Even with the prospect of a big interest rate hike by the European Central Bank in September rising, the euro has struggled as the bloc’s energy crisis increases recession risks. 

Every time the price of the EUR/USD tries to rebound upwards, the negative impact factors remind investors that the euro will remain weak for a longer period of time.

At the beginning of this week’s trading, it tried to bounce upwards, but its gains did not exceed the level of 1.0030 and then returned to stability around the parity price again, before the announcement of the German inflation figures and the American consumer confidence reading.

At the beginning the week, the US dollar rose to the highest level in 20 years against the other major currencies after Federal Reserve Chairman Jerome Powell indicated that US interest rates will remain high for a longer period of time to reduce rising inflation. Accordingly, the US dollar index DXY, the measure of the US currency against a basket of major currencies, rose to the highest level of 109.48 in two decades.

On the other hand, the euro remained weak near its lowest level in 20 years, even with the tough statements of the European Central Bank, which strengthened the expectations of an interest rate hike in September.

At the end of last week, Powell told the central banking conference in Jackson Hole, Wyoming, that the Federal Reserve will raise US interest rates as high as needed to restrain growth and will keep them there “for some time” to lower the 2% inflation target, which is more than three times the Fed’s rates.

“Powell’s comments supported pricing a higher rate on federal funds for a longer period of time,” said Kenneth Brooks, a currency analyst at Societe Generale Bank, “the assumption that the Fed will start cutting interest rates in mid-2023 is premature,” he added.

The capital markets responded by intensifying bets for a sharper hike in US interest rates in September, with the probability of a 75 basis point hike currently at around 70%. Accordingly, US Treasury bond yields rose, with two-year bond yields reaching their highest level in 15 years at around 3.49%, which strengthened the US dollar. In his speech at the Jackson Hole Symposium, European Central Bank Board Member Isabelle Schnabel, French Central Bank President Francois Villeroy de Gallo and Latvia’s Central Bank Governor Martins Kazak all called for strong or important political actions.

Even with the prospect of a big interest rate hike by the European Central Bank in September rising, the euro has struggled as the bloc’s energy crisis increases recession risks. It is expected that the giant Russian energy company Gazprom will stop natural gas supplies to Europe from August 31 to September 2 due to maintenance.

Overall, the EUR/USD exchange rate has fallen significantly in 2022, and although factors such as the US economy and Fed policy have been an important driver of this decline, it is the rising cost of energy supply disruptions that gives most credence to bearish forecasters for some the other markets. Regarding the expected future for the Euro-Dollar, both “Rabobank” and “Nomura” expected a sustained break below the parity price in the Euro/Dollar rate during the coming months.

Expectations of the EUR/USD:

• The general trend of the EUR/USD currency pair is still downward and the stability below the parity price supports the bears’ control over the trend for a longer period of time.
• The continued concern about the future of energy in the Eurozone will stimulate the bears to further move down and therefore the appropriate support levels for the currency pair may currently be 0.9920 and 0.9845 and 0.9790 respectively.
• On today’s chart, the current performance pushed the technical indicators towards oversold levels.

On the upside and in the same period of time, breaking the 1.0200 resistance pair of the euro will be an opportunity to break the downward trend. Today the euro will react to the announcement of the German inflation figures and the dollar will react to the announcement of the American consumer confidence reading.

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The price of the yellow metal has struggled to maintain any momentum after surpassing $1,800 earlier this month. 

• Gold futures snapped a three-session winning streak on Friday, despite a weaker dollar. Investors are watching developments at the annual Jackson Hole Economic Symposium, expecting the event to provide guidance on monetary policy.
• The price of the yellow metal has struggled to maintain any momentum after surpassing $1,800 earlier this month.
• The price of gold tried to recover but its gains stopped towards the resistance level of $1765 per ounce before collapsing towards the support level of $1734 per ounce following Jerome Powell’s statements.

Gold price was relatively flat during the week’s trading and remains down roughly 4% year-to-date. As for the price of silver, the sister commodity to gold, it tried to stay above the $19 level at the end of last week’s trading. The price of the white metal posted a weekly gain of 1.4%, narrowly avoiding a bear market. The economic data cannot support the divergent gold prices because the statistics cannot support or oppose any argument for further increases or decreases in interest rates. For now, financial markets will be keeping a close eye on what happens at the Fed’s annual retreat in Wyoming.

