. Daily Commodity Analysis - Gold plunges, oil rises, Tellurian turmoil, USDA shakes markets.

Daily Commodity Analysis – Gold plunges, oil rises, Tellurian turmoil, USDA shakes markets.

Daily Commodity Analysis – Gold plunges, oil rises, Tellurian turmoil, USDA shakes markets.

11 Dec 2023

Introduction

Welcome to our daily market update, where we dissect the latest movements in key commodities – Gold, Crude Oil, Natural Gas, and Corn. In today’s dynamic financial landscape, we delve into the forces shaping these markets, exploring technical analyses, recent developments, and notable events that could impact your investment decisions. Stay informed and empowered as we guide you through the intricacies of the global economic stage. Let’s dive into the trends that matter, providing you with a comprehensive view to navigate the markets successfully.

Markets In Focus Today – GOLD

Gold prices fall below $2,000 amid reduced expectations for an imminent Federal Reserve rate cut.

Gold prices dipped below the $2,000 mark in Asian trading on Monday, driven by a reassessment of market expectations regarding an early Federal Reserve interest rate cut in 2024. The decline marked a significant reversal from last week’s record highs, influenced by a resilient U.S. dollar and positive signals from the U.S. economy, boosting risk sentiment. Spot gold experienced a 0.4% drop to $1,996.24 per ounce, while February gold futures fell 0.1% to $2,012.75 per ounce by 23:19 ET (04:19 GMT). Both values were approximately $150 lower than the recent peak. Traders approached gold cautiously ahead of an upcoming Fed meeting, where it is widely anticipated that interest rates will remain unchanged. The Fed’s stance on monetary policy in 2024 will be closely monitored, especially following strong U.S. labor market data that tempered expectations for a rate cut by March 2024, resulting in substantial losses in the gold market. Improved risk appetite post the labor market report indicated just enough economic strength for a potential “soft landing,” leading to a decline in gold prices and an advance in stock markets. Beyond the Fed meeting, attention is focused on interest rate decisions from the Bank of England, European Central Bank, and Swiss National Bank this week. All three banks are expected to signal a commitment to higher-for-longer interest rates, which typically negatively impact gold prices by raising the opportunity cost of investing in the metal. The week also holds significance with the release of U.S. inflation data for November. In the realm of industrial metals, copper prices fell on Monday due to concerns about weakening demand stemming from China’s disinflationary signals. March copper futures dropped 0.6% to $3.8087 per pound, reflecting ongoing economic challenges in the world’s largest copper importer despite robust copper imports in November.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 2016.71 | Negative Crossover | Bearish
  • MA 20 : 2007.71 | Negative Crossover | Bearish
  • MA 50 : 1978.58 | Positive Crossover | Bullish

Simple :

  • MA 10 : 2029.69 | Negative Crossover | Bearish
  • MA 20 : 2007.69 | Negative Crossover | Bearish
  • MA 50 : 1963.63 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 49.66 | Neutral Zone | Neutral

Stochastic   Oscillator : 19.23 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 2052.82 R2 : 2082.09
  • S1 : 1998 S2 : 1937

Overall Sentiment : Neutral Market Direction : Sell

Trade Suggestion : Limit Buy : 1997 | Take Profit : 1937 | Stop Loss : 2005

Crude

Oil prices continue to rise following purchases for the U.S. strategic reserve.

