversal Phase.

Gold has been in a downtrend recently while Silver has continued to stay somewhat bullish in a sideways price trend.  You can see from the tables below, Gold recently completed a Reversal Cycle Phase (ending with a Bullish Declining Phase) while Silver has continued to exhibit Bullish Cycle Phases since March 9, 2020.

Both Gold and Silver ended their last completed Cycle Phases recently.  Gold will end the last completed Cycle Phase on May 10, 2021.  Silver ended its last completed Cycle Phase on April 12, 2021. The next Advancing Cycle Phase for both Gold and Silver will begin this week and next week – and will continue until July 19, 2021.  After that, the Declining Cycle Phase will begin and last until late September, for Gold, and late October for Silver.

If our research is correct, we may see extended bullish trending over the next 6+ months in both Gold and Silver.

Silver Cycle Phases Continue To Show Stronger Bullish Trending

The following Silver Weekly Chart highlights the Cycle Phases and highlights the price trends for each Advancing and Declining Cycle Phase.  While Gold has experienced an extended Bearish Cycle Phase over the past 5+ months, Silver has continued to show stronger bullish price Cycle Phases and continues to attempt higher closing price levels at the end of each Cycle Phase.  We believe this suggests Silver is likely to see some explosive upside price trending when the $28.42 level (the higher YELLOW line) is breached.  This level represents historical price resistance for Silver.  Once this level is breached, we believe Silver will begin to advance higher very quickly.

Remember, we have until July 19, 2021, before the first Advancing Cycle Phase in Silver ends.  This Advancing Phase may prompt a move above the $28.42 level and may attempt to rally above $30.00 as we have drawn on the chart (below). If the Declining Cycle Phase continues this bullish trend, we may see Silver trading above $32.00 ~ $33.00 before Halloween 2021.  This would represent a +26.5% rally in Silver from the last completed Cycle Phase price level.

In closing, we want to suggest that a rally as we are proposing in Gold and Silver will also present a renewed risk factor for the US and global markets (potentially). In the past, we have seen precious metals rally while the US stock market rallies.  It is not uncommon for precious metals to begin to move higher while the US stock market continues to move higher.  This type of price activity simply suggests that global traders/investors are moving capital into Precious Metals as the US stock market climbs a strengthening “wall of worry”.  This type of price action happened from 2004 to 2009 – prior to the Credit Crisis/Housing Crisis.

As we’ve been suggesting for many months, the next few years are going to be full of incredible opportunities for traders and investors. Smart traders will quickly identify these phases of the market and will understand how to position themselves to take advantage of this next phase. You can learn more about how I identify and trade Gold, Silver, and the markets by watching my FREE step-by-step guide to finding and trading the best sectors.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily pre-market reports, proprietary research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers. Sign up today!

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

Happy Trading!

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

Oil Price Fundamental Daily Forecast – Mixed Gasoline Inventory Numbers Fueling Trader Indecision

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday as bullish traders take a breather following the release of mixed inventories reports on Tuesday and Wednesday.

Today’s move doesn’t suggest topping action, but rather the potential shifting in sentiment from aggressive traders chasing prices higher to more conservative traders looking for a pullback into a value area.

At 13:56 GMT, June WTI crude oil futures are trading $65.09, down $0.54 or -0.82% and July Brent crude oil is at $68.51, down $0.45 or -0.65%.

Earlier in the week, traders expressed concerns over the pandemic in India and its potential impact on global demand, however, since then these worries have been offset by optimism fueled by the lifting of lockdowns in the United States and parts of Europe.

American Petroleum Institute Weekly Inventories Report

The American Petroleum Institute (API) reported late Tuesday that U.S. crude supplies fell by 7.7 million barrels for the week ended April 30. Ahead of the report, traders were pricing in at 3.9 million barrel draw.

The API also reported that gasoline stockpiles fell by 5.3 million barrels versus pre-report estimates of a 500,000 barrel drawdown.

Meanwhile, distillate inventories declined by nearly 3.5 million barrels. Traders were looking for a 1.6 million barrel drawdown.

Energy Information Administration Weekly Inventories Report

According to the U.S. Energy Information Administration (EIA), crude inventories fell by 8 million barrels in the week to April 30 to 485.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.3 million-barrel drop.

U.S. gasoline stocks rose by 737,000 barrels in the week to 235.8 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 652,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 2.9 million barrels in the week to 136.2 million barrels, versus expectations for a 1.1 million-barrel drop, the EIA data showed.

