Market players keep waiting for inflation updates and potential effects on central banks’ decisions.
US CB Consumer Confidence improved by more than anticipated in August.
XAU/USD is neutral-to-bullish in the near term, bulls taking their chances of dips.
Quiet trading extends on Tuesday, with Gold changing hands at around $2,510 a troy ounce. The bright metal is confined to a tight intraday range as expectations mount for the upcoming United States (US) inflation figures to be out on Friday. The country is set to release the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. Price pressures in the US remain above the Fed’s 2% goal but far from the four-decade high hit in mid-2022.
But it is not just about receding inflation. The labor market has finally shown signs of loosening, meaning wages-related risks have decreased. In the meantime, the economy keeps growing at a relatively healthy pace, all of which backs an interest rate cut. Chairman Jerome Powell and co have spent the last month hinting towards a shift in the current monetary policy, reinforcing the idea of a new cycle coming when he spoke at the Jackson Hole Symposium last week. Hopes the Fed will trim rates in September maintain the US Dollar under pressure.
Meanwhile, United States (US) data beat expectations. The Conference Board’s (CB) Consumer Confidence Index rose to 103.3 in August, while the July figure was upwardly revised to 101.9 from 100.3. Furthermore, the Expectations sub-index improved to 82.5, while the July reading was revised to 81.1, marking the second consecutive month of the Index above 80. A reading below the latter usually signals a recession ahead.
XAU/USD short-term technical outlook
From a technical point of view, the risk for XAU/USD remains scheduled to the upside. The daily chart for the pair shows it keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its upward slope well above also bullish 100 and 200 SMAs. Technical indicators, in the meantime, have lost their upward strength but consolidate near overbought readings, falling short of suggesting an upcoming decline.
In the near term, and according to the 4-hour chart, XAU/USD is neutral-to-bullish. A flat 20 SMA keeps providing intraday support, while the 100 and 200 SMAs grind north far below the current level. Technical indicators, however, stand right above their midlines without clear directional strength. The risk of a steeper decline seems limited, but the lack of progress could force some profit-taking and send Gold below the $2,500 mark.
Silver holds above 50 and 100-DMAs, showing buyer strength, but momentum is diminishing.
For uptrend continuation, a break above the August 26 peak of $30.18 is needed, aiming for $30.50 and July 17 high of $31.42.
If gains below $30.00 aren’t sustained, expect a pullback to supports at $29.22-$29.13 and key $29.00 level.
Silver’s price consolidated for the second straight day, within the $29.70-$30.10 area on Tuesday, yet printed gains of 0.24%. At the time of writing, XAG/USD trades at $29.96.
XAG/USD Price Forecast: Technical outlook
The XAG/USD trades above the confluence of the 50- and 100-day moving averages (DMAs), an indication of buyer strength. Still, Silver’s uptrend seems stretched, with bills failing to achieve a daily close above $30.00.
Momentum supports buyers yet shows that they’re losing steam, as the Relative Strength Index (RSI) shows.
Silver’s uptrend will continue once buyers reclaim the August 26 peak at $30.18. Once surpassed, the next resistance would be the $30.50 figure, followed by the July 17 swing high at $31.42.
Conversely, if XAG/USD sellers keep prices below $30.00, this will expose the confluence of the 50 and 100-DMAs at around $29.22-$29.13, ahead of the $29.00 figure.
XAG/USD Price Action – Daily Chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Nevertheless, natural gas has been falling for six straight days. It may run out of bearish momentum and yet find support that leads to a bullish reversal around the lows. There are no signs of that yet, but a rally above today’s high of 1.97 may signal a bottom and could lead to a test of higher price levels. Following a rally above today’s high natural gas will be heading towards this week’s high of 2.02, followed by the 20-Day MA at 2.09.
Break Below 1.875 Support Targets Lower Prices
On the downside, a decisive decline below today’s low of 1.875 signals a continuation of the bear trend. Whether the downside momentum stalls or accelerates at that point remains to be seen. Supportive of a bearish continuation are the moving averages. Notice that the orange 50-Day MA broke below the blue 200-Day MA yesterday, a sign that the decline is weakening.
The first area to watch for support would then be around a prior interim swing high at 1.85 from April 23. A little lower is the 88.6% Fibonacci retracement of the larger uptrend that began from the April swing low at 1.58. Depending on when it is reached the 88.6% level will likely be nearby potential support represented by the lower uptrend line.
