XAU/USD Current price: $2,513.31

• Market players keep waiting for inflation updates and potential effects on central banks’ decisions.
• US CB Consumer Confidence improved by more than anticipated in August.
• XAU/USD is neutral-to-bullish in the near term, bulls taking their chances of dips.

Quiet trading extends on Tuesday, with Gold changing hands at around $2,510 a troy ounce. The bright metal is confined to a tight intraday range as expectations mount for the upcoming United States (US) inflation figures to be out on Friday. The country is set to release the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. Price pressures in the US remain above the Fed’s 2% goal but far from the four-decade high hit in mid-2022.

But it is not just about receding inflation. The labor market has finally shown signs of loosening, meaning wages-related risks have decreased. In the meantime, the economy keeps growing at a relatively healthy pace, all of which backs an interest rate cut. Chairman Jerome Powell and co have spent the last month hinting towards a shift in the current monetary policy, reinforcing the idea of a new cycle coming when he spoke at the Jackson Hole Symposium last week.  Hopes the Fed will trim rates in September maintain the US Dollar under pressure.

Meanwhile, United States (US) data beat expectations.  The Conference Board’s (CB) Consumer Confidence Index rose to 103.3 in August, while the July figure was upwardly revised to 101.9 from 100.3. Furthermore, the Expectations sub-index improved to 82.5, while the July reading was revised to 81.1, marking the second consecutive month of the Index above 80.  A reading below the latter usually signals a recession ahead.

XAU/USD short-term technical outlook  

From a technical point of view, the risk for XAU/USD remains scheduled to the upside. The daily chart for the pair shows it keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its upward slope well above also bullish 100 and 200 SMAs. Technical indicators, in the meantime, have lost their upward strength but consolidate near overbought readings, falling short of suggesting an upcoming decline.

In the near term, and according to the 4-hour chart, XAU/USD is neutral-to-bullish. A flat 20 SMA keeps providing intraday support, while the 100 and 200 SMAs grind north far below the current level. Technical indicators, however, stand right above their midlines without clear directional strength. The risk of a steeper decline seems limited, but the lack of progress could force some profit-taking and send Gold below the $2,500 mark.

Support levels: 2,508.80 2,496.40 2,485.10  

Resistance levels: 2,523.50 2,531.60 2,542.00

• Silver holds above 50 and 100-DMAs, showing buyer strength, but momentum is diminishing.
• For uptrend continuation, a break above the August 26 peak of $30.18 is needed, aiming for $30.50 and July 17 high of $31.42.
• If gains below $30.00 aren’t sustained, expect a pullback to supports at $29.22-$29.13 and key $29.00 level.

Silver’s price consolidated for the second straight day, within the $29.70-$30.10 area on Tuesday, yet printed gains of 0.24%. At the time of writing, XAG/USD trades at $29.96.

XAG/USD Price Forecast: Technical outlook

The XAG/USD trades above the confluence of the 50- and 100-day moving averages (DMAs), an indication of buyer strength. Still, Silver’s uptrend seems stretched, with bills failing to achieve a daily close above $30.00.

Momentum supports buyers yet shows that they’re losing steam, as the Relative Strength Index (RSI) shows.

Silver’s uptrend will continue once buyers reclaim the August 26 peak at $30.18. Once surpassed, the next resistance would be the $30.50 figure, followed by the July 17 swing high at $31.42.

Conversely, if XAG/USD sellers keep prices below $30.00, this will expose the confluence of the 50 and 100-DMAs at around $29.22-$29.13, ahead of the $29.00 figure.

XAG/USD Price Action – Daily Chart

Down for Six Straight Days

Nevertheless, natural gas has been falling for six straight days. It may run out of bearish momentum and yet find support that leads to a bullish reversal around the lows. There are no signs of that yet, but a rally above today’s high of 1.97 may signal a bottom and could lead to a test of higher price levels. Following a rally above today’s high natural gas will be heading towards this week’s high of 2.02, followed by the 20-Day MA at 2.09.

Break Below 1.875 Support Targets Lower Prices

On the downside, a decisive decline below today’s low of 1.875 signals a continuation of the bear trend. Whether the downside momentum stalls or accelerates at that point remains to be seen. Supportive of a bearish continuation are the moving averages. Notice that the orange 50-Day MA broke below the blue 200-Day MA yesterday, a sign that the decline is weakening.

The first area to watch for support would then be around a prior interim swing high at 1.85 from April 23. A little lower is the 88.6% Fibonacci retracement of the larger uptrend that began from the April swing low at 1.58. Depending on when it is reached the 88.6% level will likely be nearby potential support represented by the lower uptrend line.