Oil prices increased on Monday, marking a second consecutive session of gains, as U.S. efforts to replenish strategic reserves offered some support. However, concerns about potential crude oversupply and softer growth in fuel demand for the coming year persisted. Brent crude futures climbed by 0.6%, or 48 cents, reaching $76.32 per barrel by 0406 GMT. Simultaneously, U.S. West Texas Intermediate crude futures stood at $71.61 per barrel, marking a 0.5% increase, or 38 cents. While both contracts experienced a more than 2% surge on Friday, they recorded their seventh straight week of declines, marking the longest streak of weekly losses since 2018, primarily due to ongoing concerns about oversupply. The recent weakness in prices prompted the U.S. to seek up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) for delivery in March 2024. Analyst Tony Sycamore from IG noted that the Biden Administration’s efforts to refill the SPR were providing support, and technical chart indicators were also contributing to the price support. Despite commitments from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to cut 2.2 million barrels per day (bpd) of production in the first quarter, investor skepticism persists regarding an actual reduction in supply. Growth in output from non-OPEC countries is expected to lead to excess supply in the coming year. RBC Capital Markets anticipates stock draws of 700,000 bpd in the first half but only 140,000 bpd for the full year. Analysts from RBC emphasized that prices would likely remain volatile and directionless until the market receives clear data points regarding compliance with voluntary output cuts. The latest consumer price index data from China, the world’s top oil importer, indicated rising deflationary pressures, casting doubt on the country’s economic recovery. Chinese officials pledged on Friday to stimulate domestic demand and bolster the economic recovery in 2024. Investors are closely monitoring meetings at five central banks, including the Federal Reserve, and U.S. inflation data this week for guidance on interest rate policies and their potential impact on the global economy and oil demand.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 72.60 | Negative Crossover | Bearish
  • MA 20 : 74.53 | Negative Crossover | Bearish
  • MA 50 : 78.25 | Negative Crossover | Bearish

Simple :

  • MA 10 : 73.14 | Negative Crossover | Bearish
  • MA 20 : 74.68 | Negative Crossover | Bearish
  • MA 50 : 79.95 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 38.69 | Neutral Zone | Neutral

Stochastic   Oscillator : 19.63 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 73.50 R2 : 78
  • S1 : 69.66 S2 : 66.85

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Buy : 69.66 | Take Profit : 66.85 | Stop Loss : 71

NATURAL GAS

The U.S. liquefied natural gas (LNG) developer Tellurian has removed co-founder Charif Souki from his position as chairman.

Tellurian, the U.S. liquefied natural gas (LNG) developer, announced on Friday the removal of its chairman and co-founder, Charif Souki, from his role as an executive officer. This decision comes in the wake of auditors expressing doubts about the company’s ability to cover future expenses. Souki played a pivotal role in establishing the U.S. LNG export market in 1996 and transforming Cheniere Energy into a major LNG exporter. However, his success has not been replicated at Tellurian. Souki, who co-founded Tellurian in 2016 with Martin Houston, will be replaced by Houston as the new chairman. Souki will continue to serve on the company’s board. Following this announcement, Tellurian’s shares rose 4% in extended trading to 78 cents. The stock had reached as high as $11.19 in 2019 but faced setbacks when key backers, including LNG traders Vitol and Shell, withdrew as potential customers for its crucial Driftwood export project. Tellurian has undergone multiple changes to its Driftwood strategy over the years, struggling to secure enough potential clients for the first phase of the 27.6 million metric ton per annum facility, valued at $14.5 billion. Last month, auditors issued a going concern warning on the company’s financial statements. Despite commencing construction on the first phase using cash from equity sales and a small gas-production unit, the company faced challenges. The management change is seen as a shift in direction and a focus on profitability, according to Ben Dell, managing partner at Kimmeridge, a private equity firm critical of Souki’s spending and strategic changes. Tellurian has lost potential customers for Driftwood over the years, and Souki’s removal is considered a significant move to salvage the company’s prospects, particularly related to the success or failure of the Driftwood LNG project. The company remains focused on completing the construction of Driftwood LNG, despite the challenges it has faced.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 2.48 | Negative Crossover | Bearish
  • MA 20 : 2.61 | Negative Crossover | Bearish
  • MA 50 : 2.74 | Negative Crossover | Bearish

Simple :

  • MA 10 : 2.49 | Negative Crossover | Bearish
  • MA 20 : 2.63 | Negative Crossover | Bearish
  • MA 50 : 2.88 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 24.36 | Neutral Zone | Neutral

