Gold(XAUUSD) and WTI Crude Oil Forecast (2 SEPTEMBER 2022)

Gold Forecast: Markets Plunge Towards the Previous Low

Short-term bounces will continue to be nice selling opportunities, but I think it’s probably only more likely to be a situation where this will be greatly influenced by the Federal Reserve and interest rates.

Gold markets have fallen during the trading session on Thursday as we continue to see a lot of negativity in the charge. This is a market that I think will continue to be very noisy, and as we head into the jobs figure on Friday, it does make a certain amount of sense that we may get a little bit of back-and-forth trading.

The previous low, which sits near the $1680 level, is more likely than not going to be an area that’s difficult to get below because it has been a major support level over the last several years, so breaking down below that level will open a “trapdoor” that can send this market much lower. In that trade, we will more than likely see gold plunge towards the $1500 level. The $1500 level course will be a significant round number that a lot of people will be paying close attention to. Because of this, I think it’s only a matter of time before we would see a little bit of “market memory” come into the picture.

Wait for Short-term Bounces to Sell

• On the other hand, if we do rally from here, then I would anticipate that we could see the $1720 level offering a certain amount of resistance based upon “market memory” there as well.
• If we do break above there, the market is likely to see resistance in the $1760 level as well.
• The 50-Day EMA sits just above there and is going lower, so I think that also offers plenty of resistance.
• Short-term bounces will continue to be nice selling opportunities, but I think it’s probably only more likely to be a situation where this will be greatly influenced by the Federal Reserve and interest rates.

With the jobs number coming out on Friday, it’s very likely that we will see a lot of volatility. That volatility will have the market going back and forth and cause quite a bit of a headache if you are not properly sized. With this, I will probably be paying close attention to the market at the close on Friday, because it will give us a good clue as to how people will feel about holding gold into a 3-day weekend. Keep in mind that Monday is Labor Day in the United States, so therefore there will be very limited electronic trading.

WTI Crude Oil Forecast: Continues to Threaten to Break Down

The crude oil markets could get a little bit of a spike though because OPEC is threatening to cut production.

The West Texas Intermediate Crude Oil market has fallen again during the trading session on Thursday, as it looks like we are seeing a lot of jitters before the jobs number. The market breaking down below the $85 level is a very real threat right now, and if that were to happen, we would more likely than not see this market breakdown rather drastically.

At that point, I anticipate that the WTI market goes down to the $80 level. At that point, we are threatening a very significant breakdown and therefore we could see things fall apart. On the other hand, if we rally from here, we could go back to the 200-Day EMA. This is at roughly $95, but at this point, it seems like we are likely to see a lot of resistance, especially as we have so many different things going on at the same time in the world that could cause serious issues.

Demand and Supply Dynamic Pushing Down Prices

• One of the biggest concerns of course is the fact that the Iranians could throw a million barrels into the market daily if they get the deal done with the West, and the increase in supply could be a big influence on the market.
• That could drive down prices quite rapidly, but furthermore, we have concerns about the global economy slowing down, as it looks like we are heading into a recession.
• In recessionary times, it’s very likely that demand for crude oil will continue to drop.

The crude oil markets could get a little bit of a spike though because OPEC is threatening to cut production. Whether or not that’s the case is a completely different situation, but I believe we have a situation where the market has shown its true colors, and therefore every rally will be looked at with suspicion. Signs of exhaustion will get sold into, and with the jobs number coming out on Friday, we will have to look at what the Fed may read into the employment situation. Ironically, the jobs number coming out stronger than anticipated may cause problems as it may have the Federal Reserve tightening monetary policy even further, therefore it could cause major problems for risk appetite and could slow down the economy even further. By the end of the day Friday, we should have more clarity.

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