• Silver drops 0.85%, retreating from a daily peak of $32.26, pressured by rising US Treasury yields.
• XAG/USD must decisively clear $32.00 for a bullish continuation toward the YTD high of $32.51.
• Failure to hold above $32.00 risks a slide towards $31.44, with $31.00 as key support.

Silver price retraces after matching the September 24 daily peak of $32.26 and drops beneath the $32.00 figure, losing over 0.85%, weighed by higher US Treasury yields. Also, a recovery of the US Dollar and investors’ reluctance to push the grey metal prices higher kept XAG/USD at familiar levels.

XAG/USD Price Forecast: Technical outlook

The uptrend on Silver remains in place, but price action suggests that buyers are struggling to keep the spot price above the $32.00 mark. During the year, XAG/USD has cracked the $32.00 barrier eight times, but after that, the non-yielding metal, dove.

For a bullish continuation, the XAG/USD must decisively clear the $32.00 mark. After that, traders need to test the year-to-date (YTD) high at $32.51, followed by the $33.00 mark. On further strength, XAG/USD could aim towards the October 1, 2012, peak at $35.40.

Conversely, if XAG/USD falls below $32.00, the next support would be the September 20 daily high at $31.44 before testing $31.00.

XAG/USD Price Action – Daily Chart

XAU/USD Current price: $2,653.99

• Geopolitical tensions undermined the market mood and helped the US Dollar.
• The focus remains on the United States inflation update scheduled for Friday.
• XAU/USD eased from fresh highs, but its bearish potential remains limited.

Spot Gold positive bias continued on Wednesday, as the bright metal traded as high as $2,670.43 a troy ounce. The XAU/USD pair retreated as the US Dollar gathered momentum within American trading hours, firmly up against most major rivals. Gold, however, remains resilient due to its safe-haven conditions, as Wall Street turned red, with the Dow Jones Industrial Average losing over 240 points at the time of writing.

The sentiment deteriorated rapidly by the end of the European session, helped by escalating geopolitical concerns. On the one hand, United States (US) President Joe Biden said that an all-out war is possible in the Middle East, but there is also the possibility of a settlement. Meanwhile, Russian President Vladimir Putin threatened once again with the use of nuclear weapons.

At the same time, the Organization for Economic Cooperation and Development  (OECD) maintained the US growth forecast for 2024 at 3.6% but downwardly revised 2025 progress to 1.6% from 1.8% previously. Finally, higher US Treasury yields are helping the USD on its way up.

Data-wise, the macroeconomic calendar remained scarce. Speculative interest keeps waiting for the US Personal Consumption Expenditures (PCE) Price Index to be released on Friday. The Federal Reserve’s (Fed) favorite inflation gauge is expected to show that price pressures continued to recede in August.

XAU/USD short-term technical outlook  

The daily chart for the XAU/USD pair shows it struggles around its opening and that a corrective decline is not out of the picture. Technical indicators retreated modestly but hold within overbought readings without downward strength. At the same time, the pair keeps developing above bullish moving averages, with the 20 Simple Moving Average (SMA) maintaining its firm upward slope over $100 below the current level.

The 4-hour chart shows XAU/USD entered a consolidative phase, while the risk of a downward extension seems limited. The 20 SMA keeps heading north at around $2,638, while the 100 and 200 SMAs extended their advances far below the shorter one. The Momentum indicator turned lower, although it holds far above its midline, while the Relative Strength Index (RSI) indicator turned flat at around 66, also suggesting absent selling interest.

Support levels: 2,652.60 2,638.10 2,623.25

Resistance levels: 2,670.00 2,685.00 2,700.00

In general, this is a market that has plenty of things to push it higher, but I don’t necessarily think that it’s got a huge run ahead of it. When you look at longer term charts, you see that the $3 level has been crucial multiple times, and as we approach it, I would expect some type of pullback unless of course a hurricane or a tropical storm actually shuts down production in places like Louisiana.