Daily Forecast

The mixed inventories reports may have given buyers a reason to pause. Both the API and EIA reports drawdowns in crude oil and distillate inventories, but the gasoline inventories data yielded mixed results. The API reported a large drawdown, but the EIA report showed an unexpected rise in inventories.

As we approach summer driving season in the U.S., traders will shift their focus to the gasoline numbers. It’s still a little early in the season so the gasoline data wasn’t that big of a deal. However, between May 31 and September 5, bullish traders will be expecting to see stronger demand for gasoline.

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

Silver Price Daily Forecast – Resistance At $27.50 In Sight

Silver Video 06.05.21.

Weak Dollar Provides Support To Silver

Silver gained upside momentum and managed to get above the resistance at $27.00 while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at the 20 EMA at 91.30 and is testing the support at the 91 level. In case the U.S. Dollar Index declines below this level, it will move towards the support at 90.70 which will be bullish for silver and gold price today. Weaker dollar is bullish for precious metals as it makes them cheaper for buyers who have other currencies.

Gold is currently testing the resistance at the $1800 level. In case gold manages to settle above this level, it will head towards the resistance at $1820 which will be bullish for silver.

Gold/silver ratio managed to get below the 67 level and is trying to settle below 66.50. If gold/silver ratio declines below this level, it will move towards the 66 level which will be bullish for silver.

Technical Analysis

silver may 6 2021

Silver managed to get above the resistance at $27.00 and is trying to gain additional upside momentum. If silver settles above this level, it will move towards the resistance at $27.50. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

A successful test of the resistance at $27.50 will push silver towards the next resistance level at $27.75. If silver gets above the resistance at $27.75, it will head towards the next resistance which is located at $28.30.

On the support side, a move below the $27 level will push silver towards the support at $26.65. In case silver declines below this level, it will head towards the support at $26.30.

A successful test of the support at $26.30 will push silver towards the support which is located at the 20 EMA at $26.15. In case silver manages to settle below this level, it will head towards the next support at the 50 EMA at $25.95.

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

American Indices Moving in Opposite Directions

American Indices are currently moving in opposite directions. The tech-heavy NASDAQ index is going down, aiming for the long-term up trendline while the old-school Dow Jones flirts with all-time highs after the price escaped from the pennant formation.

The German Dax is trading inside a flag formation, which is promoting a long-term breakout to the upside.

Gold is aiming higher after a successful bounce from the 1760 USD/oz support.

The USDCAD broke the lower line of the channel down formation, which should be considered an extreme weakness.

The AUDCHF tested the lower line of the symmetric triangle pattern. A breakout to the downside is very probable.

The ZARJPY shot higher after a false bearish breakout from the Head and Shoulders formation.

The EURPLN is aiming higher after a very handsome bullish engulfing pattern on the daily chart.

The USDHUF dropped like a rock after the price created a shooting star on the daily chart, which bounced from a combination of dynamic and horizontal resistances.

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

 

Price of Gold Fundamental Daily Forecast – Underpinned by Dovish Fed Member Comments, Capped by Strong Data

Gold futures are trading higher on Thursday, but pulling back from its high after the release of a better-than-expected government report. Earlier in the session, gold prices rose as the U.S. Dollar retreated from two-week highs and U.S. Treasury yields fell, with traders focusing on economic data for clues on the Federal Reserve’s strategy on monetary support going forward.

At 13:08 GMT, June Comex gold futures are trading $1792.00, up $7.70 or +0.43%.

Thin market conditions ahead of Friday’s U.S. Non-Farm Payrolls report have contributed to this week’s volatile price action. Dovish comments from Federal Reserve members have helped underpin prices, while stronger-than-expected economic data has helped put a lid on gains.

U.S. Treasury Secretary Janet Yellen, a noted dove, also contributed to the volatility with two-sided comments.

Fed’s Rosengren Says It Is Premature to Talk About Tapering

Helping to support gold prices on Thursday are comments from Federal Reserve Bank President Eric Rosengren.

On Wednesday, Rosengren said inflation will be temporarily distorted this spring as the U.S. economy works through imbalances caused by the pandemic but the pressures should be short-lived and should not lead to a pullback in monetary policy.

“Despite the ebbs and flows of the data, inflation is expected to remain close to 2 percent over the forecast horizon,” Rosengren said during a virtual event organized by Boston College. “This does seem to me to be the most likely outcome, which should allow monetary policymakers to be patient in removing accommodation.”

For now, Rosengren said “significant slack remains in the economy” and made it clear it is too soon to start talking about reducing the Fed’s asset purchases.

