. 2024 Commodities Outlook: Wheat, Gold, Silver, Oil & Gas.

2024 Commodities Outlook: Wheat, Gold, Silver, Oil & Gas.

2024 Commodities Outlook: Wheat, Gold, Silver, Oil & Gas.

01 Jan 2024

Encouraging underlying factors, persistent geopolitical uncertainties, and anticipated Federal Reserve easing indicate a potential upward trend for the complex in the coming year. Nevertheless, given the considerable uncertainty surrounding global growth, we maintain a cautiously optimistic outlook for commodities in 2024.

Despite high expectations, the commodities complex faced challenges in 2023, marked by a milder European winter, trade flow adjustments to geopolitical events, and China’s economic hiccups. Central bank tightening and a stronger US dollar added headwinds. Looking ahead to 2024, a cautiously optimistic outlook prevails, supported by neutral to mildly bullish fundamentals, ongoing geopolitical tensions, and potential tailwinds from the US Federal Reserve’s policy adjustments and a weaker USD, although softer global growth poses demand risks.

GOLD:

XAU/USD faces challenges but aims for a 14% increase in 2023.

  • The gold price has rebounded following a retreat from three-week highs.
  • The US Dollar is once again weakening, influenced by sluggish US Treasury bond yields on the last trading day of 2023.
  • Gold prices could be influenced by factors such as Fed policy and the global economic situation.
  •  The technical outlook indicates that the bullish potential remains intact as we move into 2024.

Gold has experienced significant fluctuations in 2023, witnessing a 15% increase from January to May, followed by a 13% decline into October, and then a subsequent 19% rise to achieve an all-time high in early December. Several factors affecting gold prices seem aligned for the first quarter of 2024, shaping the trading thesis discussed in the remainder of this article, along with relevant technical considerations.

Gold confronts dual risks as we enter 2024. The actions of the Federal Reserve in terms of monetary policy, the condition of the global economy, and geopolitical events hold the potential to substantially influence the movements of XAU/USD in the upcoming year.

GOLD Technical Outlook:

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 2062.46| Negative Crossover | Bullish
  • MA 20: 2035.98| Positive Crossover | Bullish
  • MA 50: 2011.60 | Positive Crossover | Bullish

Simple:

  • MA 5: 2066.07 | Negative Crossover | Bearish
  • MA 20: 2035.98 | Positive Crossover | Bullish
  • MA 50: 2011.60 | Positive Crossover | Bullish

RSI (Relative Strength Index): 60.59| Positive Zone | Buy

Stochastic Oscillator: 54.23| Buy zone | Negative

Resistance And Support Levels:

  • R1: 2072.83| R2: 2143.96
  • S1: 2009.60| S2: 1949.01

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 2084.68| Take Profit: 2143.96 | Stop Loss: 2047.80

SILVER:

Silver makes an upward surge as markets conclude 2023, with XAG/USD rebounding from the $24.00 level.

  • XAG/USD experienced a rebound from $24.00, testing the $24.40 level.
  • Silver markets are in flux as investors assess the likelihood of a Fed rate cut.
  • Despite a bullish inclination, Silver continues to be constrained below $24.60.

XAG/USD experienced a widespread surge in risk appetite on Wednesday as investors increasingly favor the notion that the Federal Reserve (Fed) will initiate interest rate cuts in 2024. Some anticipate the first cuts as early as March next year.

Spot Silver demonstrates a distinct bullish inclination as markets conclude 2023 amid a thin, abbreviated post-holiday trading week. XAG/USD remains confined within a familiar but challenging near-term range, oscillating between $24.00 and $24.60.

US Treasury yields are retracting, and the US Dollar is declining further as investors flock to Fed rate cut expectations, causing the US 2-year Treasury yield to drop to 4.26% from its initial position near 4.3% on Wednesday. While the 2-year Treasury yield hits its lowest point since May of this year amid increased risk bids due to rate cut anticipations, Silver is experiencing constrained knock-on buying from broad-market risk movements.

Silver Technical Outlook:

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 23.93| Negative Crossover | Bullish
  • MA 20: 23.78| Positive Crossover | Bullish
  • MA 50: 23.76 | Positive Crossover | Bullish

Simple:

  • MA 5: 24.00 | Negative Crossover | Bearish
  • MA 20: 23.78 | Positive Crossover | Bullish
  • MA 50: 23.76 | Positive Crossover | Bullish

RSI (Relative Strength Index): 47.06| Positive Zone | Buy

Stochastic Oscillator: 22.9| Sell zone | Negative

Resistance And Support Levels:

  • R1: 23.95| R2: 25.50
  • S1: 22.83| S2: 21.95

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 24.34| Take Profit: 25.50 | Stop Loss: 23.71

BRENT CRUDE OIL:

Oil prices experienced a 10% decline in 2023 as supply, and demand concerns weigh.