A report indicated that consumer demand in the United States is diminishing, which may affect the economy in general as the fourth quarter approaches. And according to the Census Bureau, US personal spending rose just 0.1% in July, below market estimates of 0.4%. And that was less than a 1% gain in June. This represents the weakest number this year. Personal income rose by 0.2% last month, missing economists’ expectations of 0.6%. While it was the sixth straight monthly gain, it was the worst reading since January’s 0% growth.”

U.S. Treasury yields turned amid a mixed performance, with the benchmark 10-year yield rising 2.1 basis points to 3.045%. And one-year bond yields fell 0.1 basis point to 3.362%, while the 30-year bond yield rose 2.1 basis points to 3.255%. And a rising rates environment is usually bearish for gold because it raises the opportunity cost of owning commodity, as it doesn’t yield a return.

For other metals markets, copper futures rose to $3.7655 a pound. Platinum futures fell to $865.00 per ounce, while palladium futures rose to $2144.00 per ounce.

The price at gold is traded is being affected by the reaction from the release of the economic data. Michigan’s American consumer confidence index for the month of August exceeded expectations at 55.2, settling at 58.2. This affected the price of the yellow metal as investors turned to risk trading. While the personal income and spending data was disappointing, investors remained positive after the impressive data announced earlier in the week.

Initial US GDP data for the second quarter came in stronger than expected on a quarterly and annual basis. On the other hand, initial and ongoing jobless claims came in below estimates, boosting market optimism once again. Durable goods for July missed expectations at 0.6% with a change of 0%, while non-defense capital goods orders for aircraft was higher than the 0.3% expected by the analysts, with a change of 0.4%.

Technical analysis of the price of gold:

In the near term and according to the performance on the hourly chart, it seems that the gold price is trading within the formation of a sharp downward channel. This indicates a strong downward momentum in the short term in market sentiment. Therefore, the bears will target short-term profits at around $1734, or lower at $1730, while the are looking to pounce on potential rebound profits at around $1.741, or higher at $1746.

In the long term and according to the performance on the daily chart, it seems that the price of gold is trading within the formation of a downward channel. This indicates a significant long-term bearish bias in market sentiment. Therefore, the bears will target long-term profits at around $1714 or lower at $1690 per ounce. On the other hand, the bulls will target potential reversal profits at around $1759 or higher at $1782 per ounce.

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For two days in a row, the price of gold is trying to recover. The rebound gains did not exceed the resistance level of 1756 dollars an ounce, before the price of XAU/USD settled around the level of 1751 dollars an ounce in the beginning of trading today, Thursday. Attempts to recover the gold price were halted by the strength of the US dollar and with investors’ focus turned to the global central banks event in Jackson Hole to get more clues on interest rate hike plans.

The US dollar rose 0.3%, making gold more expensive for overseas buyers.

While a stronger dollar is hurting gold, the market is relatively calm. Commenting on this, Bob Haberkorn, chief market analyst at RGO Futures, said metal traders are waiting to see what comes out of the Jackson Hole meeting and want to know more about the Fed’s rate hike path. Market participants await US Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium on Friday. The speech may shed some light on the path of Fed monetary tightening.

Amid high interest rates, gold tends to underperform because it does not generate any interest. In general, the price of gold is rising due to the decline in the dollar after the weak US data.

Investors will also focus on the second estimate of US GDP for the second quarter and consumer spending data for July which is due for release later this week.

Spot silver was down 1% to $18.97 an ounce. Commenting on the performance, Carlo Alberto de Casa, analyst at Kinesis Money said, “Silver’s price performance has been negative so far in 2022… A combination of negative factors, including fear of recession, rising interest rates and a strong dollar, have severely impacted the price of the industrial metal.”

XAU/USD Gold Price Analysis Today

• There is no change in my technical view for the performance of the XAU/USD gold price.
• The trend is facing downward pressures, and the direction will not change to an upward trend without stabilizing above the psychological resistance of 1800 dollars an ounce.
• I still see that the price of gold may move in narrow ranges and tighten performance until the reaction to the most important event for the markets this week, the statements of US Central Bank Governor Jerome Powell in his Jackson Hole seminar.

I still prefer buying gold from every bearish level and the closest support levels for gold are currently 1742 and 1725 dollars, respectively. The XAU/USD gold price will be affected today by the level of the US dollar and the extent to which investors take risks or not, as well as the reaction from the announcement of the growth of the US economy and the number of US weekly jobless claims.