“We need to have a substantial improvement for us to begin tapering. It is quite possible that we’ll see those conditions as we get to the latter half of the year,” Rosengren said. “But right now what we have is one really strong employment report, one quarterly strong GDP report. And so I think it’s premature right now to focus on the tapering.”

Daily Outlook

After an earlier surge, gold prices appear to be consolidating as investors position themselves ahead of Friday’s U.S. Non-Farm Payrolls report. This report could set the tone of the market for the next month.

On Wednesday, ADP reported strong private sector numbers. On Thursday, initial claims for unemployment benefits fell sharply last week to 498,000, in another sign the labor market is getting closer to pre-pandemic levels.

There is nothing bullish per se in the news, but investors appear unwilling to give up until there is definitive proof that the Fed is getting ready to begin tapering its bond purchases.

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

Stocks Mixed After Better-Than-Expected Initial Jobless Claims Report

Stocks Lack Direction As Traders Wait For New Catalysts

S&P 500 futures are swinging between gains and losses in premarket trading as traders remain cautious while the market is trading near record highs.

The market faced some selling pressure at the beginning of May, but it should be noted that the recent attempt to move lower was quickly bought. Traders seem to be a bit worried about higher inflation which may force the Fed to raise rates sooner than expected, but such worries are not strong. The bond market stays calm, and the yield of 10-year Treasuries has recently failed to settle above the 20 EMA at 1.60%.

At this point, it looks that the market will need additional catalysts to gain momentum and move away from current levels.

Initial Jobless Claims Decline To 498,000

The U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims report indicated that 498,000 Americans filed for unemployment benefits in a week. Analysts expected that Initial Jobless Claims would total 540,000.

Continuing Jobless Claims increased from 3.65 million (revised from 3.66 million) to 3.69 million compared to analyst consensus of 3.62 million.

Yesterday, ADP Employment Change report indicated that private businesses hired 742,000 workers compared to analyst consensus of 800,000. The employment picture will not be complete without Non Farm Payrolls and Unemployment Rate reports which will be published tomorrow. Non Farm Payrolls report is expected to show that the economy added 978,000 jobs in April. Unemployment Rate is projected to decline from 6% to 5.8%.

Oil Moves Lower As India Reports Record Number Of COVID-19 Cases

Yesterday, India reported more than 412,000 of new coronavirus cases, putting pressure on the oil market. While oil traders have mostly ignored negative developments in India, the country’s problems may ultimately have a notable impact on demand for oil.

Meanwhile, the recent EIA Weekly Petroleum Status Report indicated that crude inventories declined by 8 million barrels compared to analyst consensus which called for a decline of 2.35 million barrels. The U.S. domestic production remained unchanged at 10.9 million barrels per day (bpd) which was bullish for oil.

The recent data suggests that oil demand is picking up, so oil will have good chances to continue its upside move when the situation in India shows signs of stabilization.

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

Natural Gas Price Fundamental Daily Forecast – ‘Bearish Surprise’ Fears Ahead of Weekly EIA Storage Report

Natural gas futures are trading nearly flat shortly before the New York opening and well ahead of the release of the weekly government storage report at 14:30 GMT. After reaching its highest level since February 22 on Tuesday, gains have been capped by expectations from a more substantial build in underground inventories.

At 11:31 GMT, June natural gas futures are trading $2.945, up $0.007 or +0.24%.

Energy Information Administration Weekly Storage Report

Natural Gas Intelligence (NGI) is reporting that traders are expecting today’s EIA report to show a storage injection for the week ended April 30 that could be more than four times greater than the prior week.

NGI also reported that a Bloomberg survey Wednesday showed a median estimate for a 66 Bcf injection, with predictions ranging from 49 Bcf to 76 Bcf. Estimates generated by a Reuters poll spanned increases of 49 Bcf to 76 Bcf, with a median of 65 Bcf. The Wall Street Journal’s weekly survey showed estimates ranging from increase of 52 Bcf to 70 Bcf, with an average of 62 Bcf.

NGI’s model predicted a 76 Bcf build.

Median estimates for the April 30 week, while much higher, still compare favorably to recent history. The EIA recorded a 103 Bcf build in the comparable week of 2020, while the five-year average injection is 81 Bcf, according to NGI.

If you recall, last week’s EIA report showed a 15 Bcf injection for the week ended April 23. That was well below normal for this time of year, leaving U.S. inventories at 1,898 Bcf – 302 Bcf lower than a year earlier and 40 Bcf below the five-year average.

