Will Breakout Confirm?

The advance today triggered a breakout of the closest prior swing high in the series of lower swing lows at 3.02. Once there is a daily close above 3.02, assuming further bullish moves, an upside breakout of a large symmetrical triangle pattern will have confirmed the breakout. In addition, today’s rally triggered a likely continuation of the bull trend that started from the August swing low, as there is now a higher swing high. A daily close above the 3.02 high also will confirm the continuation of that trend. A confirmed breakout indicates that there is a greater chance for a continuation of the move.

Upside Looks Towards 3.35

Once the price structure of the triangle is busted with a higher swing high, previous higher swing highs become a target. And a confirmed breakout above either will provide another sign of strength. The first is 3.16 from the peak in June. Given the potential improvement in momentum once a breakout is confirmed that price target may easily be surpassed leading to 3.22.

However, that is a short-term target as it is derived from the most recent rising ABCD pattern (light blue) that shows price symmetry between the two swings at that target. Further up is a price zone of potential resistance from 3.35 to 3.45. An ascending ABCD pattern (purple) reaches its target at 3.35. At 3.39 there is a match with resistance seen at the January peak, while there is an extended ABCD target at 3.42. The range ends with the target from a large rising ABCD pattern at 3.45.

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

• Rising concerns in the Russia-Ukraine crisis spark further gains in Gold .
• Steady geopolitical tensions favour the flight-to-safety environment.
• XAU/USD flirts with the $2,650 region prior to the $2,700 mark.

Persistent concerns in the geopolitical landscape encouraged market participants to increase their positions in the precious metal on turnaround Tuesday, a move that came in response to swelling effervescence in the Russia-Ukraine front and as a direct answer to bouts of demand for the safe haven universe.

Against that backdrop, prices of the troy ounce of the yellow metal advanced further north of the recently broken $2,600 mark, meeting immediate hurdle at the interim 55-day SMA in the $2,640 zone for the time being.

In addition, Gold’s rebound appears bolstered by a vacillating price action in the US Dollar (USD) as markets reassess the strength of the Trump-era rally. Additionally, the widespread loss of momentum in US Treasury yields across various maturities has also offered the metal further chances to recover.

It is worth noting that the resurgence of tensions on the geopolitical front came in response to reports over the weekend that the Biden administration has authorized Ukraine to use US-made weapons to strike Russian territory.

Looking ahead, this week’s focus will shift to key economic data releases globally, with preliminary PMIs expected to take center stage in the first turn. Comments from central bank officials are also likely to draw attention, especially following Fed Chair Jerome Powell’s remarks last week, where he reiterated the Fed’s cautious approach to further rate cuts, citing the resilience of the US economy.

Shifting the optics, non-commercial players (speculators) reduced their net long positions in Gold to approximately 236.5K contracts as of November 12, the lowest level since early June, according to the latest CFTC report. This decline coincided with a second consecutive drop in open interest, which could in turn morph into a signal that the recent downtrend in the commodity could start losing momentum.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows a clear break above the bullish 100-day Simple Moving Average (SMA) near $2,550, an area close to November’s low of $2,536. Further up, the so far weekly high around $2,540 (November 19) coincides with the transitory 55-day SMA, reinforcing this initial resistance zone. Up from here, the next minor target emerges at the weekly high of $2,749 (November 5).

On the other hand, a quick breach of the temporary 100-day SMA at $2,551 should shift the attention to the November bottom of $2,536 (November 14).

In the short term, the 4-hour chart suggests that the ongoing recovery has more room to run. The Relative Strength Index (RSI) has bounced but faces resistance around the 62 region, while the Average Directional Index (ADX) at 32 indicates a lack of strong trend momentum for the time being.

On the upside, the next resistance levels to watch are $2,639, followed by the more significant 200-SMA at $2,678 and the 100-SMA. On the downside, support remains firm at $2,536, a key level to watch if prices reverse course.