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The price of gold maintained an advance as investors weighed on expectations for the path of the Federal Reserve’s monetary policy tightening after new data indicated some weakness in the US economy. Yesterday, bullion prices cut six consecutive days of declines with the decline of the dollar. The price of gold XAU/USD moved towards the level of 1754 dollars an ounce, after prices plunged towards the support level of 1728 dollars an ounce at the beginning of the week’s trading.

The rebound came as investors await the annual meeting of global central bankers in Jackson Hole later this week and Federal Reserve Chairman Jerome Powell’s speech on Friday. Commenting on this, Goldman Sachs chief economist Jan Hatzius said he expected Powell to make the case for a slower rate hike. However, Minneapolis Fed President Neil Kashkari said it was “very clear” that the US central bank should tighten monetary policy again to control inflation.

Investors are assessing the strength of the Fed to continue raising interest rates in the face of increased risks to growth. Economic activity has weakened from the United States to Europe and Asia, fueling fears that price hikes and the war in Ukraine will push the world into recession. While bullion has stabilized ahead of the Jackson Hole seminar, Avtar Sandow, Senior Director of Commodities at Philip Nova, said, “The US dollar index remains at multi-year highs affecting its weight not only on gold prices but also on other currencies.”

Stock Futures are Lower

Today, Asian stock index and US stock futures are lower as investors assess the potential pace of further Fed monetary tightening and growing signs of an economic slowdown. The region-wide stock market was down about 0.5%, led by declines in China and Hong Kong, as shares of Logan Group Co. A volatile stock price once again highlights the real estate crisis affecting the Chinese economy.

The recession was fueled by broader risk aversion which saw declines in the S&P 500, Nasdaq 100 and European futures contracts. Risk-sensitive currencies such as those in Australia and New Zealand declined. The 10-year Treasury yield remained above 3%. The latest data has shown weak economic activity from the US to Europe and Asia, underscoring the delicate task the Fed faces in raising interest rates to bring down high inflation without triggering a recession. In general, investors will flock to Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole on Friday to see how tough the US central bank is in the face of mounting economic challenges. The global recovery in stocks from the June low was halted before the much-anticipated event.

Today’s XAU/USD Gold Price Forecast:

• Despite the recent rebound, the XAU/USD gold price is still within the bearish trend.
• A strong reversal of the trend will not occur without the gold price moving towards the $1800 psychological resistance again.
• According to the performance on the daily chart below, I see that the price of gold may enter into buying levels from the support levels of 1725 and 1700 dollars, respectively.
• The price of gold may remain under pressure until the reaction, which will be mentioned in the Jackson Hole symposium, which is organized by the US Central Bank.

The price of gold today will be affected by the level of the US dollar and the extent to which investors take risks or not, as well as the reaction from the announcement of US durable goods orders and pending US home sales.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decline in recent trading at intraday levels, to achieve slight daily gains until the moment of writing this report, by 0.96%. It settled at the price of $9.372 per million British thermal units, after sharply declining during trading. Yesterday, the rate was -5.24%.

Natural gas prices retreated from 14-year highs after Freeport LNG said on Tuesday it plans to restart its liquefaction facility in early to mid-November, later than previously expected, and that will lead to further delays. in US LNG exports.

Higher natural gas prices in Europe helped keep prices higher around the world, prices in Europe rose on Monday after Russia announced that natural gas giant Gazprom would again halt supplies to Europe via the Nord Stream 1 pipeline for three days. It starts on August 31.

However, natural gas storage facilities in Germany are now more than 80% full before winter, showing steady progress despite a significant drop in deliveries from Russia amid the war in Ukraine.

Natural Gas Technical Outlook

• Natural gas declined following the stability of the pivotal resistance level 9.600, as the price failed to confirm its breach with another close above.
• It reaped the profits of its recent rises, and to try to gain positive momentum that might help it recover and breach that resistance in the future.
• It is trying at the same time to drain some of its saturation of clear buying of the relative strength indicators, especially with the start of the influx of negative signals from them.

All of this comes in light of the dominance of the main bullish trend over the medium and short term along a slope line, as shown in the attached chart for a (daily) period, with the continuation of positive support for its trading above its simple moving average for the previous 50 days.

Therefore, our expectations suggest a return to the rise of natural gas during its upcoming trading, but on condition that it first breach the pivotal resistance level 9.600, then target the resistance level 10.70. In the event that this resistance continues to remain stable in front of its upcoming trading, this would lead to more negative pressure to target the support level. 8.60.