Stochastic   Oscillator : 9.68 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 3.09 R2 : 3.27
  • S1 : 2.3660 S2 : 2.11

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Buy : 2.3660 | Take Profit : 2.11 | Stop Loss : 2.45

CORN

“Corn Prices Turn Bearish Following Release of USDA Data”

“Corn Ends Week with Marginal Losses Amid USDA Data Impact” Corn concluded the last trading day of the week with fractional to 2 ½ cent losses across the front months, resulting in the March contract showing only a ¾ cent gain for the week’s trade. The USDA’s weekly Ethanol report indicated an unchanged to 13 cents/gal weaker cash average price regionally, ranging from $1.54 to $1.80/gal. Regional DDGS markets experienced trade from $170-$190 in MI to $240 in KS, mostly $5 to $20 weaker for the week. The cash corn oil market was generally 1 to 4 cents/lb cheaper, ranging from 53 to 56 cents/lb regionally. Weekly CFTC data revealed that corn spec traders were closing shorts and adding longs during the week ending on 12/5, resulting in a net short position of 160,533 contracts. Commercial hedgers were closing longs throughout the week, flipping them back to a net short position by 39,754 contracts. In today’s market activity, USDA announced a 165k MT corn sale to unknown destinations. However, the focus was on USDA’s monthly WASDE report, which showed a 25 mbu increase for the U.S. corn export program, leading to a reduction in carryout to 2.131 bbu. The global corn adjustments included a 1.3 MMT increase in corn production, with adjustments for Ukraine (+1 MMT), Egypt (+200k), and Canada (-200k MT) to a total of 1.222 billion MT. Both Brazil and Argentina were left unchanged in the report. Brazil’s CONAB reduced projected corn production by 530,000 MT to 118.53 MMT. The market initially saw a spike in prices following the news but proceeded to “buy the rumor and sell the fact.” Dec 23 Corn closed at $4.65 3/4, down 2 1/2 cents, Nearby Cash was $4.55 1/1, down 2 3/8 cents, Mar 24 Corn closed at $4.85 1/2, down 2 1/2 cents, May 24 Corn closed at $4.97 1/2, down 2 cents.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 4.77 | Positive Crossover | Bullish
  • MA 20 : 4.78 | Positive Crossover | Bullish
  • MA 50 : 4.89 | Negative Crossover | Bearish

Simple :

  • MA 10 : 4.75 | Positive Crossover | Bullish
  • MA 20 : 4.77 | Positive Crossover | Bullish
  • MA 50 : 4.90 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 48.62 | Neutral Zone | Neutral

Stochastic   Oscillator : 73.71 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 493 R2 : 512
  • S1 : 470 S2 : 440

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 493 | Take Profit : 512 | Stop Loss : 485

Elsewhere In The Commodity Market

Silver prices have declined to around $23.3 per ounce, reaching their lowest point in nearly one month and marking an over 8% drop since reaching a six-month high of $25.4 on December 1st. This decline is attributed to a stronger-than-expected jobs report, which contradicted earlier expectations of the Federal Reserve expediting rate cuts in the first quarter of 2024. The U.S. economy added nearly 200 thousand jobs in November, with an unexpected drop in the unemployment rate and continued robust wage growth. This positive economic data has increased the opportunity cost of holding silver, impacting its appeal compared to interest-bearing assets. Additionally, the potential for a prolonged period of higher interest rates, as indicated by the jobs report, has exerted pressure on the outlook for silver, especially given its dual role as an industrial input. A restrictive monetary policy can potentially dampen industrial demand for silver. Chile’s state-owned Chochilco has forecasted a 9.4% decline in silver demand in 2024, primarily due to lower investments. Despite this projection, the market is expected to remain in a deficit, in line with The Silver Institute’s forecast, which anticipates lower output in key silver-producing countries such as Peru and Mexico.

Key Economic Events & Data Release Today:

11:31PM(IST)-USD-10-y Bond Auction