Even if that were to happen, that would have a short-term effect. We would probably get some type of pullback that you could buy into heading into the winter, and then you collect your profit. Remember, I am long of natural gas via an ETF, and now we’re getting to the point where I may close out even more of my position and just take my profit and go home. As far as jumping in here and buying, I mean, it could work out, but it is a little late for that.

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

Adds comments and closing prices

NEW YORK, Sept 24 (Reuters) –Arabica coffee futures on ICE rose to a 13-year high on Tuesday as worries over the crop in top producer Brazil persisted, compounded by fears there will not be enough rains in the country in the weeks ahead.

Raw sugar futures also gained, hitting a seven-month peak.

COFFEE

* December arabica coffee KCc1 settled up 4.15 cents, or 1.6%, at $2.678 per lb​, having hit the highest since September 2011 at ​$2.7040.

* Dealers said rains this past weekend in Brazil’s coffee growing regions might be enough to stimulate the first crop flowering, but follow-up rains will be needed to help fix the flowers into cherries.

* “This is where things get tricky,” said one dealer, noting the 11-15 day forecast has trended drier.

* Capping gains in coffee prices though were reports that the EU Deforestation Regulation banning the import of commodities linked to deforestation could be delayed, dealers said.

* The regulation is due to come into effect at the end of December, and has been boosting coffee imports into the bloc for much of this year.

* November robusta coffee LRCc2 rose 0.7% at $5,312 a metric ton.

SUGAR

* October raw sugar SBc1 ​​settled up 0.57 cent, or 2.5%, at 23.12 cents per lb, having hit a seven-month high of 23.30 cents.

* Dealers said the market continues to be supported by downgrades to projections for sugar output in top producer Brazil both this year and next due to the drought and related fires.

* A survey by S&P Global Commodity Insights expects sugar production in Brazil’s centre-south to have fallen 1.3% in the first half of September from last year. Industry group Unica is expected to release the data in coming days.

* December white sugar LSUc1 ​​rose 1.9% at $595.40 a ton.

COCOA

* December New York cocoa CCc1 ​​​settled up $81, or 1%, to $7,867 a ton.

* March London cocoa LCCc2 ​fell 0.7% to 4,526 pounds per ton.

Reporting by Maytaal Angel and Marcelo Teixeira; Editing by Emelia Sithole-Matarise and Daniel Wallis

Resistance Seen at Bottom of Triangle Formation

Resistance was seen around the rising trendline at the bottom of a large symmetrical triangle pattern. Today’s 73.52 high may end a counter-trend rally following a breakdown from the triangle formation three weeks ago given that a test of resistance at the line has occurred. At the same time, the 20-Day MA was recaptured three days ago, and today’s trading range is fully above the 20-Day line.

These are short-term signs of strength that may lead to a test of resistance at higher prices. The 61.8% retracement at 73.74 is the next higher price level to watch, while a breakout above that level is followed by potential resistance around the falling 50-Day MA (orange), currently at 74.94. Notice that the 50-Day line has converged with the internal downtrend line as they point to similar resistance levels.

Eventual Turndown Anticipated

Given the bearish breakdown of the triangle pattern, crude oil is anticipated to eventually find resistance and turn back down to retest recent lows and possibly go lower. The long-term downtrend line, which represents potential support, was approached on the recent decline to 66.65, but it was not hit. Therefore, if a bearish reversal ensues the trendline may eventually be approached. A 33-month low of 63.67 can be watched for now as a proxy for the trendline. Notice that the trendline has not been tested as support since June 2023.

Rally Above 50-Day MA Would Counter Bearish Above Bearish Implications

Regardless of the bearish implications from the symmetrical triangle breakdown, that would start to change on a daily close above the 50-Day MA. Along with the 50-Day line keep an eye on how the month ends. Given that September will be ending shortly, the monthly chart may also provide clues. It is currently set up as a potentially bullish hammer candlestick pattern with a high of 75.19. Therefore, holding above the 50-Day line puts the monthly high in range.

