Wall Street recovers amid mounting speculation Donald Trump could win the US elections.
United States first-tier data to be out later in the week keeps investors in cautious mode.
XAU/USD remains under selling pressure in the near term, support at $2,377.10.
Spot Gold keeps marching south on Monday, with XAU/USD trading at around $2,390. The bright metal peaked last week at a record high of $2,483.63, retreating afterwards straight to the current levels. The US Dollar gained upward traction after Wall Street’s opening, while stocks recover following one of the worst weeks of the year.
Optimism seems to be benefiting the American currency despite political noise from the weekend. President Joe Biden decided to step down from the presidential race, which ended up boosting hopes for a Donald Trump victory, known for being more “pro-market.”
Meanwhile, upcoming United States (US) first-tier figures maintain investors in wait-and-see mode. The country will publish this week the first estimate of the Q2 Gross Domestic Product (GDP), alongside a revision of the Fed’s favorite inflation gauge for the first quarter, the Personal Consumption Expenditures (PCE) Price Index. Additionally, the US will release June PCE inflation on Friday.
XAU/USD short-term technical outlook
The XAU/USD pair is down for a fourth consecutive day, with the slide decelerating, suggesting the correction may soon be over. The daily chart shows the pair holds above a bullish 20 Simple Moving Average (SMA) which advances above also ascending 100 and 200 SMAs while providing dynamic support at around $2,377.10. Meanwhile, the technical indicators are losing their downward strength within positive levels, near completing the overbought correction.
In hte near term, and according to the 4-hour chart, the risk remains skewed to the downside. XAU/USD trades below a firmly bearish 20 SMA, while pressures a mildly bullish 100 SMA, suggesting continued selling pressure. At the same time technical indicators head south near oversold readings, with no signs of changing course.
Support levels: 2,377.10 2,364.00 2,349.50
Resistance levels: 2,412.10 2,425.70 2,439.90
XAU/USD Current price: $2,392.80
Wall Street recovers amid mounting speculation Donald Trump could win the US elections.
United States first-tier data to be out later in the week keeps investors in cautious mode.
XAU/USD remains under selling pressure in the near term, support at $2,377.10.
Spot Gold keeps marching south on Monday, with XAU/USD trading at around $2,390. The bright metal peaked last week at a record high of $2,483.63, retreating afterwards straight to the current levels. The US Dollar gained upward traction after Wall Street’s opening, while stocks recover following one of the worst weeks of the year.
Optimism seems to be benefiting the American currency despite political noise from the weekend. President Joe Biden decided to step down from the presidential race, which ended up boosting hopes for a Donald Trump victory, known for being more “pro-market.”
Meanwhile, upcoming United States (US) first-tier figures maintain investors in wait-and-see mode. The country will publish this week the first estimate of the Q2 Gross Domestic Product (GDP), alongside a revision of the Fed’s favorite inflation gauge for the first quarter, the Personal Consumption Expenditures (PCE) Price Index. Additionally, the US will release June PCE inflation on Friday.
XAU/USD short-term technical outlook
The XAU/USD pair is down for a fourth consecutive day, with the slide decelerating, suggesting the correction may soon be over. The daily chart shows the pair holds above a bullish 20 Simple Moving Average (SMA) which advances above also ascending 100 and 200 SMAs while providing dynamic support at around $2,377.10. Meanwhile, the technical indicators are losing their downward strength within positive levels, near completing the overbought correction.
In hte near term, and according to the 4-hour chart, the risk remains skewed to the downside. XAU/USD trades below a firmly bearish 20 SMA, while pressures a mildly bullish 100 SMA, suggesting continued selling pressure. At the same time technical indicators head south near oversold readings, with no signs of changing course.
Oil prices are expected to drop to the mid-$70s next year amid a surplus on the market, according to Morgan Stanley.
Currently, the oil market is tight and warrants the $80s per barrel price range, but with seasonal demand starting to abate in the fourth quarter, market balances are set to return, the investment bank said in a note carried by Reuters on Monday.
In the fourth quarter of 2024, the market would be balanced “when seasonal demand tailwinds abate and both OPEC and non-OPEC supply return to growth,” Morgan Stanley’s analysts wrote.
Next year, the market will even tip into a surplus amid rising supply from both OPEC+ and non-OPEC+ producers, the bank’s commodity strategists reckon.
According to the bank, global refinery runs will hit their 2024 peak in August and are not expected to reach this level again until July next year.
