Rally Above 3.02 Triggers Bull Breakout

Resistance was seen on Tuesday following the day’s high of 3.01. That was a failed attempt to break out above the most recent swing high of 3.02. A decisive rally above that high should provide a more reliable indicator for the triangle breakout. It will also signal a continuation of the rising trend that began from the August swing low as a higher swing high will be triggered.

The 3.02 high is also a monthly high for October. Therefore, a rise above it will also trigger a monthly upside breakout and result in a third month in a row of higher monthly highs and higher lows. Nonetheless, if natural gas can end the month above September’s closing price of 2.91 it will have reached its highest monthly closing price since October 2023.

Initial Upside Target at 3.22

Given the bullish recovery today following a pullback, it looks like natural gas may have completed a short correction and could attempt to advance above 3.02 shortly. If it can sustain a rally above that high, it next heads towards the 3.16 swing high from June. Then, a little higher, is an initial target from a small rising ABCD pattern (light blue) at 3.22. However, there is a confluence of price targets from 3.35 and 3.45, including the initial target from a rising ABCD pattern at 3.35 (purple) and a larger ABCD pattern marked in orange that targets 3.45.

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

• Silver struggles near 100-day SMA, with downside potential towards $30.00 and lower supports.
• Technical outlook suggests further weakness, with a key support at $30.18 and the 200-day SMA at $28.63 in focus.
• Recovery above $31.00 could challenge resistance at the 50-day SMA and extend towards $32.00.

Silver price drops below $30.50 for the second consecutive session, prints losses of over 0.90% following a tempered US inflation report. The US CPI came as expected, though he hinted that disinflation has stalled. The XAG/USD trades at $30.40, set to end the session lower.

XAG/USD Price Forecast: Technical outlook

Silver price consolidated during the last two days at around the 100-day Simple Moving Average (SMA) at $30.31. However, the mid-term bias is tilted to the downside, and once bears push prices below August’s 26 high turned support at $30.18, they will test the psychological $30.00 mark. A breach of the latter will expose the 200-day SMA at $28.63, followed by the September 6 swing low of $27.69.

If Silver moves back above $31.00, this could pave the way for challenging the 50-day SMA at $31.51. Once surpassed, XAG/USD’s next resistance would be $32.00.

Oscillators like the Relative Strength Index (RSI) hint that further XAG/USD’s downside is seen, as RSI remains shy of being oversold.

XAG/USD Price Chart – Daily

XAU/USD Current price: $2,586.03

• United States inflation met market expectations in October, still above the Fed’s goal.
• Stock markets remain under pressure, albeit Wall Street fights back on Wednesday.
• XAU/USD remains under pressure and aims to extend its slump in the near term.

After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. The American currency trades with a firmer tone after Wall Street’s opening and the release of the United States (US) October Consumer Price Index (CPI), having reached fresh weekly highs against most major rivals. In the case of XAU/USD, the pair dipped below $2,600 but bounced back above it, currently struggling to extend its gains.

The US Bureau of Labor Statistics reported that the CPI rose at an annualized pace of 2.6% in October and was up by 0.2% on a monthly basis, matching expectations. The core annual figure printed at 3.3%, which was also in line with the forecast. The US Dollar ticked lower as an immediate reaction to the news but resumed its advance as US indexes quickly trimmed pre-opening gains.

At the time of writing, however, market participants are battling to establish a trend. The USD retains its strength, but the momentum eased, while US indexes pared the bleeding, with only the Nasdaq Composite trading in the red. The macroeconomic excitement will likely recede as the US has no other relevant figure to release for the rest of the week.

XAU/USD short-term technical outlook

XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump. The daily chart shows the pair remains above 100 and 200  bullish moving averages, albeit the 20 Simple Moving Average (SMA) gains downward traction above the current level. Technical indicators, in the meantime, head firmly south within negative levels. The 100 SMA provides support at around $2,540.65.