• Silver prices advance as dollar-denominated metals become more affordable, supported by a weaker US Dollar.
• The grey metal finds support from safe-haven inflows as tensions in the Russia-Ukraine conflict escalate.
• Non-interest-bearing assets encountered headwinds after Fed Chair Jerome Powell dampened expectations of imminent rate cuts.

Silver price (XAG/USD) continues to gain ground for the second consecutive day, trading around $31.40 per troy ounce during the Asian session on Tuesday. The prices of the dollar-denominated Silver recover from two-month lows as the US Dollar (USD) experiences profit-taking selling after a recent rally. This rally was fueled by expectations of fewer Federal Reserve (Fed) rate cuts and optimism about US economic outperformance under the incoming Trump administration.

Meanwhile, safe-haven Silver is gaining traction amid rising geopolitical tensions. US President Joe Biden authorized Ukraine to use US-made weapons for strikes deep within Russia, a move that escalated concerns in the region. In response, the Kremlin issued a warning on Monday, vowing to retaliate against what it called a reckless decision by the Biden administration. Russia had earlier cautioned that such actions could significantly increase the risk of confrontation with NATO.

Non-yielding assets like Silver faced headwinds after Fed Chair Jerome Powell tempered expectations of immediate rate cuts. Powell emphasized the economy’s strength, a robust labor market, and ongoing inflationary pressures. He stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.” Investors now await additional remarks from Fed officials this week for further insight into the trajectory of US interest rates.

Markets are closely monitoring China’s upcoming Loan Prime Rate (LPR) decision, anticipating potential additional stimulus measures to support economic growth. This follows the recent 10 trillion Yuan debt package, which did not include direct economic stimulus, heightening market concerns. As one of the world’s largest manufacturing hubs for electronics, solar panels, and automotive components, China’s industrial demand for Silver remains a key factor influencing its prices.

• Gold price builds on the previous recovery above $2,600 early Tuesday.
• Geopolitical risks and US Dollar pullback alongside Treasury bond yields power Gold price.
• Gold price eyes 50-day SMA resistance at $2,655 as the daily RSI remains bearish.   

Gold price extends the recovery into Asian trading on Tuesday, reversing half the previous week’s decline. The focus remains on the upcoming speeches from US Federal Reserve (Fed) policymakers and geopolitical tensions between Russia and Ukraine.   

Gold price gains on easing US Treasury bond yields

Gold price stays firm for the second consecutive day so far, drawing support from the recent retracement in the US Treasury bond yields across the curve, fuelling the corrective downside in the US Dollar (USD) against its major currency rivals.

 The US bond yields have embarked upon a correction mode as investors remain wary of the impact of the potential fiscal and trade policies to be introduced by US President-elect Donald Trump on the economic and inflation outlook.

Additionally, Gold price capitalizes on the renewed geopolitical escalation between Russia and Ukraine after US President Joe Biden authorized Ukraine to use American Army Tactical Missile Systems (ATACMS) to strike inside Russia on Sunday. The decision to allow the use of long-range US weapons inside Russia came after Moscow deployed North Korean ground troops to supplement its own forces.

Moreover, expectations of more stimulus measures coming in from China also bode well for the bright metal. China is the world’s top Gold consumer. Securities Journal, Chinese state media, quoted analysts saying further cuts to the Reserve Requirement Ratio (RRR) coming this year.

Note that China is the world’s top Gold consumer, and any support measures by the local authorities to boost economic performance seem positive for the precious metal. However, it remains to be seen if Gold price manages to hold on to its recovery momentum as traders turn cautious, awaiting more cues on the Fed’s interest rate outlook from the central bank talks due Tuesday and later this week.

Also, traders could refrain from placing fresh bets on the yellow metal ahead of the American AI giant Nvidia Inc.’s earnings report, which could significantly impact the broader market sentiment and the value of the USD, eventually influencing the USD-sensitive Gold price.

Gold price technical analysis: Daily chart

Technically, Gold price appears to be a ‘sell on bounce’ trade as long as the 14-day Relative Strength Index (RSI) remains below the 50 level. The indicator is currently trading near 45.

The immediate resistance is seen at the $2,630 round number, above which a strong topside barrier aligns at the 50-day Simple Moving Average (SMA) at $2,655.

