• Silver struggles to gain any meaningful traction and oscillates in a range on Tuesday.
• The technical setup favors bullish traders and supports prospects for further gains.
• Any meaningful downfall could be seen as a buying opportunity and remain limited.

Silver (XAG/USD) trades with a positive bias around the $30.80-$30.85 area during the Asian session on Tuesday and remains well within the striking distance of a two-month peak touched the previous day. 

From a technical perspective, Friday’s convincing breakout through the $30.00 psychological mark barrier, which coincided with a short-term descending trend line, was seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart have just started gaining positive traction and support prospects for a further near-term appreciating move for the XAG/USD. 

Acceptance above the $31.00 mark will reaffirm the constructive outlook and lift the white metal to the next relevant hurdle near the $31.45-$31.50 supply zone. Some follow-through buying should allow bulls to aim back to reclaim the $32.00 mark. The momentum should allow the XAG/USD to aim back to challenge a one-decade high, around mid-$32.00s touched in May. 

On the flip side, any meaningful corrective slide below the $30.50 immediate support is likely to attract fresh buyers and remain cushioned near the aforementioned descending trend-line resistance breakpoint, now turned support, near the $30.00 mark. The latter could act as a key pivotal point, which if broken might prompt some technical selling and make the XAG/USD vulnerable. 

The subsequent fall could get extended towards the $29.40-$29.35 intermediate support en route to the $29.00 round figure. Some follow-through selling could drag the XAG/USD to the next relevant support near the $28.20-$28.15 zone. This is followed by the $28.00 mark and the monthly low, around the $27.70 area, which if broken might shift the bias back in favor of bearish traders.

XAG/USD daily chart

 

• Silver price extends its upside due to rising expectations of an aggressive rate cut by the Fed.
• The demand for dollar-denominated Silver gains attraction as it becomes cheaper for buyers using other currencies.
• Markets assess demand prospects in China, given that Silver is crucial for a range of industrial applications.

Silver price (XAG/USD) continues its winning streak that began on September 9, trading around $31.00 per Troy ounce during Monday’s Asian session. The non-yielding Silver extends its upside due to growing speculation that the US Federal Reserve (Fed) will opt for a jumbo 50 basis points rate cut at its upcoming monetary policy meeting.

The demand for Silver is gaining traction due to a weaker US Dollar (USD), driven by lower Treasury yields. As Silver is a dollar-denominated commodity, it becomes cheaper for buyers using other currencies, which helps support increased demand for the precious metal.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, trades around 100.81, with 2-year and 10-year yields on US Treasury bonds standing at 3.58% and 3.65%, respectively, at the time of writing.

The market is divided over the scale of the rate cut by the Fed on Wednesday. According to the CME FedWatch Tool, markets anticipate 41.0% odds of a 25 basis point (bps) rate cut by the Fed at its September meeting. The likelihood of a 50 bps rate cut has increased to 59.0%, up from 50.0% a day ago.

Additionally, markets are evaluating demand prospects in China after mixed economic indicators. Silver is essential in various industrial applications, such as electronics, solar panels, and automotive components. Given China’s status as one of the world’s largest manufacturing hubs, the country’s industrial demand for Silver is significant.

XAU/USD Current price: $2,582.67

• Investors await the Federal Reserve announcement and the first rate cut in four years.
• Treasury bond yields fell towards fresh yearly lows, weighing on the US Dollar.
• XAU/USD retreated modestly from record highs, retains its bullish potential.

Gold price reached a fresh record high of $2,589.50 a troy ounce on Monday, retreating just modestly from the level and now trading at around $2,582.00 in the American session. XAU/USD surged during Asian trading hours, helped by a resurgent Japanese Yen (JPY), which put pressure on the US Dollar against all major rivals.

The USD/JPY pair fell to its lowest in over a year as investors keep an eye on the interest rate difference between the United States (US) and Japan, as both central banks are meant to announce their monetary policies this week. The Federal Reserve (Fed) is widely anticipated to cut the benchmark interest rate by 25 basis points (bps) on Wednesday, while the Bank of Japan (BoJ) will likely move in the opposite direction on Friday. The US Dollar also fell in anticipation of the Fed’s announcement, as there is a chance the central bank will go for a larger rate cut.