Despite today’s bearish behavior, natural gas is on track to close above the prior swing low of 1.88. That may provide little comfort to the bulls, but it does provide a small indication that buyers may be returning.

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

• The West Texas Intermediate Crude Oil Market has shot straight up in the air during the trading session here on Monday, as we continue to see a lot of volatility.
• At this point in time, the market managed to rally all the way to the 50-day EMA near the $77.25 area.

With that being the case, it is showing a little bit of hesitation. However, it’s probably worth noting that the market is going to continue to be very volatile due to the macroeconomic conditions of the wars going on around the world and of course, the fact that Libyans had cut back production. So, with that being said, I think you’ve gotten a situation where traders will continue to look at oil through the prism of extreme volatility and perhaps even the possibility of a lot of concerns about supply. Now, having said that, I do recognize that if the market breaks above the $79.50 level, we could really start to see this market take off. That could open up a move all the way to the $84.50 level, but I also recognize that it is going to take a significant amount of momentum to make that happen.

Oil Could Remain “Buy the Dip.”

I think in general we’ve got a situation where traders are going to continue to buy the dip. So, if anything, I would be looking for an opportunity to pick up a little bit of value. I don’t know that I would be a massive holder of the market right now. I think it’s just a scenario where you are looking at short-term pullbacks as short-term opportunities.

As far as some type of massive shift in the overall psyche of the market, I think you probably have some way to go. With this being the case, it is likely going to be a scenario where the oil market will continue to see a lot of questions asked of the trading public as to where we are going to go over the longer term.

Ready to trade the crude oil Forex forecast? Here’s a list of some of the best Oil trading platforms to check out. 

Weaker Chinese oil demand, high inventories, and rising U.S. shale production have prompted Goldman Sachs to reduce its expected range for Brent oil prices by $5 to $70-$85 per barrel.

Commercial inventories have been stable in the peak summer demand season, contrary to expectations of drawdowns, analysts at the Wall Street bank wrote in a note carried by Investing.com.

Higher U.S. supply has been offsetting some of the seasonal demand, according to Goldman Sachs.

Efficiency gains among U.S. producers have raised shale supply by 200,000 barrels per day (bpd) above the investment bank’s expectations.

Higher supply from America, and possibly from OPEC+ later this year and in 2025, has led Goldman Sachs to forecast that Brent Crude prices would average below $80 per barrel next year.

The current forecast is now Brent to average $77 a barrel, as OPEC+ could opt for a strategic move to add supply and punish non-OPEC+ growth, according to Goldman’s note carried by Bloomberg.

OPEC+ could decide to add supply on the market in a move that could be “strategically disciplining non-OPEC supply,” Goldman Sachs’s analysts wrote.

“Prices could significantly undershoot in the short term, especially if OPEC were to strategically discourage US shale growth more forcefully, or if a recession were to reduce oil demand,” the bank’s analysts noted, referring to a scenario in which Brent could trade lower than its price forecast.

Morgan Stanley has also recently revised its oil price forecasts downward, reflecting expectations of increased supply from OPEC and non-OPEC producers amid signs of weakening global demand. The bank now anticipates that while the crude oil market will remain tight through the third quarter, it will begin to stabilize in the fourth quarter and potentially move into a surplus by 2025.

Morgan Stanley has cut its forecast for the fourth quarter to $80 per barrel, down from $85, and now expects prices to gradually decline to $75 per barrel by the end of 2025, slightly lower than their previous estimate of $76.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com

• In my daily analysis of the natural gas markets, the first thing I notice is that this asset is struggling overall, as every time we have rallied over the last couple of weeks, we’ve seen the natural gas markets fall.
• In fact, when you look at the weekly chart, the past 2 weeks have seen shooting stars form, and I think that does suggest that it is probably only a matter of time before we drop.

All things being equal, the market were to continue breaking down from here, it could very easily drop to the $2.00 level, which is a large, round, psychologically significant figure, and therefore I think it would make a lot of sense for us to test that area. The $2.00 level is an area that I think will continue to be crucial, as we had bounce from there and of course it is a large, round, psychologically significant figure, and an area where think you would see a lot of options barriers, and of course a lot of traders willing to “step in and pick up value.”

Cyclical Trade

Cyclical trade at this point in time is obvious, and therefore I think a lot of people have to pay close attention to it. The market is likely to continue to see a lot of volatility, but I think at this point in time it’s also worth paying close attention to the idea that we are in the slowest part of the year as far as demand is concerned. That being said, as we get later in the year, it’s likely that natural gas will rally again, as we have seen time and time again. After all, as temperatures drop in the northeastern part of the United States, that does drive up the price and demand of natural gas in general. All things being equal, this is a market that I think is still in the process of bottoming out in trying to find enough support to turn things around.

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