After initially falling on the news last Thursday, prices rose on Monday in a delayed reaction to the news.

Short-Term Weather Outlook

According to NatGasWeather for the week-ending May 6 to May 12, “Weather systems and associated cool shots with showers and thunderstorms will continue across the Midwest and Northeast through next week with highs of 50s and 60s and lows of 30s and 40s. Cooling has also arrived into the South/Southeast with highs of 70s to low 80s for lighter demand, although warming back into the 80s and 90s from Texas to the Southeast late this weekend. The West will experience showers and cooling over the Northwest in the coming days with highs of 50s and 60s but very warm over the Southwest with highs of 80s to 90s. Overall, moderate the rest of the week.”

Daily June Natural Gas

Daily Forecast

Traders are taking no chances ahead of this week’s EIA report, essentially moving to the sidelines ahead of the numbers.

A neutral report would actually compare favorably to historic norms, but the move to the sidelines suggests traders are erring on the side of caution because of the possibility of a bearish surprise.

A bullish report could trigger a retest of this week’s high at $3.001, setting up the possibility of a breakout rally. A bearish report could drive prices back toward the upper level of a support zone at $2.868.

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

Daily Gold News: Thursday, May 6 – Gold Bouncing Back and Forth

The gold futures contract gained 0.47% on Wednesday, as it extended its short-term consolidation. In early April the market has bounced from the support level marked by March 8 local low of $1,663.30. The yellow metal’s price was the lowest since last year’s June. Today gold is trading closer to the recent local highs, as we can see on the daily chart (the chart includes today’s intraday data):

Gold is 0.3% higher this morning, as it is trading closer to $1,800 price level. What about the other precious metals? Silver is 1.0% higher, platinum is 0.8% higher and palladium is 0.8% lower today. So precious metals are higher this morning.

Yesterday’s ADP Non-Farm Employment Change release has been worse than expected at +742,000. The ISM Services PMI has also been worse than expected at 62.7. Today we will get the Unemployment Claims release, among others.

The markets will be waiting for tomorrow’s monthly jobs data release.

Where would the price of gold go following Friday’s NFP release? We’ve compiled the data since September of 2018, a 32-month-long period of time that contains of thirty two 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 1.92% in April and it gained 2.54% in March.

The following chart shows the average gold price path before and after the NFP releases for the past 32 months. The market was usually advancing ahead of the release day and closing 0.49% 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, May 6

  • 7:30 a.m. U.S. – Challenger Job Cuts y/y
  • 8:30 a.m. U.S. – Unemployment Claims, Preliminary Nonfarm Productivity q/q, Prelim Unit Labor Costs q/q
  • 1:00 p.m. U.S. – FOMC Member Bostic Speech

Friday, May 7

  • 6:00 a.m. Eurozone – ECB President Lagarde Speech
  • 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
  • 10:00 U.S. – Final Wholesale Inventories m/m
  • 10:00 a.m. Canada – Ivey PMI

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

Paul Rejczak
Stock Selection 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.

 

The Black Stuff and The Green List: Oil Volatility is On Its Way!

Those 55 miles per hour speed limits on the highway in the 1970s were largely down to shortages of supply and were designed to ensure less fuel was used by motorists as a result of war rather than for the purposes of road safety which they were largely perceived as.

Today, very little has changed, despite the substantial investment in renewable energy and alternative methods of generating motive power for everything from central heating to transport, and the value of the sticky black stuff is still inexorably dependent on the utterings of government leaders.

Over the past year, to consider oil to have been a volatile commodity is an understatement, its value having dropped into negative equity around one year ago for the first time in history, and the ensuing lockdowns and travel bans having created lower prices in the Western markets whilst demand in South and South East Asia has remained very high.

Today, crude oil is absolutely under the microscope. Even the OPEC countries are publicly discussing its immediate future, with Ihsan Abdul Jabbar, the Oil Minister of Iraq, OPEC’s second largest producer, noted that oil could probably remain around US$65 a barrel.

Standard data is scheduled for release within the next 24 hours in the United States, in the form of the weekly inventories from the American Petroleum Institute, which will be compared to the unexpected climb last week to 90,000 barrels, however this is a bland, routine spreadsheet exercise.

The matter of real interest is that commercial consumers and distributors will likely be assessing a huge increase in purchasing refined petroleum products such as gasoline for cars, and perhaps more specifically, kerosene for aircraft, meaning that more crude oil will be bought by refineries, as the perpetually locked down European Union and its Trans-Atlantic neighbours on the entire North American continent begin to lift travel restrictions.

