. Weekly Commodity Analysis - Russia's Gas Ban and Gold Stand Amidst Rate Hikes.

Weekly Commodity Analysis – Russia’s Gas Ban and Gold Stand Amidst Rate Hikes.

Weekly Commodity Analysis – Russia’s Gas Ban and Gold Stand Amidst Rate Hikes.

23 Sep 2023

Introduction:

In the world of commodities, the oil market faced a week of uncertainty as it grappled with Russia’s supply restrictions and concerns over rising interest rates, leading to a week-ending decline. Meanwhile, gold prices held steady near the $1,900 mark despite the Federal Reserve’s hawkish stance. In the midst of these developments, copper prices experienced a dip as the US dollar gained strength. Natural gas markets remained volatile, influenced by weather patterns, LNG operations, and winter predictions. Amid these market dynamics, XAG/USD exhibited choppy behavior after a rally toward $23.70, with US yields making a rebound.

Brent Crude Oil:

Oil ends week lower as demand concerns face Russia supply ban.

Oil prices remained stable on Friday, but the week ended with a decline due to profit-taking and as markets balanced supply worries resulting from Russia’s restriction on gasoline exports against demand problems brought on by upcoming rate hikes.

The restriction will “bring new uncertainty into an already tight global refined product supply picture and the prospect that the impacted countries will be seeking to bid up cargoes from alternative suppliers,” according to a note from RBC.

According to Dennis Kissler, senior vice president of trading at BOK Financial, there was also some profit-taking. “Investors are anticipating a slack in demand coming into October as refineries go into maintenance and as a higher interest rate is going to further pressure markets,” Kissler said.

Due to worries of a supply shortage, the contracts have increased by more than 10% during the last three weeks.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 92.47 | Negative Crossover | Bearish
  • MA 20: 90.36 | Positive Crossover | Bullish
  • MA 50: 86.66| Positive Crossover | Bullish

Simple:

  • MA 5: 92.80 | Negative Crossover | Bearish
  • MA 20: 90.09 | Positive Crossover | Bullish
  • MA 50: 86.16 | Positive Crossover | Bullish

RSI (Relative Strength Index): 66.79| Buying Zone | Bullish

Stochastic Oscillator: 2.09 | Sell Zone | Negative

Resistance And Support Levels: 

  • R1: 93.55 | R2: 97.95
  • S1: 88.93 | S2: 83.37

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 94.63 | Take Profit: 98.00 | Stop Loss: 92.73

Gold:

Despite the Fed’s recent hawkish comments, gold concludes the week barely changed, holding near mid $1,900.

As markets continued to speculate about whether the Federal Reserve would raise rates one last time this year in November or December, gold prices ended the week little altered, recovering from a one-week low.

A significant resistance has been reached as the gold price has recovered from a significant US Dollar decline. But despite a recent increase in US Treasury bond yields, further recovery seems unlikely. The benchmark yield on US Treasury bonds for 10 years is currently 4.511%, which is a 16-year high.

Given that major economies are still on the verge of recession, gold dealers will be eagerly awaiting the release of business PMI data for the US, UK, and Euro area later in the day. The US Dollar is expected to experience renewed demand for haven assets if risk aversion spreads after depressing PMI readings, which would impede the recovery of the gold price.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1924.54 | Negative Crossover | Bearish
  • MA 20: 1922.96 | Positive Crossover | Bullish
  • MA 50: 1925.06 | Positive Crossover | Bullish

Simple:

  • MA 5: 1925.55| Negative Crossover | Bearish
  • MA 20: 1922.78| Positive Crossover | Bullish
  • MA 50: 1919.66 | positive Crossover | Bullish

RSI (Relative Strength Index): 51.34 | Buy Zone | Positive

Stochastic Oscillator: 57.26 | Buy Zone | Negative

Resistance And Support Levels: 

  • R1: 1943.18 | R2: 1987.49
  • S1: 1907.55 | S2: 1868.06

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1953.78 | Take Profit: 1987.49 | Stop Loss: 1930.66.

Elsewhere In the Commodity Market.

As the dollar increased and inventory data revealed more increases, copper prices fell. Natural Gas Volatility Reigns Amid Weather, LNG Operations, Winter Predictions.

XAG/USD turns choppy after rallying near $23.70, US yields rebound.

Gold up (0.26%) at 1924.68, Silver up (0.66%) at 23.55, Palladium down (0.66%) at 1250.62, Platinum up (0.98%) at 928.00, Brent Crude Oil up (0.53%) at 93.83, WTI Crude Oil up (0.78%) at 90.33 as of writing time.

Key Economic Events & Data Release for Upcoming Week:

(USD) GDP (QoQ) (Q2) (Thursday).

(USD) Initial Jobless Claims (Thursday).

(USD) Crude Oil Inventories (Wednesday).