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

• Silver price surges to near $31.00 on Fed dovish bets, China stimulus and Mid East tensions.
• Fed officials remain concerned over the US labor market outlook.
• Silver price holds the downward-sloping trendline breakout

Silver price (XAG/USD) climbs to near $31.00 in Tuesday’s European session. The white metal gains as on firm speculation for the Federal Reserve (Fed) 50 basis points (bps) interest rate cut in November, the announcement of monetary stimulus by China, and escalating Middle East tensions.

According to the CME FedWatch tool, the likelihood of the Fed reducing interest rates by 50 bps to 4.25%-4.50% in November has increased to 51% from 29% a week ago. This has weighed on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 100.80. Historically, lower US Dollar makes the Silver price an inexpensive bet for investors.

Market expectations for Fed large interest rate cuts have strengthened as recent commentaries from policymakers have indicated that they are worried about deteriorating job growth.

Meanwhile, China’s top regulators have announced a slew of stimulus measure to uplift their economy. This would improve the demand for Silver as metal, given that it has applications in various industries, such as electric vehicles and wires and cables, etc.

In the Middle East region, escalating tensions between Israel and Lebanon’s Hezbollah has improved Silver’s demand as a safe-haven asset. Mid-East conflicts deepened after Israel’s airstrike in southern Lebanon on Monday.

Silver technical analysis

Silver price strengthens as it holds the breakout of the downward-sloping trendline from May 21 high of $32.50. Upward-sloping 20-day Exponential Moving Average (EMA) near $29.85 suggests that the near-term outlook of the Silver price is bullish.

The 14-day Relative Strength Index (RSI) strives to sustain in the 60.00-80.00. A bullish momentum would trigger if the oscillator manages to do so.

Silver daily chart

• Gold price hangs close to record highs of $2,664 early Wednesday.   
• The US Dollar licks wounds with Treasury bond yields as China MLF cut boosts sentiment.   
• Gold price enters extremely overbought conditions on the daily chart, risks a long-due correction.

Gold price is consolidating near the highest level on record at $2,664 early Wednesday, struggling for a fresh upside boost amid a risk-on market profile and extremely overbought conditions on the daily chart.

Gold price extends winning streak, but for how long?

Risk sentiment receives a fresh boost in Asian trading on Wednesday after the People’s Bank of China (PBOC) cut the one-year Medium-term Lending Facility (MLF) rate from 2.30% to 2.0% on Thursday, in a bid to shore up the dwindling economy. The MLF rate reduction is one such measure among a host of other stimulus efforts rolled out by China lately.

Gold price appears to lack a bullish conviction, at the moment, as China stimulus optimism weighs on the traditional safe-haven on one side while on the other hand, it raises hopes of a potential increase in Chinese demand, as the dragon nation is the world’s top Gold consumer.

However, Gold price draws support from rallying global equities and growing expectations that the US Federal Reserve (Fed) will opt for a 50 basis points (bps) interest rate cut in November, which continue to undermine the US Dollar (USD) and the US Treasury bond yields.

On Tuesday, the USD was dumped across the board alongside the US Treasury bond yields on China’s stimulus-driven risk flows and weak US Conference Board (CB) Consumer Confidence and regional activity data. Soft data stoked another outsized Fed rate cut expectations at the upcoming meeting.

The CB Consumer Confidence Index dropped to 98.7 this month from an upwardly revised 105.6 in August, registering the largest decline since August 2021. Meanwhile, The Richmond Fed index fell to a 52-month low of -21 from a prior low of -19 in August and a low before that of -17 in July.

Markets are currently pricing in about a 60% chance of such a move, the CME Group’s Fed WatchTool shows. For the next two Fed meetings, rate futures are implying more than 80 bps in cuts. Additionally, the US Dollar also bore the brunt of the sell-off in US Treasury bond yields across the curve, triggered by a strong auction of US two-year government bonds.  

Looking ahead, there is no top-tier US economic data in the docket. However, speeches from Fed policymakers and risk trends will continue to play a pivotal role in the Gold price action. Further, Gold traders could also resort to repositioning ahead of a bunch of Fedspeak due Thursday, including the key opening remarks from Fed Chair Jerome Powell at the US Treasury Market Conference in New York.  