Meanwhile, US Treasury yields trade near fresh multi-month lows. The 10-year note currently offers 3.63%, while the 2-year note yields 3.55%, its lowest in two years.

XAU/USD short-term technical outlook  

The XAU/USD pair holds on to modest intraday gains, and technical readings in the daily chart show the risk skews to the upside, although the momentum receded. The pair finally detached from a bullish 20 Simple Moving Average (SMA), currently at around $2,517. The 100 and 100 SMAs gain upward traction far below the shorter one, reflecting persistent buying interest. Finally, technical indicators have turned flat, although they hold well into positive territory.

In the near term, and according to the 4-hour chart, XAU/USD seems poised to correct overbought conditions. Technical indicators are retreating from extreme levels with modest downward slopes, not enough to anticipate a steeper decline. Meanwhile, a firmly bullish 20 SMA heads firmly higher in the $2,550 region, far above the longer ones, which also advance.

Support levels: 2,575.20 2,563.60 2,550.00

Resistance levels: 2,590.00 2,605.00 2,620.00

• Silver gains some follow-through traction and climbs to a nearly two-month top on Monday.
• The technical setup suggests that the path of least resistance for the XAG/USD is to the upside.
• Any meaningful corrective slide could be seen as a buying opportunity and remain cushioned.

Silver (XAG/USD) builds on its recent strong upward trajectory witnessed over the past week or so and climbs to a nearly two-month top on Monday. The white metal sticks to its intraday gains through the first half of the European session and currently trades just below the $31.00 mark, up 0.70% for the day. 

Looking at the broader picture, Friday’s breakout through a short-term descending trend-line was seen as a fresh trigger for bullish traders. The subsequent move up, along with the fact that oscillators on the daily chart have just started gaining positive traction, suggests that the path of least resistance for the XAG/USD is to the upside and supports prospects for additional gains.

Hence, some follow-through strength towards testing the next relevant hurdle, around the $31.45-$31.50 supply zone, looks like a distinct possibility. The momentum could extend further towards reclaiming the $32.00 mark, above which the XAG/USD could climb back towards challenging a one-decade high, around mid-$32.00s touched in May. 

On the flip side, the $30.50-$30.45 horizontal zone now seems to protect the immediate downside. Any further decline could be seen as a buying opportunity and remain cushioned near the aforementioned descending trend-line resistance breakpoint, now turned support, currently near the $30.00 psychological mark. The latter could act as a key pivotal point for short-term traders. 

A convincing break below might prompt aggressive technical selling and make the XAG/USD vulnerable to accelerate the fall towards the $29.40-$29.35 region en route to the $29.00 round figure. Some follow-through selling might shift the bias in favor of bears and expose the $27.70 area, or the monthly low, with some intermediate support near the $28.20-$28.15 zone.

Silver daily chart

 

• As you can see, the natural gas markets initially tried to rally a bit only to turn around and show a certain amount of negativity as it looks like we are going to test the $2.50 level.
• The $200.50 level is an area that a lot of people will be paying close attention to, and that is an area that I think a lot of traders will see quite a bit of options barriers at as well.
• In general, you have to keep in mind that the natural gas market tends to rally this time of the year as temperatures in America are going to start dropping. And of course, demand will start to pick up.

Overall, this is a scenario that not only sees market memory at the $2.50 level, but we also see the 200 day EMA sitting underneath it that should offer support as well. On the other hand, if we turn around and take off to the upside, then we could see a market move that should go much higher, perhaps reaching the $2.80 level. This is a market that I think could be rather explosive, pardon the pun over the next several weeks.

The alternative scenario

On the other hand, if we turn around and break down below the 200 day EMA, then it’s possible that we could go down to the $2.30 level where we currently see the 50 day EMA. In general, I think this is a market that probably finds its way to the $3 level given enough time. And I am a buyer of this market on dips. Those positions that I’m buying though are small. They’re not huge because I understand how much trouble there is in the natural gas market for those who get over levered. So with this, I remain bullish, but I also recognize that this is just a trade for this time of year. And then once we get into the middle of winter, I tend to dump it and just simply forget about it for a while.

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• Gold price trades in positive territory near $2,580 in Monday’s early Asian session. 
• Firmer Fed rate cut expectations and persistent geopolitical risks continue to underpin Gold price. 
• Slow momentum in Chinese economic activity might weigh on the precious metal. 