In the near term, and according to the 4-hour chart, XAU/USD downward momentum remains strong. The intraday high was set below a firmly bearish 20 SMA, which extends its slope below the longer moving averages. Finally, technical indicators turned sharply lower after correcting oversold conditions, anticipating another leg south.

 Support levels: 2,572.45 2,560.65, 2,545.20

Resistance levels: 2,600.10 2,612.60, 2,627.10 

• Silver price bounces back to near $31.00 after the US inflation report, which showed that price pressures remain sticky.
• Annual headline and core CPI rose by 2.6% and 3.3%, respectively, as expected.
• The optimism on Trump trades will keep the Silver price edgy.

Silver price (XAG/USD) holds recovery to near $31.00 in Wednesday’s North American session after the release of the United States (US) Consumer Price Index (CPI) data for October. The Bureau of Labor Statistics (BLS) reported that price pressures remain sticky as the annual headline inflation accelerated to 2.6% from 2.4% in September.

The core CPI – which excludes volatile food and energy prices – rose in line with estimates and the former release of 3.3%. On month, the headline and core inflation grew expectedly by 0.2% and 0.3%, respectively.

Sticky price pressures are less likely to impact market speculation for Federal Reserve (Fed) interest rate cuts in December as officials are more worried about preventing job losses, with high confidence over inflation remaining on track toward the bank’s target of 2%.

After the US inflation data release, the US Dollar Index (DXY) drops slightly but clung to gains near 106.00. 10-year US Treasury yields slide to near 4.38%.

The overall outlook of the Silver price remains weak on so-called “Trump trades” as demand for those assets that are expected to perform better in US President-elected Donald Trump’s administration is upbeat.

Therefore, the Silver price could face selling pressure as Trump’s policies, such as higher import tariffs by 10% and lower corporate taxes, would boost US economic growth and price pressures, a scenario that will be favorable for US bond yields as the Federal Reserve (Fed) would be needed to keep interest rates restrictive. Historically, higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Silver technical analysis

Silver price remains on track toward the upward-sloping trendline around $29.00, plotted from February 28 low of $22.30. The white metal weakened after the breakdown of the horizontal support plotted from May 21 high of $32.50.

The near-term trend of the Silver price has weakened as the 20-day Exponential Moving Average (EMA) starts declining, which trades around $32.00.

The 14-day Relative Strength Index (RSI) slides to near 40.00. A bearish momentum will trigger if the RSI (14) sustains below the same.

Silver daily chart

Analysts see medium-term value in gold, with Quantitative Commodity Research’s Peter Fertig highlighting its appeal as the Fed remains inclined toward dovish rate adjustments. Following last week’s 25-basis-point rate cut, the Fed is expected to continue easing, although expectations for a December cut have softened to a 62% likelihood, down from 70% a week prior, per the CME’s FedWatch Tool. Lower interest rates generally favor non-yielding assets like gold, supporting demand among long-term investors.

Fed Rate Outlook and Inflation Data in Focus

Market participants are awaiting Wednesday’s CPI report, which economists anticipate will show a monthly increase of 0.2%, potentially placing annual inflation at 2.6%. These figures, along with forthcoming Producer Price Index (PPI) data, jobless claims, and retail sales, will offer insights into economic resilience and inflationary pressures. Fed Chair Jerome Powell’s scheduled remarks later in the week could provide additional cues on monetary policy direction, particularly if the CPI surprises.

The U.S. Treasury market has also reflected cautious positioning ahead of these economic data releases, with the 10-year yield slipping as investors consider the potential implications for the Fed’s rate path. Last week’s bond market saw a significant rise in yields following the U.S. elections, as fiscal policy expectations under President-elect Trump suggest higher growth—and possibly, higher inflation.

Short-Term Market Forecast

With traders bracing for the CPI’s impact on rate cut prospects, gold appears poised for volatility. If inflation trends lower than expected, it could bolster expectations for further rate cuts, lending strength to gold. Conversely, any upside surprise in CPI could lead to renewed dollar strength and pressure on gold. For now, the outlook for gold remains neutral to slightly bullish as investors weigh inflation data’s impact on Fed policy, eyeing the $2,650 level as a critical pivot for any sustained gains.