A combination of pent-up will to travel after a year of blocked borders and a desperate travel industry wanting to regenerate its lost earnings would result in skies full of aircraft, especially as the summer begins and the lure of cut-price tourism gives those seeking refuge from the four walls of constraint.

Companies such as Wizz Air, easyJet and Ryanair have all been advertising cheap flights recently, and have been targeting members of the public who would look to fly within Europe as soon as the travel ban is lifted. This means lots of reservations and therefore a demand for fuel.

The European Commission put forward a proposal on Monday this week to expand the list of countries whose citizens may visit the European Union for nonessential reasons and its president, Ursula von der Leyen tweeted “Time to revive EU tourism industry & for cross-border friendships to rekindle – safely. We propose to welcome again vaccinated visitors & those from countries with a good health situation.”

The decision to lift further restrictions for tourism and non-essential travel will be up to the member states and the proposal was discussed at length yesterday.

India has been a huge consumer of oil in recent weeks, and despite Iraq’s oil minister’s predictions, there is speculation within India that it may rise to $80 by the summer of this year, substantially higher than Mr Abdul Jabbar’s prediction of $65.

India, the world’s third-largest oil importer, has increased its use so dramatically recently that OPEC+, out of its own necessity, has intervened in the oil market on the supply side of the equation to offset the oil demand.

As of April 6, the EIA saw global oil demand at 97.7 million bpd this year. Compared to Brent prices that were near $65 per barrel in March, the EIA sees not much movement in the price of Brent, estimating $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per barrel in 2022.

The US Energy Information Administration (EIA) has overseen a global oil demand at 97.7 million barrels per day this year as of April 6, the EIA Compared to Brent prices that were near $65 per barrel in March, the EIA sees not much movement in the price of Brent, estimating $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per barrel in 2022, which is a contrasting forecast to what the market analysts and OPEC commentators are expecting!

Such diverging views is a clear sign that volatility is likely to remain for some time yet.

Go figure!

Andrew Saks, Head of Research and Analysis at ETX Capital


Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.
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Gold Bugs Close in on $1,800 Mark, but Face Uphill Task Ahead

At the time of drafting this report, gold bugs seem to be fairly in control with gold futures nearing $1,800 per ounce despite recent data revealing the greenback’s value is gaining strength day by day.

Gold bulls are riding the bandwagon high on reports new cases of COVID-19 infection has broken above 400,000 in the world’s second most populated country (India), arbitrarily gave gold bugs the firepower to challenge the $1,800 price levels.

The yellow metal earlier reverses the pullback from its intraday high while picking up bids at $1,794 per ounce, up 0.58% for the day, as the precious metal rises for the second consecutive day with US Treasury yields and the greenback weak responses to the latest challenges in growing risk sentiments across the market spectrum.

At press time, the global crypto market value stood at $2.35 trillion, posting a 5.16% increase over the last day with Ethereum and most altcoins trading close to record high, which wasn’t enough to deter growing demand for gold.

However, gold bulls face an uphill task, with recent reports revealing the world’s most powerful economy was on the path to full recovery with the U.S. ADP Nonfarm Employment Change rising to 742,000 in April.

Such growth was the biggest in seven months as American businesses increased their production capacity in response to high economic demand in play boost by stimulus support, suggest gold bugs might unlikely have enough gas to stay afloat in the coming weeks.

In spite of the soaring dollar and the appetite for more risk, gold bugs are hopeful to attack the $1,800 threshold one more time.

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

World Shares Resilient, Drugmakers Hit by Biden’s Move on Vaccines

By Hideyuki Sano

MSCI’s broadest gauge of world stocks, ACWI, was up slightly and European stocks are expected to open flat with both Euro Stoxx futures and Britain’s FTSE futures little changed.

Japan’s Nikkei jumped 1.8% as it reopened after a five-day holiday.

But MSCI’s index of Asia-Pacific shares outside Japan lost 0.15% as Chinese shares, also resuming trade for the first time since last week, wobbled. The CSI300 fell 1.3%, led by falls in biotech firms.

China’s healthcare share index dropped more than 4% after U.S. President Joe Biden threw his support behind waiving intellectual property rights for COVID-19 vaccines.

Biden’s move hit U.S. vaccine makers, too, including Moderna, but Wall Street was supported overall by gains in energy and other cyclical shares.

Dow hit a record high overnight, having risen 0.29%, while the S&P 500 added 0.07%.