Despite today’s bearish behavior, natural gas is on track to close above the prior swing low of 1.88. That may provide little comfort to the bulls, but it does provide a small indication that buyers may be returning.
For a look at all of today’s economic events, check out our economic calendar.
(MENAFN) Goldman Sachs has adjusted its forecast for brentcrude oil prices for 2025, lowering its average price expectation and narrowing its price range by USD5 per barrel. The bank now anticipates that Brent crude will average USD77 per barrel in 2025, down from a previous forecast of USD82. The revised price range for Brent crude is now set between USD70 and USD85 per barrel. This adjustment comes in response to unexpected increases in oil inventories and a slowdown in demand from China, which are both expected to exert downward pressure on oil prices. Despite this, Goldman Sachs noted that demand from India and lower interest rates are helping to mitigate the extent of the price decline.
In addition, Goldman Sachs highlighted that U.S. oil supplies are surpassing earlier expectations, while demand growth in China has cooled. This shift has contributed to the adjustment in price forecasts. The Organization of the Petroleum Exporting Countries (OPEC) has also revised its global oil demand growth forecast for the coming year, reducing it to 1.78 million barrels per day from an earlier estimate of 1.85 million barrels per day. Goldman Sachs remains optimistic that OPEC will increase production in the fourth quarter.
OPEC+—which includes OPEC members and allies such as Russia—has been implementing a series of production cuts since late 2022 to stabilize the market. Most of these cuts are set to remain in effect until the end of 2025. On August 1, OPEC+ announced plans to begin unwinding the most recent round of cuts, totaling 2.2 million barrels per day, starting in October. However, these reductions may be paused or reversed if market conditions necessitate such measures. Recently, oil prices have experienced volatility, with a recent decline following a rise of more than 7 percent over three sessions, driven by concerns over escalating conflicts in the Middle East and disruptions to Libyan oil fields.
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The West Texas Intermediate Crude Oil Market has shot straight up in the air during the trading session here on Monday, as we continue to see a lot of volatility.
At this point in time, the market managed to rally all the way to the 50-day EMA near the $77.25 area.
With that being the case, it is showing a little bit of hesitation. However, it’s probably worth noting that the market is going to continue to be very volatile due to the macroeconomic conditions of the wars going on around the world and of course, the fact that Libyans had cut back production. So, with that being said, I think you’ve gotten a situation where traders will continue to look at oil through the prism of extreme volatility and perhaps even the possibility of a lot of concerns about supply. Now, having said that, I do recognize that if the market breaks above the $79.50 level, we could really start to see this market take off. That could open up a move all the way to the $84.50 level, but I also recognize that it is going to take a significant amount of momentum to make that happen.
Oil Could Remain “Buy the Dip.”
I think in general we’ve got a situation where traders are going to continue to buy the dip. So, if anything, I would be looking for an opportunity to pick up a little bit of value. I don’t know that I would be a massive holder of the market right now. I think it’s just a scenario where you are looking at short-term pullbacks as short-term opportunities.
As far as some type of massive shift in the overall psyche of the market, I think you probably have some way to go. With this being the case, it is likely going to be a scenario where the oil market will continue to see a lot of questions asked of the trading public as to where we are going to go over the longer term.
Weaker Chinese oil demand, high inventories, and rising U.S. shale production have prompted Goldman Sachs to reduce its expected range for Brent oil prices by $5 to $70-$85 per barrel.
Commercial inventories have been stable in the peak summer demand season, contrary to expectations of drawdowns, analysts at the Wall Street bank wrote in a note carried by Investing.com.
Higher U.S. supply has been offsetting some of the seasonal demand, according to Goldman Sachs.
Efficiency gains among U.S. producers have raised shale supply by 200,000 barrels per day (bpd) above the investment bank’s expectations.
Higher supply from America, and possibly from OPEC+ later this year and in 2025, has led Goldman Sachs to forecast that Brent Crude prices would average below $80 per barrel next year.
The current forecast is now Brent to average $77 a barrel, as OPEC+ could opt for a strategic move to add supply and punish non-OPEC+ growth, according to Goldman’s note carried by Bloomberg.
OPEC+ could decide to add supply on the market in a move that could be “strategically disciplining non-OPEC supply,” Goldman Sachs’s analysts wrote.
“Prices could significantly undershoot in the short term, especially if OPEC were to strategically discourage US shale growth more forcefully, or if a recession were to reduce oil demand,” the bank’s analysts noted, referring to a scenario in which Brent could trade lower than its price forecast.