• Silver price gains ground due to trade repositions ahead of the US inflation data release on Wednesday.
• The US Consumer Price Index may report an increase of 2.6% YoY in October, with core CPI rising by 3.3%.
• Silver prices may struggle as the implementation of Trump’s proposed policies could delay further rate cuts by the Fed.

Silver prices (XAG/USD) extends gains for the second consecutive day, trading around $30.90 per troy ounce during the European session on Wednesday. Silver prices gain momentum as traders seem to adjust their positions ahead of a crucial US inflation report, which could shape expectations for potential Federal Reserve interest rate cuts.

Softer-than-expected US CPI data could strengthen expectations for steady rate reductions by the Fed, likely increasing demand for non-interest-bearing precious metals like silver. However, the headline Consumer Price Index (CPI) is projected to show a 2.6% year-over-year increase for October, compared to the previous 2.4% reading. Meanwhile, core CPI is expected to rise by 3.3%.

However, the price of the dollar-denominated Silver remains under pressure from a strengthening US Dollar (USD), fueled by expectations of fiscal expansion and inflationary policies under the potential Trump administration. A stronger USD makes Silver more expensive for buyers holding foreign currencies, which negatively impacts the commodity’s demand.

The implementation of Trump’s proposed policies could lead to increased investment, spending, and labor demand, heightening inflation risks. This scenario may prompt the Federal Reserve (Fed) to adopt a more restrictive monetary policy stance.

Weak economic data from China, combined with the absence of direct economic stimulus, has heightened concerns about demand in the world’s largest manufacturing hub. Silver is also under pressure due to its significant use in electrification, especially in solar panels.

Meanwhile, Chinese-owned solar panel manufacturers are reducing production, partly due to fears that a potential victory by Trump in the upcoming US election could result in higher tariffs on the industry. Morgan Stanley has forecast that the Trump administration might impose immediate tariffs of up to 60% on Chinese imports.

• Silver moves further away from over a one-month trough touched on Tuesday.
• The technical setup warrants some caution before positioning for further gains.
• Any further move up could be seen as a selling opportunity and remain capped.

Silver (XAG/USD) builds on the previous day’s bounce from the $30.20-$30.15 area, or its lowest level since October 8 and gains some follow-through positive traction during the Asian session on Wednesday. The momentum lifts the white metal back closer to the $31.00 mark in the last hour, though the technical setup warrants some caution before positioning for any further gains.

Given that the XAG/USD showed resilience below the 100-day Simple Moving Average (SMA) on Tuesday, the recovery could be attributed to short-covering amid some repositioning ahead of the US inflation figures. That said, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold zone. This, in turn, suggests that any further move up could be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

The momentum, however, could extend further towards the next relevant hurdle near the $31.60-$31.65 region, though is more likely to remain capped near the $32.00 round figure. The latter should act as a key pivotal point, which if cleared decisively will indicate that the recent corrective slide from the vicinity of the $35.00 psychological mark, or a 12-year high touched in October has run its course. This would shift the bias in favor of bulls and pave the way for additional gains.

On the flip side, the $30.60 area, or the 50% Fibonacci retracement level of the August-October rally, now seems to protect the immediate downside. This is followed by over a one-month low, around the $30.20-$30.15 region touched on Tuesday and the $30.00 psychological mark. Acceptance below the latter will confirm a near-term breakdown below the 100-day SMA and make the XAG/USD vulnerable to accelerate the fall further towards the 61.8% Fibo. level, near the $29.65-$29.60 region. 

The downward trajectory could extend further towards the $29.00 mark before the XAG/USD eventually drops to the next relevant support near the $28.75 region en route to the mid-$28.00s.