Acceptance above the latter is critical to sustaining the recovery mode from two-month troughs of $2,537.

The next stiff resistance is located at $2,687, the 21-day SMA.

Failing to find a foothold above the 50-day SMA on a daily closing basis could revive the bearish sentiment, reinforcing sellers toward the $2,600 threshold.

Additional declines could threaten the confluence support at $2,551, where the 100-day SMA coincides with the September 18 low.

A sustained break below the last will trigger a fresh downtrend toward the $2,500 threshold, with the next bearish target seen at the September 4 low of $2,472.

• Technical outlook shows silver below the 50-day SMA at $31.54, with potential resistance at $32.00 and $32.95.
• Current market dynamics could push silver towards $33.00 if upward momentum continues.
• Bearish control remains if price drops below $30.13, key supports at $30.00 and September 6 low of $27.69.

Silver prices soar late in the New York session, trading with gains of over 3% at around $31.16 after bouncing off daily lows of $30.24. A weak US Dollar and falling US Treasury yields augmented appetite for precious metals, which halted their slide after the US Presidential Election.

XAG/USD Price Forecast: Technical outlook

Silver’s uptrend remains intact despite trading below the 50-day Simple Moving Average (SMA) at $31.54.  Although it has printed a lower low beneath the October 8 swing low of $30.13, sellers need the grey’s metal price to stay below the 50-day SMA. If that’s not achieved, the next resistance would be $32.00, followed by the October 4 peak at $32.95. On further strength, $33.00 would be up next.

On the other hand, XAG/USD is slumping below $30.13, and sellers are in charge. The next support would be $30.00, followed by the Intermediate support seen at $27.69, the September 6 low.

Oscillators such as the Relative Strength Index (RSI) remain bearishly biased, though in the short term, some upside is seen.

XAG/USD Price Chart – Daily

• The US Dollar loses momentum along with the Trump-led rally.
• Geopolitical jitters dominate the backdrop at the beginning of the week.
• XAU/USD manages to make a U-turn and reclaim the $2,600 barrier.

After six consecutive days of losses, Gold prices manage to regain some balance and trim part of the recent intense pullback, reclaiming the $2,600 mark per troy ounce and above in quite a positive start to the new trading week.

The favourable backdrop in the precious metal also appears propped up by another negative day in the US Dollar (USD) as market participants keep re-assessing the recent Trump-infused strong rally, while the lack of a clear direction in US yields across different time frames also gives the yellow metal fresh legs.

However, the resurgence of the geopolitical factor, precisely from the Russia-Ukraine war, seems to be mostly behind the wake-up call in the metal, particularly after Biden’s administration “authorised” Ukraine to use US-made weapons to strike Russian territory.

Moving forward, it should be a week dominated by data releases surrounding the real economy worldwide, where the publication of preliminary PMIs is expected to take centre stage. In addition, opinions from central bank officials are also seen keeping investors entertained, especially after Fed’s Chair Jerome Powell suggested last week that the central bank is in no rush to cut its interest rates further given a resilient US economy.

On another front, non-commercial players (speculators) have reduced their net long positions in Gold to about 236.5K contracts, a level not seen since early June, according to the CFTC Positioning report for the week ending November 12. This retracement also came in tandem with the second straight drop in open interest, aligning with the recent decline.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that it bounced from a bullish 100 Simple Moving Average (SMA) near $2,550, a region close to the November low ($2,536). However, the initial hurdle above $2,600 coincides with a Fibo retracement of the yearly rally and is expected to offer decent resistance.

In the near term, and according to the 4-hour chart, the ongoing upward correction seems poised to continue. The Relative Strength Index (RSI) rebounded but met resistance around the 55 level, while the Average Directional Index (ADX) around 32 is not supportive of a strong trend.

Initially, on the upside, emerges the 55-SMA at $2,630, which precedes the more significant 200-SMA and the provisional 100-SMA at $2,679 and $2,684, respectively. On the other hand comes $2,536.