That’s why Morgan Stanley expects Brent Crude prices to drop from current levels to the mid $70s to high $70s per barrel range in 2025.
Early on Monday, Brent Crude prices were up by 0.52% at $83.07, while the U.S. benchmark, WTI Crude, was trading 0.49% higher at $80.46.
Morgan Stanley reiterated in the note its price forecast of $86 per barrel Brent oil for the third quarter of 2024.
Goldman Sachs has also recently reaffirmed its outlook from June that
Brent crude prices are set to rise to $86 per barrel this summer amid strong consumer demand which will put the market into a sizeable deficit in the third quarter.
The Joint Ministerial Monitoring Committee (JMMC), the OPEC+ panel monitoring the oil market, is not expected to recommend in August any changes to the current production policy plan of the group, OPEC+ delegates told Bloomberg last week.
When the panel meets again on August 1, the meeting is expected to be a routine one, and no recommendations on oil production policy – other than the OPEC+ group has already announced – are expected to be issued, according to Bloomberg‘s anonymous sources among the OPEC+ delegates.
Gold price bounces off $2,400 amid a positive start to a Big week.
Despite risk aversion, the US Dollar stays softer with US Treasury bond yields.
Gold price looks to $2,425, as the daily RSI turns north above 50.
Gold price is attempting a bounce from $2,400, having snapped a three-day corrective decline from record highs of $2,484. Gold price capitalizes on a broad-based US Dollar softness alongside sluggish US Treasury bond yields even as markets stay risk averse.
Gold price keenly awaits top-tier US economic data
As investors digest the recent US political developments, the US Dollar maintains a weaker undertone so far this Monday. On Sunday, US President Biden dropped out of the election race and endorsed Vice President Kamala Harris for the Democratic ticket. Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 4 cents to 60 cents, while Harris climbed 12 cents to 39 cents, per Reuters.
A Democratic win would imply higher taxes and the need for lower borrowing costs, suggesting that policy easing for the US Federal Reserve (Fed). This, in turn, would be bearish for the US Dollar in the long term. Therefore, the Greenback is unable to take advantage of the market’s anxiety amid renewed China growth worries while gearing up for key US event risks later this week.
The US equity and Treasury futures rise, exerting negative pressure on the US Treasury bond yields across the curve, lending additional support to the non-yielding Gold price. Markets also seem to ignore the People’s Bank of China’s (PBOC) interest-rate cuts to its one-year and five-year mortgage lending rates, as it raises concerns that the government recognizes the downward pressure on China’s economy.
Markets also stay unnerved as a packed week of corporate earnings unfolds, with Tesla and Google-parent Alphabet due on the cards. Additionally, traders resort to repositioning ahead of Thursday’s advance US second-quarter Gross Domestic Product (GDP) and the Fed favored inflation gauge out on Friday.
Markets are currently pricing in a September rate cut, as futures show a 97% chance, according to the CME Group’s FedWatch Tool.
Ahead of these key events, Gold price could maintain a buoyant tone amid dovish Fed expectations and the US political uncertainty. However, the fading Asian physical demand for Gold price could act as a headwind for the bright metal. Asian customers, especially the Indians, refrained from making new purchases despite deep discounts, as they preferred to book profits on record-high bullion prices.
China, dealers were offering discounts of up to $6 an ounce on international spot prices, the lowest in more than two years as per Reuters records.
Gold price technical analysis: Daily chart
Gold price has found fresh buyers, as the 14-day Relative Strength Index (RSI) stalls its descent and turns north again while holding above the 50 level. The indicator is currently at 55.
The 21-day and 50-day Simple Moving Averages (SMA) Bull Cross also remains in play, adding credence to the renewed upside in Gold price.
if Gold price rebound picks up strength, the $2,425 static resistance will be tested. The next topside barrier is seen at the previous lifetime high of $2,450, above which buyers will target the new all-time high of $2,484 reached last week.
Conversely, should sellers fight back control, Gold price could challenge the $2,400 threshold once again. Acceptance below that level could accentuate the downside toward the 21-day SMA at $2,376.
Additional weakness could expose the 50-day SMA support at $2,360.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price bounces off $2,400 amid a positive start to a Big week.
Despite risk aversion, the US Dollar stays softer with US Treasury bond yields.
Gold price looks to $2,425, as the daily RSI turns north above 50.