Gold price technical analysis: Daily chart

As observed on the daily chart, the extremely overbought conditions, as represented by the 14-day Relative Strength Index (RSI) flriting with the 80 level, suggest that a correction could be in the offing.  

If buyers flex their muscles, acceptance above the $2,670 round level is critical to unleashing further upside toward the $2,700 barrier.

On the flip side, any correction in Gold price will likely test the previous day’s low of $2,623, below which the $2,600 threshold will come into play.

Further south, Gold sellers could target the September 20 low of $2,585.

• Gold prices advance, underpinned by ETF Flows, China stimulus and safe haven flows,
• Gold ETF flows have been positive, and if this trend continues, it could further support the upward momentum of gold prices.
• From a technical analysis perspective, gold is in overbought territory, but this may not be a significant obstacle. The psychological $2,650 and $2675 handles are the next key resistance levels to watch.

Most Read: China Slashes Rates – Stimulus Package by PBoC Welcomed by Markets

Gold prices continue to hold the high ground, underpinned by heightened tension in the Middle East and stimulus from China. The precious metal is enjoying its best year in 14 as a host of challenges and concerns plague market participants.

Gold continues to print fresh highs as geopolitical headwinds continue to sway back and forth. Earlier today we had a stimulus package announcement by the People’s Bank of China (PBoC) which has further aided the precious metal. As big as the stimulus package from China is, I do not believe it will hold a major sway on Gold prices but rather other metals in the sector. 

Ongoing dovish comments from Federal Reserve officials only serve to add fuel to a fire which is already raging. Some policymakers have hinted at more aggressive cuts ahead which have underpinned gold prices to a degree overnight. The question regarding a lot of these events is how much of the premium is yet to be priced in given the current nature of the market.

As things stand, markets are pricing in another 50 bps cut from the Federal reserve at the November meeting. 

Source: CME FedWatch Tool

Gold ETF Flows Hint at Further Support

ETF flows remain positive following a huge spike in July to 47.7 tonnes. August came in more modest at around 28.5 tonnes the equivalent to $2.1 USD. North America led the way with the Western markets more active at present.

Source: LSEG, World Gold Council

Despite the excellent inflows over the last four months the year-to-date losses remain around 44 metric tonnes. The idea is that if these inflows continue however, this could keep the gold rally moving in the upward direction. Economists and analysts continue to upgrade their yearly forecasts.

JP Morgan for its part stressed that the retail-focused ETF builds will be key for a sustainable gold rally, raising its price target for the precious metal to $2850/oz in 2025.

Economic Data

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

On the economic data front, we do have some high impact US data which could impact the US Dollar and thus gold prices. However, it would require the Core PCE data print to be extremely hot on Friday to see any lasting impact on the rate cut expectations from the Fed.

Despite comments from Fed policymaker Bowman today intimating that inflation risks remain this is a long shot and any uptick in inflation may just be a temporary reprieve for Gold prices on its march higher.

Technical Analysis Gold (XAU/USD)

From a technical analysis standpoint, Gold is tough to read at the minute particularly where areas of resistance is concerned. As we continue to print fresh all time highs it makes it difficult due to the lack of historical price data to analyze. 

To put things into perspective, the RSI on the daily, weekly and monthly timeframe are all in overbought territory. However, as we know an instrument can languish weeks and sometimes months in overbought territory on the larger timeframes so this seems to be irrelevant at present.

The psychological 2650 mark is the most immediate area i would keep an eye on as we may see a reaction or profit taking at this area. Market participants love whole numbers and when it comes to gold the ’50 and 75′ levels are always key.

Looking at support and the 2625 area has been key over the last two days serving as a base fro gold on the smaller timeframes as the precious metal advance toward the 2650 handle. This may be a level worth monitoring moving forward.

GOLD One-Hour (H1) Chart, September 24, 2024

Source: TradingView (click to enlarge)

Support

Resistance

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Zain is an experienced financial markets analyst and educator with a rich tapestry of experience in the world of retail forex, economics, and market analysis. Initially starting out in a sales and business development role, his passion for economics and technical analysis propelled him towards a career as an analyst.