Silver daily chart

• Gold price defends $2,600 before the critical US CPI event risk.   
• The US Dollar retreats with Treasury yields as Trump trades-led rally stalls.
• Gold price recovery must find a foothold above $2,645 as the daily RSI stays bearish.

Gold price has regained $2,600 early Wednesday, replicating the tepid recovery moves seen during Tuesday’s Asian trading. Gold price is snapping its three-day losing streak to its lowest level in two months, set on Tuesday at $2,590.

Gold price bounces but not out of the woods yet

Traders are cashing in profits on their Gold short and US Dollar (USD) long positions, fuelled by Republican Donald Trump’s victory in the US presidential election earlier this month. Trump’s lower tax and foreign trade policies are seen as inflationary. This narrative has supported the USD alongside the US Treasury bond yields at the expense of the non-yielding Gold price.

Further, markets believe that US President-elect Trump’s hardline policies could temper the US Federal Reserve’s (Fed) easing cycle, which has also been positive for Greenback.

Markets currently price in about a 60% chance of another 25 basis points (bps) interest rate cut in for December, down from around 84% a month ago, according to the CME Group’s FedWatch Tool.

However, all eyes turn to the highly anticipated US Consumer Price Index (CPI) data due later on Wednesday to gauge whether the Fed will continue its rate-cutting trajectory beyond December.

Economists expect the annual headline and core CPI to rise 2.6% and 3.3% in October, respectively. Meanwhile, CPI and core CPI inflation are likely to stay unchanged at 0.2% and 0.3% on a monthly basis in the reported period.

A downside surprise in the CPI and core CPI readings is set to reinforce dovish expectations surrounding the Fed’s path on rate cuts. Conversely, a hotter-than-expected inflation report could add to the market expectations that the Fed may reconsider future rate cuts.

Any reaction to the US CPI data could be short-lived, as markets will shift their focus to Fed Chair Jerome Powell’s speech on Thursday. Powell is due to speak on Global Perspectives at an event hosted by the Federal Reserve Bank of Dallas.

In the meantime, a fresh slew of speeches from Fed policymakers will also be closely scrutinized. Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie K. Logan, Kansas City President Jeffrey Schmid and their St. Louis counterpart Alberto Musalem are scheduled to speak later in American trading on Wednesday.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price managed to close Tuesday at $2,600 following a brief dip beneath that level.

That has allowed buyers to attempt a comeback whilst the 14-day Relative Strength Index (RSI) rebounds toward the 50 level.

If the short-covering rally gathers steam, Gold price could aim for the 50-day Simple Moving Average (SMA) support-turned-resistance at $2,650.

Ahead of that, buyers must take out the previous day’s high of $2,627. Further up, the $2,670 static resistance will come into play.

In case of hotter-than-expected US inflation data, Gold price could turn south toward the 100-day SMA at $2,541, near that level the September 18 low aligns.

However, sellers could meet strong contention at around the $2,585 region.

Inside Week Breakout Triggered

A bullish breakout from an inside week triggered yesterday on a move above 2.82. Then today, an attempted breakout from a symmetrical triangle pattern occurred. Notice that the purple 20-Day MA has turned up and is moving further away from the 50-Day MA showing improved momentum.

The 20-Day line is potential support during a deeper pullback, along with the 50-Day MA at 2.66. Although it is starting to look like natural gas wants to go higher, it may not occur before a period of consolidation. This would allow demand to stack up as market participants await the potential symmetrical triangle breakout.

Triangle Breakout Triggers Above 3.02

An upside breakout of the triangle will be indicated on a rally the 3.02 swing high and then confirmed by a daily close above that high. That high is part of the price structure of lower swing highs that occurred after 2023 peak. A decisive rise above it will trigger a breakout of the triangle and provide a trend continuation signal for the rising trend that began from the August low.