Crude futures witnessed a decline of more than 10% in 2023, characterized by a volatile year of trading influenced by geopolitical unrest and uncertainties regarding the oil production levels of key global producers.

Both contracts experienced a decline of over 10% in 2023, concluding the year at their lowest year-end levels since 2020.

On the final day of 2023, geopolitical tensions heightened in the Middle East as Israel increased its assaults in southern Gaza, leading to an upward push on prices.

OPEC+ is presently reducing production by approximately 6 million barrels per day, equivalent to about 6% of global supply. OPEC confronts diminishing demand for its crude in the initial half of 2024, coinciding with a decline in its global market share to the lowest level since the pandemic, driven by output cuts and Angola’s departure from the group. Simultaneously, concerns about potential supply interruptions due to the Middle East conflict have stirred anxiety, extending from the closing months of 2023 into 2024.

Brent Crude Oil Technical Outlook:

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 77.99| Negative Crossover | Bearish
  • MA 20: 77.23| Positive Crossover | Bearish
  • MA 50: 80.92 | Positive Crossover | Bearish

Simple:

  • MA 5: 78.55 | Negative Crossover | Bearish
  • MA 20: 77.23 | Negative Crossover | Bearish
  • MA 50: 80.92 | Negative Crossover | Bearish

RSI (Relative Strength Index): 40.09| Negative Zone | Sell

Stochastic Oscillator: 60.48| Buy zone | Negative

Resistance And Support Levels:

  • R1: 80.52| R2: 85.10
  • S1: 76.64| S2: 71.26

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 75.05| Take Profit: 71.26 | Stop Loss: 78.03

NATURAL GAS:

Natural gas futures ended the year with another weekly loss.

Natural gas futures conclude the year on a subdued note, with the front month registering its seventh decline in the past eight weeks. A tepid December, leading to diminished demand, has left market participants awaiting confirmation of significantly colder weather in January to boost consumption.

Natural gas for February delivery concludes with a 1.7% decrease, or 4 cents, at $2.514/MMBtu.

The present market perspective on natural gas futures is cautiously optimistic, weighing the effects of mild weather against possible demand upswings driven by colder forecasts. Traders are closely monitoring the evolving market scenario, with EIA data and weather predictions playing pivotal roles.

Natural Gas Technical Outlook:

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 2.487| Negative Crossover | Bearish
  • MA 20: 2.489| Negative Crossover | Bearish
  • MA 50: 2.461 | Positive Crossover | Bullish

Simple:

  • MA 5: 2.499 | Negative Crossover | Bearish
  • MA 20: 2.489 | Negative Crossover | Bearish
  • MA 50: 2.461 | Positive Crossover | Bullish

RSI (Relative Strength Index): 44.09| Neutral zone | Neutral

Stochastic Oscillator: 52.69| Buy zone | Negative

Resistance And Support Levels:

  • R1: 2.574| R2: 2.768
  • S1: 2.429| S2: 2.220

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 2.400| Take Profit: 2.220 | Stop Loss: 2.530

WHEAT FUTURES:

Wheat futures climb on additional Black Sea reports.

Wheat futures for March delivery increased by 1.5% to $6.32 1/2 per bushel on the Chicago Board of Trade on Thursday following reports of fresh attacks in the Russia-Ukraine conflict.

“Wheat is garnering some support once more today due to increased activity in the Black Sea,” noted Matt Zeller of StoneX. Wheat received a boost as Ukrainian forces attacked a Russian warship, prompting retaliatory promises from Russia.

Wheat futures saw an increase on Thursday following a second Black Sea incident this week, raising worries about secure grain exports from Ukraine. The incident involved a Panama-flagged vessel en route to load grain at a River Danube port hitting a Russian mine. In contrast, corn and soy complex futures experienced declines due to favorable rains in Brazil. March corn futures closed down 2¼¢ at $4.74¼ per bu, while Chicago March wheat gained 8½¢ to close at $6.31½ per bu.

Wheat Futures Technical Outlook:

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 593.84| Positive Crossover | Bullish
  • MA 20: 611.78| Negative Crossover | Bearish
  • MA 50: 642.87 | Negative Crossover | Bearish

Simple:

  • MA 5: 592.25 | Positive Crossover | Bullish
  • MA 20: 611.78| Negative Crossover | Bearish
  • MA 50: 642.87 | Positive Crossover | Bullish

RSI (Relative Strength Index): 31.05| Selling zone | Bearish

Stochastic Oscillator: 33.1| Sell zone | Positive

Resistance And Support Levels:

  • R1: 621.66| R2: 659.26
  • S1: 593.16| S2: 571.71

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Limit Sell: 602.28| Take Profit: 571.51 | Stop Loss: 623.93