Gold price is attempting a bounce from $2,400, having snapped a three-day corrective decline from record highs of $2,484. Gold price capitalizes on a broad-based US Dollar softness alongside sluggish US Treasury bond yields even as markets stay risk averse.
Gold price keenly awaits top-tier US economic data
As investors digest the recent US political developments, the US Dollar maintains a weaker undertone so far this Monday. On Sunday, US President Biden dropped out of the election race and endorsed Vice President Kamala Harris for the Democratic ticket. Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 4 cents to 60 cents, while Harris climbed 12 cents to 39 cents, per Reuters.
A Democratic win would imply higher taxes and the need for lower borrowing costs, suggesting that policy easing for the US Federal Reserve (Fed). This, in turn, would be bearish for the US Dollar in the long term. Therefore, the Greenback is unable to take advantage of the market’s anxiety amid renewed China growth worries while gearing up for key US event risks later this week.
The US equity and Treasury futures rise, exerting negative pressure on the US Treasury bond yields across the curve, lending additional support to the non-yielding Gold price. Markets also seem to ignore the People’s Bank of China’s (PBOC) interest-rate cuts to its one-year and five-year mortgage lending rates, as it raises concerns that the government recognizes the downward pressure on China’s economy.
Markets also stay unnerved as a packed week of corporate earnings unfolds, with Tesla and Google-parent Alphabet due on the cards. Additionally, traders resort to repositioning ahead of Thursday’s advance US second-quarter Gross Domestic Product (GDP) and the Fed favored inflation gauge out on Friday.
Markets are currently pricing in a September rate cut, as futures show a 97% chance, according to the CME Group’s FedWatch Tool.
Ahead of these key events, Gold price could maintain a buoyant tone amid dovish Fed expectations and the US political uncertainty. However, the fading Asian physical demand for Gold price could act as a headwind for the bright metal. Asian customers, especially the Indians, refrained from making new purchases despite deep discounts, as they preferred to book profits on record-high bullion prices.
China, dealers were offering discounts of up to $6 an ounce on international spot prices, the lowest in more than two years as per Reuters records.
Gold price technical analysis: Daily chart
Gold price has found fresh buyers, as the 14-day Relative Strength Index (RSI) stalls its descent and turns north again while holding above the 50 level. The indicator is currently at 55.
The 21-day and 50-day Simple Moving Averages (SMA) Bull Cross also remains in play, adding credence to the renewed upside in Gold price.
if Gold price rebound picks up strength, the $2,425 static resistance will be tested. The next topside barrier is seen at the previous lifetime high of $2,450, above which buyers will target the new all-time high of $2,484 reached last week.
Conversely, should sellers fight back control, Gold price could challenge the $2,400 threshold once again. Acceptance below that level could accentuate the downside toward the 21-day SMA at $2,376.
Additional weakness could expose the 50-day SMA support at $2,360.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price extends correction from all-time highs of $2,484, paring weekly gains early Friday.
The US Dollar rebounds firmly with US Treasury bond yields amid risk-aversion and Fed uncertainty.
Gold buyers stay hopedul as the daily RSI still holds above 50, ‘buy the dips’?
Gold price is on a three-day corrective decline from record highs of $2,484 on Friday, paring back weekly gains amid a solid rebound staged by the US Dollar (USD) alongside the US Treasury bond yields.
Gold price consolidates weekly gains ahead of more Fedspeak
The Greenback witnessed a dramatic comeback in the second half of Thursday’s trading after risk-aversion gripped markets, as Wall Street traders remained wary, rotating away from high-priced megacap growth stocks amid second-quarter earnings season.
Escalating trade tensions between the US and China combined with uncertainty on whether the US Federal Reserve (Fed) will go for another interest-rate cut after lowering rates in September weighed on the market sentiment, lifting the US Treasury bond yields across the curve. This, in turn, propelled the US Dollar from four-month troughs against its major currency rivals.
Markets are fully pricing in the September Fed rate cut while another cut in December is also likely, according to the CME Group’s FedWAtch Tool.
San Francisco Fed President Mary Daly participated in a ‘fireside chat’ at a conference late Thursday, noting that she is looking for more confidence that inflation is moving back to the Fed’s 2% target before calling for an interest rate cut.