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Our expectations indicate more ascent for natural gas during its upcoming trading.

Spot natural gas prices (CFDS ON NATURAL GAS) continued to rise in recent trading at intraday levels, to achieve daily gains until the moment of writing this report, by 2.38%. It settled at the price of $ 10.028 per million British thermal units, after rising sharply during yesterday’s trading by reaching 5.04%.

Natural gas stole the spotlight on Monday as prices in the United States rose to a 14-year high, with analysts attributing the gas price move to Russia’s decision to halt flows to Europe along the Nord Stream 1 pipeline.

Gazprom announced late last week that the Nord Stream 1 pipeline will be suspended for three days of maintenance, and the real concern for the market is whether flows will resume after this period.

• In the United States, August-September has historically been the strongest season of the year for natural gas, with a combination of potential supply disruptions from hurricanes and the anticipation of the upcoming home heating season.
• Issues related to the supply of Russian natural gas to Europe have also been a factor.

The current tight supply of demand is underlined by US crude stocks in the Strategic Petroleum Reserve (SPR), which are at their lowest level in more than 35 years.

Natural Gas Technical Outlook

Technically, natural gas, with its recent rise, succeeded in breaching the pivotal resistance level 9.600, to settle above it until the moment of writing this report. It is amid complete control of the main bullish trend in the medium and short term along major and minor slope lines, as shown in the attached chart for a (daily) period. The continuation of the positive pressure with its trading above its simple moving average for the previous 50 days. The influx of positive signals on the relative strength indicators is despite reaching overbought areas.

Therefore, our expectations indicate more ascent for natural gas during its upcoming trading, especially as long as its stability is above 9.600, to target the first resistance levels at 10.70.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized in the recent trading at the intraday levels, to achieve new daily gains until the moment of writing this report, by 1.49%. It settled at the price of $9.377 per million British thermal units, after it decreased during yesterday’s trading by – 1.66%.

US natural gas futures fell about 1% on Wednesday, down from a 14-year high hit in the previous session, due to expectations of cooler weather and lower demand for refrigerants over the next two weeks than previously expected.

This slight price drop came despite lower daily production, hotter-than-normal weather on the West Coast and Texas, and near-record world prices.

US gas prices have also been affected by the ongoing outage at the Freeport LNG export plant in Texas, which has left more US gas for utilities to pump into storage for the coming winter.

Wednesday’s futures traders focused squarely on the next round of weekly government inventory data in the US Estimates ahead of the Energy Information Administration (EIA)’s official weekly inventory report on Thursday were wide-ranging, but hovered around the two figures of 22 billion cubic feet and 45 billion cubic feet. cubic feet with an average forecast of 32 billion cubic feet.

So far this year, the price of gas has risen during the first month by about 145% as higher prices in Europe and Asia keep demand for US LNG exports strong. Global gas prices have risen this year after supply disruptions linked to Russia’s invasion of Ukraine on February 24.

Meanwhile, Russian gas exports through the three main lines have averaged about 2.5 billion cubic feet per day so far. Down from 2.8 billion cubic feet per day in July and 10.4 billion cubic feet per day in August 2021.

Natural Gas Technical Outlook

Technically, natural gas’s decline came yesterday as a result of the stability of the pivotal resistance level 9.600, to reap the profits of its recent rises. It is trying to gain positive momentum that might help it breach that resistance. This is in light of the dominance of the main bullish trend in the medium and short term along a slope line, as shown in the attached chart. The positive pressure of its trading continues above its simple moving average for the previous 50 days, in addition to the influx of positive signals on the relative strength indicators, despite reaching overbought areas.

• Our expectations indicate that the scenario of a rise in natural gas during its upcoming trading is likely.
• It is on condition that it first overcome the pivotal resistance 9.600 obstacle.
• After which it will target the resistance level 10.70.

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I am still looking at this through a prism of fading short-term rallies.

• The West Texas Intermediate Crude Oil market initially tried to rally on Tuesday but has also seen quite a bit of selling pressure.
• The market continues to be a scenario where we are looking at the possibility of a severe lack of demand.
• After all, if the global economy is going to continue to slow down, then it’s likely that we have further to go.

Will Iran Increase Supply?

Furthermore, the Europeans continue to give good signs that the Iranians may be able to come to the table and start selling more crude into the markets, and that of course will increase supply in a market that’s already starting to see a serious concern about being oversupplied. Whether or not that will last for the long term is a completely different question, but right now it’s a very negative type of market.

