Commodity Analysis: Gold, WTI Crude Oil & Natural Gas (15 AUGUST 2022)

Gold Technical Analysis: Trying to Advance to $1800

Gold futures held above the $1800 level to close out the week, driven by easing inflation expectations and the expectation that the Federal Reserve will focus its tightening efforts. But the rise of the US dollar put a cap on the gains of the yellow metal. The price of gold is stable around the support level of $ 1792 an ounce at the time of writing the analysis, and the highest price of gold today was $1802. During last week's trading, XAU/USD gold prices recorded a weekly boost of about 1.2%, reducing its decline since the start of the year 2022 to date to less than 1%. This represents the fourth consecutive weekly gain, and is the longest active streak in about seven months.

Silver, the sister commodity to gold, rose by $20.50 to end a tumultuous trading week. In general, the price of the white metal also recorded an exceptional weekly increase of 3.3%, reducing its decline in 2022 by about 12%.

All in all, investors are assessing the potential upside for gold now that the dollar has begun to retreat from new highs, yields are falling, and expectations that the US central bank will reverse its tightening campaign. A stronger profit is usually a bad thing for dollar-priced commodities because it makes them more expensive to buy for foreign investors. Moreover, the rising rate environment raises the opportunity cost of holding non-yielding bullion.

The US Dollar Index (DXY), which measures the performance of the US currency against a basket of other major currencies, rose to 105.71, from an opening at 105.09. The index is preparing for a weekly loss of about 0.9%, but is still up about 105% over the year. US Treasury yields were mixed on Friday, with the benchmark 10-year bond yield dropping three basis points to 2.858%. One-year bond yields were flat at 3.255%, while 30-year yields were down 3.1 basis points.

In the United States of America, the spread between the two-year and ten-year bond yields was more than -40 basis points, a widely used recession indicator. But while there is increasing expectation that the Fed will reverse the series of US interest rate hikes, many officials say it is still too early to consider slowing the pace of rate hikes or lowering the Fed funds rate.

Where Tom Barkin, President of the Federal Reserve Bank of Richmond, indicated that the US central bank will likely continue to raise interest rates, but it would be too early to say the size of the increase next month. Minneapolis Fed President Neil Kashkari also noted that July's US Consumer Price Index (CPI) was an indication that the economy is heading in the right direction, but the institution will still need to wait for additional numbers.

For other metals, copper futures fell to $3,662 a pound. Platinum futures fell to $958.00 an ounce. Palladium futures fell to $2,232.50 an ounce.

XAU/USD Technical Analysis

On the daily chart below, it seems clear that the XAU/USD gold price is moving in a neutral situation with an upward bias and the closest to testing the $1800 psychological resistance level again. I mentioned before that the level is important for a stronger move for the bulls to gain more control and bring more technical buying deals, and thus the next strong move is towards the resistance levels of 1818 and 1835 dollars, respectively.

On the downside, a move towards the $1778 and $1760 support levels is a threat to the current bullish outlook and in general I still prefer buying gold from every bearish level.

Natural Gas Technical Analysis: Breathtaking Truce

Spot natural gas prices stabilized at an increase in recent trading at intraday levels, to record daily losses until the moment of writing this report, by -1.62%. They settled at the price of $8.709 per million British thermal units, after rising slightly for the fourth day during trading on Friday, by 0.72%. Last week, natural gas rose by 9.39%.

Natural gas futures fell throughout the Friday session, despite the slight change in daily prices. September gas futures contracts in Nymex settled at $8.768 per million British thermal units, down 10.6 cents from Thursday's close. The October contract fell 11.9 cents to $8,744.

There's no doubt it's been an interesting week in the gas market, as futures have risen for most of this week in the face of cold weather. Early on Friday, the outlook for continued cold seemed to be in the cards. The Nymex contract for September touched a low of $8,516 before the opening but rose after That comes to $8,919.

Meanwhile, weak Chinese economic data raised concerns about demand in the world's largest energy importer, as government data showed that China's economy slowed unexpectedly in July, while refinery production fell to 12.53 million barrels per day, the lowest level since March 2020.

Technical Analysis

Technically, natural gas is trying to reap the profits of its recent rises and gain some positive momentum that may help it recover and resume the rise, amid the dominance of the main bullish trend in the medium and short term along a slope line, as shown in the attached chart for a (daily) period of time, with continued pressure. It is trading above its simple moving average for the previous 50 days, and we also notice in the midst of that the influx of positive signals on the relative strength indicators, after reaching oversold areas.

Therefore, our expectations suggest that natural gas will rise during its upcoming trading, as long as the support 8.054 remains intact, to target the pivotal resistance level 9.600.

WTI Crude Oil Forecast: Market Pulls Back into Weekend

I think the best way to attack this market is to fade rallies, as we continue to see a lot of selling pressure overall.

• The West Texas Intermediate Crude Oil market fell a bit on Friday as the 200-day EMA has offered a bit of trouble.
• This is a market that has a lot to digest, due to the fact that the economy is all over the place, as we are starting to factor in the possibility of a slowing situation when it comes to demand.

Sliding Down the Channel

The market will continue to pay attention to the descending channel that we are in, and therefore it’s likely that we will see the market respect that going forward. The market breaking down below the low of the Friday session could open up the possibility of a move down to the $87 level, and it should probably be noted that there is a certain amount of psychology involved in the $90 level as well.

On the other hand, if we turn around and crack above the 200-day EMA, then it’s possible that we could see the market try to make a move towards the 50-day EMA, which would essentially put the market looking at the $103 region. Ultimately, I think this market continues to see a lot of noisy and choppy behavior, but I think the best way to attack this market is to fade rallies, as we continue to see a lot of selling pressure overall.

While we could see a little bit of a rally at this point, the reality is that demand is going to suffer due to the slowing economy around the world. That works against the demand equation, and that probably is the story going forward. Because of this, I have no interest in buying, at least not in the short term, but will keep an eye on growth going forward from a global standpoint. Furthermore, we also need to keep an eye on the US dollar, because it can have a negative correlation to this market as well. Ultimately, I do think that this is a market that is going to be noisy at best, so volatility typically breeds negativity over the longer term. The market breaking down below the lows that we made just a few sessions ago could open up the floodgates to reach down to the $80 level rather quickly. Because of this, I think you need to be very cautious.

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