Meanwhile, data on Thursday showed that US jobless claims rose to the highest level in nearly a year to a seasonally adjusted 243,000 for the week ended July 13. On the other hand, The Philly Fed Manufacturing Index jumped from 1.3 in June to an impressive 13.9 in July, reaching its highest point since April and smashing the 2.9 forecast. Mixed US economic data combined with prudent Fed commentary raised concerns on the scope of the Fed rate cuts this year.
Looking ahead, all eyes will remain on the speeches from the Fed officials, as the US central bank enters its ‘blackout period’ on Saturday before July 30-31 policy meeting. Fed policymakers John Williams and Raphael Bostic are due to speak later in the American session on Friday.
Also, Gold traders will stay cautious, as the end-of-the-week flows will remain in play and position readjustments ahead of next week’s advance US Gross Domestic Product (GDP) data for the second quarter.
Gold price technical analysis: Daily chart
Despite the recent retracement, the bullish bias for Gold price remains intact so long as the 14-day Relative Strength Index (RSI) remains above the 50 level. The indicator is currently at 60.
The previous week’s 21-day and 50-day Simple Moving Averages (SMA) Bull Cross also continues to lean in favor of Gold buyers.
The immediate support for Gold price is seen at the previous week’s high of $2,425. A sustained move below that level could accentuate the downside toward the 21-day SMA at $2,373.
Ahead of that, the $2,400 mark could come into play.
On the flip side, if Gold price resumes its uptrend, the previous lifetime high at $2,450 will be put to the test, above which the new all-time high of $2,484 will be challenged en route the $2,500 barrier.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price extends correction from all-time highs of $2,484, paring weekly gains early Friday.
The US Dollar rebounds firmly with US Treasury bond yields amid risk-aversion and Fed uncertainty.
Gold buyers stay hopedul as the daily RSI still holds above 50, ‘buy the dips’?
Gold price is on a three-day corrective decline from record highs of $2,484 on Friday, paring back weekly gains amid a solid rebound staged by the US Dollar (USD) alongside the US Treasury bond yields.
Gold price consolidates weekly gains ahead of more Fedspeak
The Greenback witnessed a dramatic comeback in the second half of Thursday’s trading after risk-aversion gripped markets, as Wall Street traders remained wary, rotating away from high-priced megacap growth stocks amid second-quarter earnings season.
Escalating trade tensions between the US and China combined with uncertainty on whether the US Federal Reserve (Fed) will go for another interest-rate cut after lowering rates in September weighed on the market sentiment, lifting the US Treasury bond yields across the curve. This, in turn, propelled the US Dollar from four-month troughs against its major currency rivals.
Markets are fully pricing in the September Fed rate cut while another cut in December is also likely, according to the CME Group’s FedWAtch Tool.
San Francisco Fed President Mary Daly participated in a ‘fireside chat’ at a conference late Thursday, noting that she is looking for more confidence that inflation is moving back to the Fed’s 2% target before calling for an interest rate cut.
Meanwhile, data on Thursday showed that US jobless claims rose to the highest level in nearly a year to a seasonally adjusted 243,000 for the week ended July 13. On the other hand, The Philly Fed Manufacturing Index jumped from 1.3 in June to an impressive 13.9 in July, reaching its highest point since April and smashing the 2.9 forecast. Mixed US economic data combined with prudent Fed commentary raised concerns on the scope of the Fed rate cuts this year.
Looking ahead, all eyes will remain on the speeches from the Fed officials, as the US central bank enters its ‘blackout period’ on Saturday before July 30-31 policy meeting. Fed policymakers John Williams and Raphael Bostic are due to speak later in the American session on Friday.
Also, Gold traders will stay cautious, as the end-of-the-week flows will remain in play and position readjustments ahead of next week’s advance US Gross Domestic Product (GDP) data for the second quarter.
Gold price technical analysis: Daily chart
Despite the recent retracement, the bullish bias for Gold price remains intact so long as the 14-day Relative Strength Index (RSI) remains above the 50 level. The indicator is currently at 60.
The previous week’s 21-day and 50-day Simple Moving Averages (SMA) Bull Cross also continues to lean in favor of Gold buyers.
The immediate support for Gold price is seen at the previous week’s high of $2,425. A sustained move below that level could accentuate the downside toward the 21-day SMA at $2,373.
Ahead of that, the $2,400 mark could come into play.