Morgan Stanley has also recently revised its oil price forecasts downward, reflecting expectations of increased supply from OPEC and non-OPEC producers amid signs of weakening global demand. The bank now anticipates that while the crude oil market will remain tight through the third quarter, it will begin to stabilize in the fourth quarter and potentially move into a surplus by 2025.
Morgan Stanley has cut its forecast for the fourth quarter to $80 per barrel, down from $85, and now expects prices to gradually decline to $75 per barrel by the end of 2025, slightly lower than their previous estimate of $76.
In my daily analysis of the natural gas markets, the first thing I notice is that this asset is struggling overall, as every time we have rallied over the last couple of weeks, we’ve seen the natural gas markets fall.
In fact, when you look at the weekly chart, the past 2 weeks have seen shooting stars form, and I think that does suggest that it is probably only a matter of time before we drop.
All things being equal, the market were to continue breaking down from here, it could very easily drop to the $2.00 level, which is a large, round, psychologically significant figure, and therefore I think it would make a lot of sense for us to test that area. The $2.00 level is an area that I think will continue to be crucial, as we had bounce from there and of course it is a large, round, psychologically significant figure, and an area where think you would see a lot of options barriers, and of course a lot of traders willing to “step in and pick up value.”
Cyclical Trade
Cyclical trade at this point in time is obvious, and therefore I think a lot of people have to pay close attention to it. The market is likely to continue to see a lot of volatility, but I think at this point in time it’s also worth paying close attention to the idea that we are in the slowest part of the year as far as demand is concerned. That being said, as we get later in the year, it’s likely that natural gas will rally again, as we have seen time and time again. After all, as temperatures drop in the northeastern part of the United States, that does drive up the price and demand of natural gas in general. All things being equal, this is a market that I think is still in the process of bottoming out in trying to find enough support to turn things around.
In my daily analysis of the natural gas markets, the first thing I notice is that this asset is struggling overall, as every time we have rallied over the last couple of weeks, we’ve seen the Natural gas markets fall.
In fact, when you look at the weekly chart, the past 2 weeks have seen shooting stars form, and I think that does suggest that it is probably only a matter of time before we drop.
All things being equal, the market were to continue breaking down from here, it could very easily drop to the $2.00 level, which is a large, round, psychologically significant figure, and therefore I think it would make a lot of sense for us to test that area. The $2.00 level is an area that I think will continue to be crucial, as we had bounce from there and of course it is a large, round, psychologically significant figure, and an area where think you would see a lot of options barriers, and of course a lot of traders willing to“step in and pick up value.”Cyclical TradeTop Forex Brokers1 Get Started 74% of retail CFD accounts lose money Cyclical trade at this point in time is obvious, and therefore I think a lot of people have to pay close attention to it. The market is likely to continue to see a lot of volatility, but I think at this point in time it’s also worth paying close attention to the idea that we are in the slowest part of the year as far as demand is concerned. That being said, as we get later in the year, it’s likely that natural gas will rally again, as we have seen time and time again. After all, as temperatures drop in the northeastern part of the United States, that does drive up the price and demand of natural gas in general. All things being equal, this is a market that I think is still in the process of bottoming out in trying to find enough support to turn things around.Ready to trade daily Forex forecast? Here’s a list of some of the best commodities brokers to check out.MENAFN27082024000131011023ID1108604642
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Gold price returns to the red early Tuesday after testing record highs at $2,532 on Monday.
The US Dollar and Treasury bond yields pause their recovery stint amid a tepid risk tone.
The daily technical setup leans in favor of Gold buyers, with fresh lifetime highs in sight.
Gold price has entered a phase of upside consolidation above $2,500, as buyers await fresh catalysts for a fresh leg higher. The focus now shifts to the mid-tier US housing and sentiment data, as the Middle East tensions seem to ease.
Gold price bides time, as fresh record highs eyed
Gold price retreats in Asian trading on Tuesday, having faced rejection once again near the $2,530 level. Fears over a broader Middle East conflict seem to have eased, which is weighing on the traditional safe-haven Gold price even though the US Dollar has stalled its overnight recovery alongside the US Treasury bond yields.
US Air Force General C.Q. Brown, chairman of the Joint Chiefs of Staff, said early Tuesday that fears of a near-term broader Middle East conflict have ebbed after Israel and Lebanon’s Hezbollah exchanged fire without further escalation.