The U.S. Energy Information Administration (EIA) has revealed its latest Henry Hub natural gas spot price forecast for 2024 and 2025 in its November short term energy outlook (STEO), which was released recently.

According to its latest STEO, the EIA now sees the Henry Hub spot price averaging $2.17 per million British thermal units (MMBtu) this year and $2.90 per MMBtu next year. In its previous STEO, the EIA projected that the Henry Hub spot price would average $2.28 per MMBtu in 2024 and $3.06 per MMBtu in 2025.

In its November STEO, the EIA forecast that the commodity would come in at $2.37 per MMBtu in the fourth quarter of 2024, $2.84 per MMBtu in the first quarter of 2025, $2.45 per MMBtu in the second quarter, $3.01 per MMBtu in the third quarter, and $3.29 per MMBtu in the fourth quarter.

In its October STEO, the EIA projected that the Henry Hub spot price would average $2.81 per MMBtu in the fourth quarter of 2024, $3.16 per MMBtu in the first quarter of 2025, $2.59 per MMBtu in the second quarter, $3.13 per MMBtu in the third quarter, and $3.35 per MMBtu in the fourth quarter.

“U.S. natural gas prices fell in October as natural gas consumption declined from September, production remained relatively unchanged, and storage inventories ended the month six percent above the five-year (2019–2023) average,” the EIA said in its latest STEO.

“The U.S. benchmark Henry Hub natural gas spot price averaged $2.20 per MMBtu in October, four percent lower than the September average of $2.28 per MMBtu,” it added.

In the November STEO, the EIA outlined that October’s natural gas demand drop was “led by a 14 percent (six billion cubic feet per day) decline in consumption in the electric power sector, offsetting an increase in consumption in the residential and commercial sectors”.

“Even though consumption in the electric power sector was down month over month in October, it was 13 percent higher than the month’s five-year average,” the EIA stated.

The organization said in the STEO that high power sector demand for natural gas reflected lower natural gas prices and higher air-conditioning use in parts of the United States experiencing extended summer-like conditions.

“We expect the Henry Hub price to rise in the next three months and to average more than $2.80 per MMBtu in the first quarter of 2025,” the EIA highlighted in the November STEO.

“We expect prices to average $2.90 per MMBtu for all of 2025, or 33 percent higher than the 2024 average of $2.20 per MMBtu, mainly because of increased liquefied natural gas (LNG) exports,” it added.

“Our forecast includes LNG exports increasing by nearly two billion cubic feet per day next year with continued strong international demand for LNG as export capacity expands,” it continued.

41% Year on Year Growth Projection

A BMI report sent to Rigzone by the Fitch Group this morning showed that BMI expects the Henry Hub price to average $2.4 per MMBtu in 2024, $3.4 per MMBtu in 2025, $3.8 per MMBtu across 2026 and 2027, and $4.0 per MMBtu in 2028.

A Bloomberg Consensus included in that report projected that the commodity will average $2.4 per MMBtu this year, $3.4 per MMBtu next year, $3.7 per MMBtu in 2026, $3.8 per MMBtu in 2027, and $4.0 per MMBtu in 2028.  

“We maintain our Henry Hub price forecast this quarter, expecting a substantial, 41 percent year on year growth in average prices to $3.4 MMBtu in 2025, from $2.4 MMBtu in 2024,” BMI analysts stated in the report.

“This growth will be primarily driven by growing demand for natural gas from the U.S. LNG sector, as we anticipate three new terminals to commence operations between now and the end of 2025,” they added.

“We also expect weaker net gas imports from Canada which will further tighten the U.S. market,” they continued.

In the report, the analysts warned that the upside is set to be weakened by accelerating natural gas production growth in the United States.

“That said, we recognize growing downside risks to the 2025 price forecast stemming from downside risks to the domestic and Mexican natural gas demand and upside risks to natural gas production stemming from improved sentiment in the U.S. upstream market in the light of the election victory of the former President Donald Trump,” the analysts noted.

“His policies could also impact our forecasts beyond 2025, raising risks to our view,” they added.