Gold price (XAU/USD) gains momentum around $2,580 during the early Asian session on Monday. The precious metal reached a fresh all-time high at $2,586 on Friday amid rising expectations of a significant Federal Reserve (Fed) rate cut. The Federal Open Market Committee (FOMC) meeting on Wednesday will be in the spotlight.

The growing speculation of an interest rate cut by the Fed after US economic data signaled a slowing of the economy has boosted the yellow metal as lower interest rates reduce the opportunity cost of holding non-yielding Gold. Financial markets are now pricing in a 48% chance of a 25 basis points (bps ) US rate cut at its upcoming meeting on September 17-18, while the odds of a 50 bps cut stand at 52%, according to the CME FedWatch tool. 

“We are headed towards a lower interest rate environment, so gold is becoming a lot more attractive… I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude,” said Alex Ebkarian, chief operating officer at Allegiance Gold. 

Additionally, the ongoing geopolitical tensions in the Middle East provide further support to the safe-haven Gold price. Israeli Prime Minister Benjamin Netanyahu said on Sunday that Yemen’s Houthis will pay a “heavy price” after a missile fired by the group landed in central Israel, per the BBC. 

Nonetheless, the sluggish economy and the concerns about the economic slowdown in China might cap the upside for precious metals as China is the world’s biggest producer and consumer. The Chinese Retail Sales and Industrial Production were weaker than the expectation in August. Industrial output grew at the slowest pace since March, while Retail Sales had their second-slowest month of the year. 

 

NEW YORK: Coffee prices rose sharply on Tuesday in New York and London as investors raised their bullish bets on the beans following signs of deterioration for production in top grower Brazil, which will add to a global situation of limited supplies.

Benchmark arabica coffee futures on ICE exchange gained 4.5% at $2.3595 per lb. Prices for this type of mild-tasting coffee, the preferred choice by large chains including Starbucks and Tim Hortons, increased 25% so far this year.

Meanwhile, robusta coffee, which used to be a cheaper variety used in blends for popular supermarket brands, posted a 5% price increase in London on Tuesday to $4,383 per metric ton. Robusta is up 44% this year, after gaining 63% in 2023.

Analysts say financial investors are building long positions in coffee futures, betting prices will continue to climb on the back of production problems, particularly in Brazil.

“There are initial signs of leaf wilting and leaf dropping on Brazilian coffee fields,” said U.S. broker and analyst StoneX, when it cut its estimate for the Brazilian production following months of below-average rains.

On Monday, the head of Brazil’s largest coffee co-op Cooxupe said the company no longer expects increase in production this year in the area where it operates in the Brazilian states of Minas Gerais and Sao Paulo due to dry, hot weather.”Dry weather in Brazil is supportive and after no talk of concern for the 2025/26 crop, there is now a comment from a large producer which should know if there is a problem,” said a U.S. coffee broker referring to Cooxupe’s views.Brazil production problems follow difficulties seen in Asia, where robusta production suffered with adverse climate conditions.

With limited supplies, coffee stocks remain tight in the main consuming regions. European stocks were 27% lower in June when compared to a year earlier, while Japanese coffee stocks are 12% below the five-year average.

In other soft commodities, London cocoa rose 1.5% to 5,426 pounds per ton, while New York cocoa gained 1.4% to $6,770 a ton.

Raw sugar settled down 0.21 cent, or 1.2%, at 17.87 cents per lb and refined sugar fell 1.6% at $507.60 a ton.

By Charles Kennedy – Sep 13, 2024, 10:10 AM CDT

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Minor Pullback is a Sign of Strength

Since the August swing low of 1.875, natural gas has had one leg up followed by a minor pullback to 2.125 (C). The pullback completed a 38.2% Fibonacci retracement and then reversed higher. Finding support after a relatively minor pullback is a sign of strength. This week’s bullish continuation above the 2.30 interim swing high confirmed the second leg up. The rise also triggered a double bottom bullish reversal pattern as the neckline is 2.30 swing high. Therefore, the technical clues point to a continuation higher.