These comments came after Israel launched a preemptive airstrike on Hezbollah in southern Lebanon on Sunday, as Hezbollah was said to launch a large-scale missile and rocket attack on northern and central Israel with the intended target being Mossad, the Israeli spy agency.
Meanwhile, traders snap their short-covering spree in the US Dollar, triggered by a strong headline US Durable Goods Orders print for July, which jumped by 9.9% against a rise of 4.0% expected. Encouraging US data tempered expectations that the US Federal Reserve (Fed) could lower interest rates by 50 basis points (bps) in September, thus helping the US Dollar stage a comeback from yearly troughs.
Markets are currently pricing in a 28% probability of a 50 bps rate reduction in September while the odds of a 25 bps cut jump to 72%, the CME Group’s FedWatch Tool showed on Tuesday.
The next direction in Gold price appears north, as it remains underpinned by the increased Fed rate-cut bets and looming Mid-East geopolitical risks. Further, hopes of improvement in physical Gold demand from India and China are likely to keep any downside limited in Gold price.
Sachin Jain, CEO of the World Gold Council’s (WGC) Indian operations said that “the primary beneficiaries of the reduced duty cut will be retail consumers.” Demand during the upcoming festival season will be very strong, Jain told Reuters on the sidelines of the India Gold Conference.
“Gold demand in China is expected to improve in coming months as consumers adjust to higher prices, industry officials said, with economic uncertainty and concerns about currency weakness driving investment flows,” according to Reuters.
Looking ahead, Gold traders will take cues from the upcoming US CB Consumer Confidence and housing data while speeches from Fed policymakers will be also scrutinized for fresh policy hints.
Gold price technical analysis: Daily chart
The short-term technical outlook for Gold price remains more or less the same, with the upside risks intact so long as buyers defend the triangle resistance-turned-support at $2,468.
The 21-day Simple Moving Average (SMA) closes in on that level, making it a strong support.
It’s worth mentioning that Gold price consolidates its upside break from a symmetrical triangle confirmed a couple of weeks ago.
Meanwhile, the 14-day Relative Strength Index (RSI) turns lower but holds comfortably above 50, currently near 61, justifying the bullish outlook.
Gold buyers need to recapture the record high of $2,532 to take on the next key barrier at the $2,550 level.
Acceptance above the latter could challenge the $2,600 round level en route to the triangle target, measured at $2,660.
On the flip side, the initial demand area is seen at the $2,500 threshold for Gold buyers, below which Friday’s low of $2,485 will be challenged.
A sustained breach of the latter could expose the downside toward the abovementioned triangle resistance-turned-support at $2,468.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Upteat United States macroeconomic encouraged near-term US Dollar buying.
The US will release the Federal Reserve’s favorite inflation gauge at the end of the week.
XAU/USD could correct lower in the near term, although fresh record highs are still on the table.
Spot Gold retains its bullish bias at the beginning of the week, extending Friday’s gains towards the record high posted last week at $2,531.60. The US Dollar trades mixed across the FX board but was overall weak after Federal Reserve (Fed) Chairman Jerome Powell said that the time has come for monetary policy to adjust, speaking at the Jackson Hole Symposium. Once again, Powell conditioned an interest rate cut to incoming data, but market participants are confident the Fed will deliver a rate cut in the upcoming September meeting.
Other than that, the United States (US) released Durable Goods Orders on Monday, which unexpectedly rose by 9.9% in July, much better than the previous 6.9% or the 4% anticipated. Also, the Dallas Fed Manufacturing Index improved in August to -9.7 from the previous -17.5.
In the meantime, action across financial boards remains limited ahead of critical US data. The country will release next Friday the July Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge. At the time being, the annual increase is foreseen at 2.5%, matching the June reading, while monthly inflation is expected at 0.2%, slighly higher than the previous 0.1%.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows the bright metal hovers around Friday’s high and aims to extend gains. Technical indicators have partially lost their upward strength but hold well above their midlines, far from suggesting bullish exhaustion. At the same time, Gold stands above all its moving averages, with the 20 Simple Moving Average (SMA) heading firmly north at around $2,458.75.
For the near term, technical readings in the 4-hour chart suggest a corrective decline may develop in the next few sessions. Technical indicators have retreated from their recent lows and head firmly lower, although within positive levels. At the same time, the 20 SMA remains directionless, just below the intraday low, while the 100 and 200 SMAs maintain their bullish slopes below the shorter one, limiting the case for a steeper decline.