In a research note sent to Rigzone last Friday by the JPM Commodities Research team, J.P. Morgan projected that the U.S. natural gas Henry Hub price will average $2.37 per MMBtu in 2024 and $3.50 per MMBtu in 2025.

The company sees the commodity averaging $2.75 per MMBtu in the fourth quarter of 2024, $3.55 per MMBtu in the first quarter of 2025, $3.10 per MMBtu in the second quarter, $3.55 per MMBtu in the third quarter, and $3.80 per MMBtu in the fourth quarter, the note highlighted.

A report sent to Rigzone last Tuesday by Standard Chartered Bank Commodities Research Head Paul Horsnell showed that the company expects the nearby future NYMEX basis Henry Hub price to average $3.20 per MMBtu in the first quarter of 2025, $3.50 per MMBtu across the second and third quarters, $2.80 per MMBtu in the fourth quarter, and $3.25 per MMBtu overall next year.

Main NatGas Theme? Storage

In an exclusive interview with Rigzone, Frederick J. Lawrence, the ex-Independent Petroleum Association of America (IPAA) Chief Economist, said storage was the main natural gas theme by last week’s end but highlighted that “there are some encouraging demand signals related to demand, weather, and LNG”.

“Natural gas prices dropped toward the end of last week following a bearish EIA storage report that showed a 42 billion cubic foot net increase for the week ending November 8,” Lawrence told Rigzone, noting that storage is relatively comfortable at this point in the year after a spate of warmer than normal weather across most of the United States.

“As per the EIA report, natural gas storage was 158 billion cubic feet higher than last year at this time and 228 billion cubic feet above the five-year average,” he added.

Lawrence highlighted to Rigzone that the EIA natural gas weekly report for the week ending November 13 “showed that gas demand was up 4.9 percent last week with residential and commercial demand rising 23.8 percent compared to the previous week”. 

The ex-IPAA Chief Economist also noted that the EIA natural gas weekly report showed that natural gas exports rose 1.4 billion cubic feet per day.

“Higher international gas prices resulted from colder weather in Northeast Asia and Europe in addition to supply risk related to Russian gas flows to Austria,” Lawrence highlighted.

Lawrence also told Rigzone that, in the U.S. market, “some of the election-related impact on certain commodities and equity segments faded by the end of the week with the market more concerned with caution on future interest rate action”. 

In a separate exclusive interview with Rigzone, Jim Krane, a Research Fellow at Rice University’s Baker Institute, said traders got a surprise last week with more gas in storage than expected.

“As the Permian oil production gets gassier over time, we may get more such surprises,” Krane warned.

To contact the author, email andreas.exarheas@rigzone.com

• Silver kicks off the new week on a positive note, though the upside potential seems limited.
• The technical setup supports prospects for the emergence of fresh selling at higher levels. 
• A sustained strength beyond the $31.00 mark is needed to negate the negative outlook.

Silver (XAG/USD) regains positive traction at the start of a new week and climbs to the $30.70-$30.75 area during the Asian session, albeit it remains confined in a multi-day-old range around the 100-day Simple Moving Average (SMA).

The XAG/USD last week rebounded from the $29.70-$29.65 support zone, representing the 61.8% Fibonacci retracement level of the August-October rally. Moreover, the emergence of fresh buying on Monday favors bullish traders. That said, technical indicators on the daily chart are holding in negative territory and are still away from being in the oversold zone. Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the $31.00 round-figure mark. 

Some follow-through buying, however, will suggest that the recent corrective fall from the vicinity of the $35.00 psychological mark, or a 12-year peak touched in October, has run its course and pave the way for additional gains. The XAG/USD might then climb to the next relevant hurdle near the $31.70 area (38.2% Fibo. level) before aiming to reclaim the $32.00 round figure. 

On the flip side, the $30.20 region, followed by the $30.00 psychological mark could act as immediate support ahead of the $29.70-$29.65 area, or a two-month low touched on Friday. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the XAG/USD below the $29.00 mark, towards the very important 200-day SMA support near the $28.80-$28.75 zone en route to the $28.40-$28.35 region, or the 78.6% Fibo. level.