On the flip side, if Gold price resumes its uptrend, the previous lifetime high at $2,450 will be put to the test, above which the new all-time high of $2,484 will be challenged en route the $2,500 barrier.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The bear trend can be expected to continue until there are signs that sentiment is starting to change. Certainly, having found support at this week at a low of 2.015 shows potential for a bullish reversal but there are no signs of it yet. Given the current price pattern natural gas would need to rise above 2.21 and stay above it for an indication of strength that may be sustainable for at least a few days. If that happens a test of the 200-Day MA as resistance is a likely target as it is also marked by several other indicators. The 200-Day line is now at 2.44.
Above 2.21 Shows Strength
A rally above 2.21 would also put natural gas well above the internal downtrend line, a sign of strengthening. That would make the higher trendline a target. Notice that the purple 20-Day MA has converged with the internal trend line, and they are identifying a similar area of price. The 20-Day line is now at 2.41. That would put the target of the 20-Day MA slightly below the 200-Day line, as it is now. There are several other indicators identifying a similar price area as the 200-Day MA. Together, they create a potential resistance zone from 2.44 to 2.62.
Minor Bullish Sign in Weekly Chart
Natural gas is about to complete its fifth week in a row with lower weekly lows and lower highs. Also, this week it is on track to close at the highest price relative to the week’s trading range. In other words, relative to the week’s range, this week is set to close stronger than the prior five weeks. Not a big deal, but rather a small indication that natural gas is seeing some support off this week’s lows.
For a look at all of today’s economic events, check out our economic calendar.
U.S. crude oil fell on Friday, but still booked a fourth straight weekly gain as falling inventories show an uptick in demand.
West Texas Intermediate hit a session high of $84.52 per barrel, the highest level since late April, before pulling back. The U.S. benchmark gained about 2% this week, while global benchmark Brent was up 0.15%.
Here are Friday’s closing energy prices:
West Texas Intermediate August contract: $83.16 per barrel, down 72 cents, or 0.86%. Year to date, U.S. crude oil has gained 16.1%.
Brent September contract: $86.54 per barrel, down 89 cents, or 1.02%. Year to date, the global benchmark is ahead by 12.3%.
RBOB Gasoline August contract: $2.56 per gallon, down 3 cents, or 1.31%. Year to date, gasoline is ahead by 22.1%.
Natural Gas August contract: $2.32 per thousand cubic feet, down 9 cents, or 3.85%. Year to date, gas is lower by 7.5%.
Oil market analysts have been forecasting a tighter market in the third quarter as summer fuel demand picks up. U.S. inventory data appeared to confirm those forecasts, with crude stocks declining by 12.2 million barrels and gasoline falling by 2.2 million barrels last week.
“With oil inventories beginning to decline as a result of solid demand and constrained supply growth, investors have started to build oil exposure again,” Giovanni Staunovo, commodity analyst at UBS, told clients in a note on Thursday.
See Chart…
WTI vs. Brent
UBS is forecasting that global oil demand will grow by 1.5 million barrels per day, or bpd, this year, above the long-term growth rate of 1.2 million bpd. The bank is forecasting bigger inventory declines in the coming weeks as OPEC+ keeps production cuts in place through September.
“As such, we still believe Brent will likely reach the USD $90/bbl mark this quarter,” Staunovo said. JPMorgan has also forecast that Brent will hit $90 per barrel in August or September.
The internal downtrend line marks dynamic resistance for the current bear trend (retracement) as a rally above it will provide the first sign of strength that could lead to additional confirmation of strength. However, once today is complete, a rally above today’s high provides a short-term bullish indication. Upside follow through would then be key. Yesterday’s high was 2.21. It is fair to say that a sustainable bullish signal is not likely until natural gas rallies back above that high. That is as it stands now.
Initial Upside Target from 2.44 to 2.47
If a rally can get moving, an initial upside target for natural gas looks to be around 2.44. That begins a potential resistance zone up to 2.47, marked by several indicators. Both the 200-Day MA and 20-Day MA are at 2.44. A prior swing low support level, now potential resistance, lies around 2.47. Further, the downtrend line converges with this price area. But it doesn’t end there. The 38.6% Fibonacci retracement of the decline is within the zone at 2.45. Finally, notice that the most recent minor internal upswing caught resistance on July 9 at 2.45.
Below 2.00 Targets 1.92
Although there are reasons to suspect that the 2.02 to 2.00 price zone may continue to act as support, followed by a rally, the 61.8% Fibonacci retracement was exceeded to the downside on Monday. That opens the door to the 78.6% Fibonacci retracement at 1.92. The 2.02 to 2.00 price zone is derived from the completion of a descending ABCD pattern extended by the 161.8% golden ratio. It is anchored by a prior swing high from early-March at 2.00, which is also the top of a bottom symmetrical triangle pattern.