Second Leg Up off August Low Targets 2.54

A rising ABCD pattern is shown on the chart with an initial target of 2.54. That is a potential pivot level as there will be symmetry in price between the two swings in the pattern. The 50% retracement is near to that target at 2.52. As of today, the 20-Day MA has begun to cross above the 50-Day MA, another sign that the trend is strengthening. This doesn’t mean that natural gas goes straight to higher targets, but it has the potential to do so eventually.

Weekly Breakout Confirmed Above 2.29

Another indication for the near term is related to where natural gas ends in the week. A bullish breakout in the weekly chart also occurred on the move above 2.30. The high last week was 2.29 So, a weekly close above 2.29 will confirm the breakout on the weekly time frame and suggests that the buyers remain in charge. Further, a close today above 2.29 will be the highest weekly close in nine weeks. Nevertheless, natural gas has advanced off the August bottom and it would not be surprising to see a a short rest before it is ready to proceed higher.

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

• Gold price extends Thursday’s bullish breakout ahead of US sentiment data on Friday.
• The US Dollar keeps the red with Treasury bond yields on renewed bets of outsized Fed rate cut bets.
• Gold price achieves a symmetrical triangle target at $2,560, with more upside likely as the RSI stays bullish.

Gold price is sitting at the highest level on record near $2,570, with buyers contemplating the next move amid sustained weakness in the US Dollar (USD) and the US Treasury bond yields. Traders now look forward to the US Michigan preliminary Consumer Sentiment data for fresh directives.

Gold price capitalizes on increased bets jumbo Fed rate cut

Gold price extended the early bounce on Thursday, as the tide turned in favor of buyers following the release of the US Producers Price Index (PPI) and Jobless Claims data, which reinforced bets of an outsized interest rate cut by the US Federal Reserve (Fed) interest rate cut next week.

The PPI increased 0.2% MoM in August, the US Bureau of Labor Statistics (BLS) said Thursday, beating the expected 0.1% increase. Excluding food and energy, PPI rose 0.3%, slightly hotter than the 0.2% consensus estimate. Annually, headline PPI rose 1.7%. Excluding food, energy and trade, the annual rate was 3.3%.

Meanwhile, the  Initial Jobless Claims came in at 230,000 for the week ended Sept. 7, up 2,000 from the previous period while aligning with the forecast. Dismal US data combined with the Wall Street Journal (WSJ) article on the Fed’s rate cut dilemma brought back bets for a jumbo cut at the September meeting.

The US Dollar snapped its recovery mode and fell steeply on dovish Fed expectations, tracking the sell-off in the US Treasury bond yields.

The USD also bore the brunt of the resurgent demand for the Euro after the European Central Bank (ECB) on Thursday cut rates but President Christine Lagarde poured cold water on the expectations for another cut next month. The Hawkish cut by the ECB sent EUR/USD higher at the expense of the Greenback.

These factors added to the Gold price rebound, driving the bright metal to a fresh lifetime high of $2,560 on Thursday.

In Friday’s trading so far, Gold price witnessed a fresh leg higher and renewed record highs at $2,568, as Asian traders hit their desks and reacted to the overnight optimism surrounding the renewed dovish bets surrounding the Fed announcements next week.

However, buyers are catching their breath at the moment, as they turn slightly cautious heading into the weekend. Markets could resort to repositioning ahead of next week’s Fed policy meeting, fuelling a corrective decline in Gold price. Also, the end-of-the-week flows could play a pivotal role in the Gold price action alongside the release of the US Consumer Sentiment and Inflation Expectations data.  

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price finally yielded a breakout after closing Thursday above the upper boundary of the three-week-old trading range, pegged at the previous record high of $2,532.

Meanwhile, the 21-day Simple Moving Average (SMA), now at $2,513, continued to offer strong support to Gold buyers.

 With the range breakout in play, Gold price finally achieved the one-and-a-half-month-old symmetrical triangle target, measured at $2,560.

Despite the relentless rise, the 14-day Relative Strength Index (RSI) still holds in the bullish territory, with room for more upside until it prods the overbought boundary. The RSI indicator currently trades near 66.50.

If Gold price extends its bullish momentum, the next upside hurdle is seen at the $2,600 level, above which the $2,650 psychological level will be tested.

Should a correction ensue, the initial support is seen at the previous record high of $2,532, below which the 21-day SMA at $2,513 will be put to the test.

A sustained break below the latter is needed to challenge the key $2,500 threshold.