He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.

He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.

Breakouts on Multiple Time Frames

A monthly bullish breakout and double bottom breakout on the weekly and daily charts triggered two weeks ago on a move above 2.30. There was a bit of a lag in the advance afterwards as the breakout was followed by six days of consolidation. On the sixth day natural gas fell to test support around the 200-Day MA (blue) and it found it. Price was rejected from the 200-Day line as buyers took back control leading to two strong days up, followed by today’s high.

Strong Underlying Momentum

Given the strong upward momentum that followed the double bottom breakout and remaining higher targets, it seems likely that natural gas will make another attempt at higher prices following a retracement or consolidation. Strength was recently confirmed by the 20-Day MA crossing above the 200-Day MA and the 50-Day MA has just begun to turn up.

Moreover, a bullish reversal triggered this month on the monthly chart, and strength was further confirmed on the subsequent advance to a three-month high as July’s high of 2.60 was exceeded. The double bottom pattern points to a potential target around 2.72. If that price level is exceeded, then natural gas has a chance to test resistance around the downtrend line. For now, the 78.6% retracement at 2.89 can be used as a proxy for the trendline.

2.50 May See Support

Today’s high reached the top of a previously identified potential resistance zone from 2.65 to 2.67. Resistance was seen from the 61.8% Fibonacci retracement level at 2.67. Although a retracement to test support around the breakout level of 2.30, if bullish momentum is to stay strong a shallower retracement seems more likely. The 38.2% Fibonacci level is at 2.50, while the 50% retracement at 2.45 is joined with the prior swing high at 2.44.

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

XAU/USD Current price: $2,646.50

• Market players lifted bets of another 50 bps rate cut by the Federal Reserve.
• United States data surprised negatively, hurting demand for the US Dollar.
• XAU/USD trades at fresh record highs without signs of giving up.

Gold price hit yet another record high on Tuesday, changing hands as high as $2,639.99 a troy ounce during Asian trading hours, to break higher after Wall Street’s opening. The absence of relevant macroeconomic releases left financial markets without a fresh directional catalyst throughout the first half of the day, although the prevalent US Dollar’s weakness kept XAU/USD on the bullish side.

The bright metal extended gains beyond the $2,640 mark during the American session and after the release of discouraging United States (US) data. Consumer sentiment in the country deteriorated in September, with The Conference Board’s (CB) Consumer Confidence Index falling to 98.7 in September after printing at 105.6 in August. Even further, the Present Situation Index fell by 10.3 points to 124.3, while the Expectations Index declined by 4.6 points to 81.7 but remained above 80. Readings below it usually anticipate a recession. As a result, market participants lifted bets the Federal Reserve (Fed) could trim interest rates by 50 basis points (bps) once again in November.

Other than that, the Richmond Fed Manufacturing Index contracted to -21 in September from the previous -19 while missing the -17 anticipated. The macroeconomic calendar will remain scarce on Wednesday, with the focus moving to the end of the week when the US will release the August Personal Consumption Expenditures (PCE) Price Index.

XAU/USD short-term technical outlook  

XAU/USD trades around $2,645 with no signs of giving up. In the daily chart, the pair keeps posting higher highs and higher lows, while technical indicators maintain modest bullish slopes within overbought levels. At the same time, the pair develops far above bullish moving averages, with the 20 Simple Moving Average (SMA) now hovering at around $2,545.

The near-term picture also skews the risk to the upside, although some timid divergences anticipate a potential corrective slide. In the 4-hour chart, moving averages accelerated north far below the current level, in line with continued buying interest. However, the Momentum indicator keeps grinding lower in positive territory, diverging from price action. Finally, the Relative Strength Index (RSI) indicator maintains the positive bias, advancing near overbought readings just ahead of overbought readings.

Support levels: 2,628.10 2,613.50 2,598.10  

Resistance levels:  2,650.00 2,675.00 2,690.00