“This year, both the U.S. and Chinese economy could grow 6% or more. If the world’s two biggest economies are growing that much, clearly that’s positive,” said Norihiro Fujito, chief investment strategist, Mitsubishi UFJ Morgan Stanley Securities.

Against this backdrop, commodity prices are riding high, with copper flirting with 10-year peaks.

Oil prices extended gains to edge near their March tops as crude stockpiles in the United States, the world’s largest oil consumer, fell more sharply than expected.

U.S. crude futures stood at $65.65 per barrel, little changed on the day but just below Wednesday’s two-month high of $66.76. [O/R]

As agricultural products such as corn, soybeans and wheat, have gained sharply in recent weeks, Thomson Reuters CRB index has risen to its highest level since 2015, having gained more than 21% so far this year.

BONDS AND CURRENCIES

Higher commodity prices are fuelling inflation expectations in the bond market.

The U.S. breakeven inflation rate, or inflation expectations calculated from the yield gap between inflation-linked bonds and conventional bonds, rose to as high as 2.48% overnight.

But the U.S. nominal bond yields held relatively stable, with the 10-year U.S. Treasuries yield little changed at 1.584%.

“Bonds were supported partly because the pace of vaccinations has slowed in the States and as real-money investors are starting to buy,” said Naokazu Koshimizu, economist at Nomura Securities.

“The rise in inflation is also driven more by supply constraints than demand, which is why we are seeing rising inflation expectations and a fall in nominal yields,” he added.

In currencies, the Australian dollar briefly dropped as much as 0.6% after China said it was indefinitely suspending all activity under a China-Australia Strategic Economic Dialogue, the latest setback for their strained relations.

It last stood down 0.15% at $0.7734

The British pound was flat at $1.3910 ahead of a central bank policy review.

The Bank of England could slow the pace of its bond buying to allow its quantitative easing programme to last until the end of the year, as it could reach the cap by September at the current pace of buying.

Investors also looked to Scotland’s election that could trigger a showdown with British Prime Minister Boris Johnson over a new independence referendum.

Other currencies were little moved, with the focus on Friday’s U.S. monthly jobs report which is expected to show that nonfarm payrolls increased by 978,000 jobs last month.

The euro stood flat at $1.2004 while the yen changed hands at 109.35 per dollar.

(Editing by Himani Sarkar and Kim Coghill)

U.S Treasury Secretary Janet Yellen Speaks – Part Two

To paraphrase she said that interest rates in the United States may need to rise to prevent the economy from overheating. Yellen said that the overheating is a direct result of the current administration’s economic investment programs become enacted.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in taped remarks to a virtual event put on by The Atlantic. “It could cause some very modest increases in interest rates to get that reallocation, but these are investments our economy needs to be competitive and to be productive (and) I think that our economy will grow faster because of them.”

She explained the massive amount of fiscal stimulus with an outlay of $4 trillion in 2020, and $1.9 trillion to date this year, and when coupled with President Joe Biden’s proposed “American Jobs Plan” could add even more debt to the ballooning national debt the currently exists. Although the administration has explained that there would be no cost to middle-class Americans, many advocates of his initiative to leave that the cost cannot be covered by raising taxes on corporations and the wealthiest alone. In fact, it is believed that it would further add to our national debt which is now at record levels.

That caused gold and silver pricing to sustain a large drawdown in trading yesterday and today. Yellen clarified her remarks when she spoke at the Wall Street Journal’s CEO Council summit. She said that she was not recommending or predicting that the Federal Reserve should raise rates. Furthermore, she said that she does not see a sustained problem for the economy as it bounces back from Covid-19 and therefore does not anticipate inflation being a problem.

On a technical basis the facts remain that gold has been mired in an extremely narrow range with current support at the 21-day exponential moving average, and resistance currently at a harmonic (a harmonic is when to different technical studies occur at the same price point) which occurs at the 100-day moving average currently fixed at $1797.10 and $1800 which is a key psychological level. Gold has traded in this to find a narrow range over the last 15 trading days and continues to move sideways.

Today’s statements by Janet Yellen in attempts to clarify her statements made yesterday did move gold higher by approximately $10 it is currently fixed in Australia up $2.60 at $1786.90. This is still shy by $13 of major resistance at $1800. All things being equal it will take a dramatic fundamental shift, or a dramatic change in market sentiment to move gold pricing above or below its defined range.

Chart_21-05-05_12gold May 5

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Wishing you, as always, good trading and good health,

Gary Wagner