Silver daily chart

• Gold price rises for the first time in seven days as a new week begins.
• Renewed Russia-Ukraine geopolitical woes and a subdued US Dollar aid the Gold price rebound.
• Gold price defends key support near $2,550 as the daily RSI tests oversold territory and bounces.   

Gold price stages a solid comeback early Monday, testing the $2,600 threshold as buyers return on looming risks of a geopolitical escalation between Russia and Ukraine.   

Gold price capitalizes on safe-haven demand

In the latest development that occurred over the weekend,  US President Joe Biden authorized Ukraine to use  American Army Tactical Missile Systems (ATACMS) to strike inside Russia. The decision to allow the use of long-range US weapons inside Russia came after Moscow deployed North Korean ground troops to supplement its own forces.

Markets remain wary of further escalation in the Russia-Ukraine tensions amid the ongoing conflict between Israel and Iran, spurring safe-haven flows into the bright metal.

Gold price also capitalizes on China’s efforts to ramp up the country’s stock market activity. China Securities Regulatory Commission (CSRC) announced that it will expand the scope of stock eligible to trade via the Shanghai-Hong KongStock Connect.

Note that China is the world’s top Gold consumer, and any support measures by the local authorities to boost economic performance seem positive for the precious metal.

Meanwhile, a broad-based US Dollar (USD) upside consolidative phase also aids the Gold price upswing as buyers take a breather heading into the new week.

The USD has rallied hard to reach the highest level in a year against its major rivals last week, courtesy of the Trump trades. US President-elect Donald Trump’s fiscal and trade policies are seen as inflationary and supportive of a higher Greenback.

Attention now remains on the upcoming speech by Chicago Federal Reserve (Fed) President Austan Goolsbee in the absence of top-tier economic releases on Monday. Geopolitical developments will also be closely eyed for any significant impact on the traditional safe-haven asset, Gold.

Gold price technical analysis: Daily chart

The short-term technical outlook for Gold price remains more or less the same, with any recovery attempts likely to be short-lived as long as the 14-day Relative Strength Index (RSI) stays bearish.

However, the latest uptick in the leading indicator justifies the Gold price rebound from the critical support of $2,548, where the 100-day Simple Moving Average (SMA) and the September 18 low merge.

In doing so, Gold price challenges the $2,600 mark. Recapturing the latter on a daily closing basis is critical to unleashing the additional recovery toward the November 13 high of $2,619.

Further up, the $2,650 psychological barrier could check the upswing. The 50-day SMA aligns near that level, making it a strong resistance.

On the flip side, the immediate support is seen at the abovementioned confluence support of $2,548.

A sustained break below the last will initiate a fresh downtrend toward the $2,500 threshold, with the next bearish target seen at the September 4 low of $2,472.

• The Gold price attracts some buyers to around $2,570 in Monday’s early Asian session. 
• Traders wind back expectations for a Fed rate cut in December, weighing on the yellow metal.
• Geopolitical risks could boost the Gold price, a traditional safe-haven asset. 

The Gold price (XAU/USD) rebounds to near $2,570, snapping the six-day losing streak during the early Asian trading hours on Monday. However, the strength of the US Dollar (USD) might cap the upside for the precious metal. 

The Greenback rally in the wake of Donald Trump’s election win could exert some selling pressure on the USD-denominated Gold price. The expectations of higher inflation next year due to Donald Trump’s policies have led to fewer expected rate cuts. 

Furthermore, traders pared back expectations for lower rates in December after Fed Chair Jerome Powell said that the US central bank would be in no rush to cut, citing the “remarkably good” performance of the economy. Higher interest rates generally drag the Gold price lower, as it makes holding non-yielding assets like gold less appealing.

On the other hand, the rising geopolitical tensions in the Middle East and the ongoing conflict between Ukraine and Russia could boost the safe-haven flows, benefiting the yellow metal. President Joe Biden’s administration has allowed Ukraine to use US arms to strike inside Russia in a significant reversal of Washington’s policy in the Ukraine-Russia conflict, per Reuters.