The $100 level above is a significant resistance barrier, and if we were to break above that level that it’s possible that we could go higher. If we do break above the $100 level, then it could open up a move all the way to the $120 level. That being said, it’s worth noting that the market is continuing to pay close attention to the down-trending channel, so that’s worth paying close attention to as well. That being said, we have plenty of reasons to be bearish, at least in the short term.

The $85 level would be a potential support level, but if we were to break down below there, then we could go down to the $80 level. The $80 level is a large, round, psychologically significant figure, and an area that will probably attract a lot of attention. That being said, I think the only thing that you can count on is that there’s going to be a lot of volatility, especially if there is a sudden shift in the situation coming out of Iran and the European Union. If they suddenly blow up the idea of a potential deal, that will take roughly 1 million barrels of potential supply out of the market each day. That obviously would be bullish for the price, but ultimately, I think it’s very unlikely that the global slowdown will continue to saturate the headline, so I am still looking at this through a prism of fading short-term rallies.

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We have a bit of exhaustion coming into the market, so it makes sense that we would see the market give back some of the recent gains.

• The gold markets have pulled back again on Tuesday as we are now below the $1780 level.
• Ultimately, this is a market that I think will continue to show bits and pieces of hesitation, but whether or not it breaks down completely might be a completely different question. After all, gold markets have seen a nice rally as of late.

Noisy Behavior Ahead

However, you also have to keep in the back of your mind that the candlestick from the Monday session was a massive outsized candle and that typically gets a little bit of follow-through if nothing else. The market will continue to see a lot of noisy behavior, because of everything that’s going on in the bond market. Keep in mind that the bond market drives where the gold market will go most of the time, and that has certainly been the case for the last several months.

The gold markets are difficult to trade unless you are keeping an eye on the 10-year yield because if you have the ability to pick up the yield on a piece of paper, you don’t have to pay for storage when it comes to gold. Because of this, you must keep an eye on both charts. Furthermore, you need to keep an eye on the US dollar, because it has a major influence on where we get on, as gold is priced in those very same US dollars.

The candlestick for the trading session on Tuesday was negative, although it certainly was a lot less negative than the previous one. There is a certain amount of support to be found near the $1750 level, so I think we ought to pay close attention to it, because if we break down below that level, then it opens up a move quite a bit lower. On the other hand, if we were to turn around and break above the $1815 level, that could kick off the next move higher, perhaps looking to chase the 200-day EMA above, presently near the $1845 level. At this point, the entire trading world is all about interest rates and bond markets, so you need to pay attention to these yields more than anything else. Ultimately, it does look like we have a bit of exhaustion coming into the market, so it makes sense that we would see the market give back some of the recent gains.

 

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Spot natural gas prices continued to rise in recent trading at intraday levels, to achieve new daily gains until the moment of writing this report, by 0.68%. It settled at the price of $9.460 per million British thermal units, after rising sharply during yesterday’s trading. By 5.91%.

Natural gas futures ended yesterday’s session at their highest levels since 2008, buoyed by supply shortages in the US and Europe, as European gas prices remained elevated after the weekend amid maintenance activity in Norway, while flows through the Nord Stream 1 pipeline remain significantly restricted. big.

Natural Gas Prices

Prices in the US also remain high amid rising temperatures, and although the temperatures are cooling down, hurricane season is still lurking.

Analysts expect the US Energy Information Administration on Thursday to report an increase of 34 billion cubic feet in US gas inventories for the week ending August 12, according to a survey by S&P Global Commodity Insights, which indicated that a rise in that volume would be much lower. of an average five-year storage of 47 billion cubic feet.

So far this year the price of gas in the first month has risen by about 150%, as higher prices in Europe and Asia maintain strong demand for US LNG exports. Global gas prices have risen this year after supply disruptions linked to Russia’s invasion of Ukraine on February 24.

Technical Outlook for Natural Gas

Technically, natural gas is now preparing to attack the pivotal resistance level 9.600, amid the dominance of the main bullish trend in the medium and short term along a slope line. This is shown in the attached chart for a (daily) period, with the continued influx of positive signals on the relative strength indicators, despite reaching areas. The price is very saturated with buying operations, and the price is also benefiting from the continuation of the positive pressure to trade above its simple moving average for the previous 50 days.

Therefore, our expectations indicate that natural gas will continue to rise during its upcoming trading, but on the condition that it first breach the obstacle of the resistance level 9.600, and then target the resistance level of 10.70.

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