For a look at all of today’s economic events, check out our economic calendar.
Crude oil prices edged higher on Tuesday, June 11, after the Organisation of Petroleum Exporting Countries and its allies (OPEC+) stuck to its forecast for a relatively strong growth in global oil demand in 2024. Investors also waited for the outcome of the US Federal Reserve’s policy decision, which was due on Wednesday, June 12, as it may impact the global oil demand outlook.
Brent crude futures rose 49 cents, or 0.6 per cent, to $82.11 a barrel, continuing a sharp recovery since closing at a four-month low of $77.52 last week. That closing level was the lowest since February amid concerns of oversupply and low demand through the rest of 2024.
US West Texas Intermediate (WTI) crude futures gained 41 cents, or 0.6 per cent, to $78.15. Coming to domestic prices, crude oil futures last traded 0.76 per cent higher at ₹6,535 per barrel on the multi-commodity exchange (MCX).
What’s working for crude oil prices?
-OPEC maintained its 2024 forecast for relatively strong growth in global oil demand despite lower-than-expected use in the first quarter. It said travel and tourism would support consumption in the second half of the year. OPEC+ agreed to extend most of its deep oil output cuts well into 2025.
-Analysts noted that they are now at least considering the idea that maybe oil demand will pick up in the second half, and the market may actually need some additional OPEC supply after the OPEC’s demand outlook released today.
-The World Bank said on Tuesday that US economy’s stronger-than-expected performance has prompted it to lift its 2024 global growth outlook, but warned that overall output would remain well below pre-pandemic levels through 2026.
-Strong US economic data and inflation still higher than the Fed’s target have pushed financial markets to limit rate cut expectations to only two 25-basis points rate reductions this year, likely starting in September. Economists have said there was a considerable risk of only one or no rate cuts in 2024.
-The release of US consumer prices data for May and the conclusion of the Fed’s two-day policy meeting are both scheduled for Wednesday. The European Central Bank (ECB) should persist in restraining economic growth given the inflationary pressures and wait with its next rate cut until uncertainty recedes, said chief economist Philip Lane.
-If China’s producer price index (PPI) falls by two per cent or more year on year it would suggest that the deflationary risk spiral remains entrenched in China, which could result in lower demand for oil, according to analysts.
-Deflation can stifle spending as businesses and consumers delay purchases with the expectation that prices will fall, hitting economic activity and dampening oil demand. Saudi crude exports to China fell for a third straight month, pressuring prices further. US crude oil stockpiles were expected to have fallen by 1.8 million barrels in the week to June 7.
WTI crude oil futures rose more than three per cent at the start of week, on expectations of higher demand. US Energy Secretary Jennifer Granholm told Reuters that US could hasten the replenishment rate of Strategic Petroleum Reserve as maintenance on the stockpile is completed by the end of the year. The expectations of rising fuel demand this summer also aids the prices, according to Kaynat Chainwala, AVP-Commodity Research, Kotak Securities.
Analysts noted that Goldman Sachs predicts that crude oil demand will surge in the third quarter due to the peak summer driving season, with Brent prices potentially testing $86 a barrel. Additionally, they foresee a global oil market deficit of 1.3 million barrels per day in the third quarter.
‘’Crude oil prices are being supported by upbeat demand estimates from Goldman Sachs. However, strength in the dollar index could limit gains. We expect crude oil prices to remain volatile. Crude oil has support at $76.70–76.10 and resistance at $77.90–78.50. In INR, crude oil has support at ₹6,410–6,360 and resistance at ₹6,560–6,620,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
The European Central Bank left interest rates unchanged, failed to trigger action.
Mixed United States data and an uptick in Treasury yields helped the US Dollar.
XAU/USD eases for a second consecutive day, the bearish potential is well limited.
Spot Gold trades with a soft tone on Thursday, hovering around its daily opening just below the $2,460 mark. The US Dollar found some demand as government bond yields pared losses and posted a modest rebound, while stock markets turned south amid a worsening market mood. Discouraging American data coupled with an uneventfull European Central Bank (ECB) monetary policy announcement, pushing investors into safety.