Target Zone from 2.35 to 2.45

There is an initial potential upside target that has been identified on the chart from 2.35 to 2.45. Nonetheless, an earlier target from a nearby rising ABCD pattern (green) shows an initial target at 3.22 and a secondary target that is with the target zone. You can see on the chat that there are three rising ABCD patterns, each assessing a different portion of the swings. Once a second swing from (CD) matches the price change in the first leg up (AB), there is price symmetry and a potential pivot. As with all pivots, resistance may follow, or a bull breakout indicates a continuation.

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

• OPEC cuts oil demand growth forecasts for 2024 and 2025, citing concerns about the Chinese economy.
• China’s stimulus measures have failed to impress, and the country’s economic outlook remains a concern.
• Technical analysis suggests that oil prices are eyeing a bounce but could face resistance around $74.00 and $76.35.

Most Read: Gold (XAU/USD) Prices Slide as US Dollar (DXY) Rally Continues

Oil prices are holding firm today following a 5% decline over the previous two trading days. A stronger US Dollar and hopes of a Middle East peace deal have also weighed on Oil prices as markets digest the potential impacts from a Trump Presidency.

OPEC Cuts Demand Forecast for 2024 and 2025

OPEC released its monthly report today which showed a fourth consecutive downgrade of its forecast for both 2024 and 2025. OPEC said world oil demand would rise by 1.82 million barrels per day in 2024, down from growth of 1.93 million bpd forecast last month. For 2025, OPEC estimated global demand growth at 1.54 million bpd from 1.64 million bpd.

Continuing on from last month, China was the main factor in the economic downgrade for 2024. OPEC lowered its prediction for China’s oil demand growth to 450,000 barrels per day, down from 580,000 barrels per day. Furthermore, China’s diesel consumption dropped in September compared to the same time last year, continuing a seven-month trend of decreases.

On China OPEC stressed that Diesel has been under pressure from a slowdown in construction amid weak manufacturing activity, combined with the ongoing deployment of LNG-fuelled trucks. China has been a point of concern for the majority of 2024 and even more so when it comes to Oil demand. 

This downgrade comes soon after OPEC + announced it would not unwind the most recent layer of cuts of 2.2 million bpd from December but said on Nov. 3 it will delay the plan for a month. The Oil cartel cited concerns around weakening demand and supply outside of OPEC + are currently maintaining downward pressure on Oil prices.

China Stimulus Fails to Impress

Beijing announced a 10-trillion-yuan ($1.4 trillion) debt package on Friday to help local governments deal with financial problems. This follows recent stimulus measures in September as well which so far seem to have failed to lead to any meaningful change. The Macro economic outlook for China remains a concern with many analysts downgrading their forecasts of late. 

This week’s decision comes as China deals with challenges from Donald Trump’s re-election as U.S. president, who has threatened to increase tariffs on Chinese goods. The impact of this could see the Chinese economy struggle to achieve its 2025 GDP targets as well and could in part explain the reasoning for the OPEC downgrades. 

Technical Analysis

From a technical perspective, Oil prices started the week on the back foot following a losing week and a very bearish Friday after rejecting the key resistance zone at 76.35. 

As things stand however the daily candle is on course to close bullish, up around 0.90% on the day. A daily close here will lead to a higher low which would hint at further upside and potentially a fresh high above the 76.35 handle. 

A boost in oil prices could materialize should concerns around a wider Middle East conflict return to the fore. President Elect Donald Trump has been recruiting Cabinet members already which could add a risk premium on the chance of peace in the Middle East. 

If markets perceive any appointments as being pro-war, the idea of a regional conflict involving Iran is likely to rear its ugly head. This in turn could send fears around Oil supply etc to the fore. 

A continued recovery from here faces some resistance around 74.00 before the recent highs at 76.35 come into focus. 

Looking at the downside, a potential candle close below the 71.40 (recent swing low) could send Oil prices back below the key psychological 70.00 handle with 69.52 and 68.17 further areas of interest on the downside. 

Brent Crude Oil Daily Chart, November 12, 2024

Source: TradingView (click to enlarge)

Support

• 74.63
• 72.38
• 70.00 (key area of confluence)

Resistance

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