Metals Down While Gold, Oil, & Natural Gas Show Weakness
Precious metals including gold and silver were trading down on Friday as standard market traders locked in profits in advance of the weekend market closures. Nevertheless, both metals managed to close out the week with modest gains. Last week was nothing short of wild, and many traders are still trying to catch their breath after a roller coaster ride of ups and downs. After a number of tweets coming from U.S. President Donald Trump, China and the United States claims exchanges, the strong movements of the USD/CNY pair and in equities, and an unappealing economic calendar, by the time the week was nearing its end, traders were more than ready to close their positions and look to the coming week.
Metals did manage to trade positive on the week, despite being down on Friday. However, the movement may possibly be a temporary retracement. Why would this be? There are a number of traders who are concerned over the next potential global crisis and are looking to gold as a safe haven investment. Gold has traditionally held the role as a safe haven investment, and this isn’t likely to change in the future. The reason being gold’s consolidation above 1,500 and shifting negative on Friday as simply profit-taking in advance of the weekend.
XAU/USD was last trading at 1,511, down 0.75% on the day. However, the overall week was quite different. XAU/USD closed in the positive for a third week in a row. Gold gained 1.02% gains on the week, but price action movements are more on a linear mode over the 1,500 area and held by the 1,530 level. Technical analysis is suggesting additional consolidation in the coming days. Forex chart patterns agree with that assessment, but at the core it is fundamental matters that are driving asset price movement. So, expect bullish continuation throughout the middle term.
On the positive upside, 1,530 is the immediate level of price resistance. Above that level, 1,615 and 1,640 will be the next levels to keep an eye on. After those levels, 1,800 will be the next level to watch for. For the month of August, gold has posted 7.1% in gains up to this point. If positive trends continue, it would mark the fourth favorable period in a row for the precious metal.
Silver managed to close positive on the week as well. The metal is also trading positive for the second consecutive week as risk aversion has been impacting the market for more than two weeks now. On Friday, the XAG/USD pair was trading negative, but was off intra-level lows of 17.05. At last check, silver was moving at 17.20, down 0.32% on the day. Market watchers observed the metal moving mostly sideways, but many were motivated by the obvious profit-taking.
Technical analysis suggests even more space for the upside, but the 17.40 level is placing a limitation on any upside for the time being. When reviewing the weekly charts, the XAG/USD pair was trading up 1.40%, adding onto the 4.70% gains realized over the previous week. For the month of August, silver is trading up 5.80%, posting its third consecutive month of gains.
Gold & Silver Weekly Price Forecasts
Although gold and silver did manage to rally during the week, both metals did underperform during the latter half of the week. As of now, technical analysis suggests that perhaps a moderate pullback is likely over the coming days. Do bear in mind though that this doesn’t mean that the vast majority of traders will be looking to sell off their precious metals.
As gold and silver prices climbed and fell throughout the week, gold began to show indications of resistance at the $1550 price level. Gold showed indications of support at the $1500 level. Having said that, the candle stick appears to be less than remarkable and for that reason many market experts are anticipating that gold is going to decline, shifting down towards the $1450 level. Many were looking for resistance in the charts, expecting to see resistance in the $1450 region. Overall though, most feel that the market will go on to favor both gold and silver over the long-term, but caution traders about the potential for bumps in the road. Inevitably, goal is provided with a boost each time a central bank cuts interest rates, as investors turn to physical assets, which are viewed as safer investments.
Within the forex charts, an ascending triangle appeared underneath and the $1450 price level, which was underneath was the preceding resistance barrier. The $1450 level should now receive some support, and any type of pullback that may take place could offer traders value. We do have to look at the potential flip side, of course, and that would be that gold breaks above the very top of the candle stick on the week. If this happens, the gold market will soar. much higher. In fact, if this were to happen, we could see the price climb to as high as the $1600 level. Most forex traders are not opting to go short on gold and silver at this time, but do see value in longer, more steady price trends. Even when resistance enters the picture, these two metals, gold specifically, do not appear to be held back. The market for gold is indeed bullish, but trader will need to practice patience.
Crude Oil Price Forecast
Crude oil markets showed signs of weakness last week, especially during Friday’s trading session. The crude oil markets fell considerably during the session and closed out the week showing clear signs of weakness once again. At this stage, many market experts feel that the crude oil market is likely going to continue its decline. For forex traders, this means that there could be plenty of opportunities for going short.
WTI Crude Oil: The WTI crude oil market started out the day trying to rally on Friday but continued to meet resistance just above the $55 price level. Above that, traders will see the 50-day EMA just above the resistance level that is beginning to slope downward, and crude oil seems to be impeding its own progress. When looking to the weekly candlestick, you’ll note that it is a shooting star. This is a negative indicator and does not bode well for the commodity. Do note that the previous weeks candle pattern was a hammer, and this could mean that in the coming week you’re likely to see oil prices making their way lower under volatile market conditions. Look for opportunities to go short on short-term price rallies during times of market exhaustion.
Brent: The Brent oil markets also attempted to rally during Friday’s trading session but would meet the same fate that the WTI market did. The Brent oil market faltered and ended up forming an exhaustion candle within the charts. It has become rather clear that the previous level of price support, which was between $59 and $60, is now providing resistance, as is to be expected. So, where do we go from here? The first price level to target will be the $57.50 level. Following that, look to the $55 level. Most standard market traders have no interest in buying at this time, as the commodity looks to continue to face substantial resistance. Forex traders, however, may find a few opportunities to go short while the $55 price level provides strong support.
Natural Gas
At the start of the week, natural gas markets attempted to rally, but would ultimately give back much of its gains. The commodity closed underneath the $2.20 price level, which obviously is an extremely negative indicator. Natural gas markets continually exhibit exhaustion on price rallies, and on the charts, ended up forming a bit of a shooting star on the weekly candle. The $2.20 price level is continually problematic, as it has not just been supported in the past but has now met resistance a number of times. The charts also show a downtrend line above the $2.20 level, and that indicates continuing downward pressure on the natural gas market as well. The natural gas markets have been trending down for quite some time, primarily because of the substantial abundance of the commodity globally.
All things considered, it is expected that many traders will avoid trading on natural gas, especially where long-term trades are concerned. If you are a forex trader who considers themselves to be a long-term trader, then you may want to start focusing on the coming winter months and start watching for any type of price breakout. Now, this is not likely to happen soon, but it could pay to be ready to trade on the first signs of a change over to cooler temperatures, as these could lead to a break in the downward price trend. Once that happens, watch for the price to break just over the $2.50 price level. Again, this is not likely to happen over the short-term, as temperatures in the northern hemisphere are likely to remain warm for a few more months, but it’s never too soon to plan. Do keep in mind though that oversupply, combined with a warmer client, will continue to reduce global demand and negatively impact natural gas prices.
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