The ECB left interest rates unchanged as widely anticipated, while the accompanying statement showed policymakers would remain data-dependant and take decisions meeting by meeting. European officials are considering that only one more rate cut this year could be possible, as inflation remains above the central bank’s goal.
United States (US) data was mixed, as Initial Jobless Claims for the week ended July 12 unexpectedly jumped to 243K, much worse than the 230K anticipated by market players. On the other hand, the July Philadelphia Fed Manufacturing Survey improved to 13.9 after printing at 1.3 in June and beating the expected 2.9.
It is worth adding, however, that the US Dollar shows limited strength, suggesting the current advance will remain corrective.
XAU/USD short-term technical outlook
The XAU/USD pair is under mild selling pressure for a second consecutive day, albeit barely retreating from record highs. Technical readings in the daily chart are far from suggesting a stepper decline, as indicators have barely retreated from overbought territory while lacking clear directional strength. At the same time, the pair keeps developing well above bullish moving averages, with the 20 Simple Moving Average (SMA) providing dynamic support at around $2,370.
In the near term, and according to the 4-hour chart, the technical picture is pretty much the same. XAU/USD is developing just above a firmly bullish 20 SMA, while the 100 and 200 SMAs also head higher, well below the shorter one. Technical indicators, in the meantime, pulled back from overbought readings but turned flat within positive levels, suggesting limited selling interest at the time.
Support levels: 2,448.90 2,435.50 2,422.65
Resistance levels: 2,465.00 2,483.70 2,495.00
XAU/USD Current price: $2,453.23
The European Central Bank left interest rates unchanged, failed to trigger action.
Mixed United States data and an uptick in Treasury yields helped the US Dollar.
XAU/USD eases for a second consecutive day, the bearish potential is well limited.
Spot Gold trades with a soft tone on Thursday, hovering around its daily opening just below the $2,460 mark. The US Dollar found some demand as government bond yields pared losses and posted a modest rebound, while stock markets turned south amid a worsening market mood. Discouraging American data coupled with an uneventfull European Central Bank (ECB) monetary policy announcement, pushing investors into safety.
The ECB left interest rates unchanged as widely anticipated, while the accompanying statement showed policymakers would remain data-dependant and take decisions meeting by meeting. European officials are considering that only one more rate cut this year could be possible, as inflation remains above the central bank’s goal.
United States (US) data was mixed, as Initial Jobless Claims for the week ended July 12 unexpectedly jumped to 243K, much worse than the 230K anticipated by market players. On the other hand, the July Philadelphia Fed Manufacturing Survey improved to 13.9 after printing at 1.3 in June and beating the expected 2.9.
It is worth adding, however, that the US Dollar shows limited strength, suggesting the current advance will remain corrective.
XAU/USD short-term technical outlook
The XAU/USD pair is under mild selling pressure for a second consecutive day, albeit barely retreating from record highs. Technical readings in the daily chart are far from suggesting a stepper decline, as indicators have barely retreated from overbought territory while lacking clear directional strength. At the same time, the pair keeps developing well above bullish moving averages, with the 20 Simple Moving Average (SMA) providing dynamic support at around $2,370.
In the near term, and according to the 4-hour chart, the technical picture is pretty much the same. XAU/USD is developing just above a firmly bullish 20 SMA, while the 100 and 200 SMAs also head higher, well below the shorter one. Technical indicators, in the meantime, pulled back from overbought readings but turned flat within positive levels, suggesting limited selling interest at the time.
And what that means is that during the summertime, typically it’s pretty weak, although we did recently see a spike higher due to a massive heat wave. Well, that’s come and gone. So, at this point, the next major spike will, unless there is a massive heat wave again, probably be the fall season when Americans start to heat their homes with natural gas again. Remember, this is an American contract you are trading. It’s not European.
Joe Biden signed an executive order not too awfully long ago in the last couple of years, which bans quite a bit of exporting of liquefied natural gas, not all, but quite a bit. So that’s why Europeans don’t get as much relief from the United States as you would expect. That is expected to be lifted into Donald Trump administration. And if that’s the case, it will massively change the dynamics of this market.
But as things stand right now, it is almost solely a domestic market. So, by all means, keep an eye on the US if you want to know what’s going on here. I use it as something to trade cyclically via ETF. If you don’t have the ability to trade an ETF, a very small CFD swing position is possible here, obviously to the upside, but you have to be willing to just let it go. It’s going to have to last probably a couple months to realize its full potential.
For a look at all of today’s economic events, check out our economic calendar.
