On Monday (November 13th), WTI crude oil hit $78 per barrel in early trading on the US stock market, rising 0.88% on the day. Brent crude oil hit $82 per barrel upwards, rising 0.65% on the day.
Despite Iraq's support for OPEC+group production cuts, including the Organization of Petroleum Exporting Countries (OPEC), which led to a rebound in oil prices last Friday, crude oil prices still fell by about 4% throughout the week, marking the first three consecutive weeks of decline since May.
Investors are more concerned about slowing demand in the United States and China, while concerns about supply disruptions caused by the Israel Hamas conflict have eased, "said Hiroyuki Kikukawa, president of NS Trading under Nissan Securities (OTC: NSANY). The US Energy Information Administration (EIA) announced last week that the country's crude oil production this year will be slightly lower than previously expected, and demand will also decrease. Next year, per capita gasoline consumption in the United States may drop to its lowest level in 20 years. Federal Reserve Chairman Jerome Powell stated last week that if inflation is not controlled, there may be another interest rate hike, and investors are concerned about Powell's speech. IG market analyst Tony Sycamore said that the more hawkish Fed comments "are not welcome for crude oil because recent data from China and the United States has resurfaced growth concerns." China's weak economic data last week also raised concerns about a decline in demand for the world's largest crude oil importer. Chinese refiners have requested a supply reduction in December from Saudi Arabia, the world's largest exporter. Last month, consumer prices in China fell to their lowest level during the pandemic, sparking concerns about the country's economic recovery. Nevertheless, if the WTI approaches $75 per barrel, "we may see supportive buying as people expect Saudi Arabia and Russia to decide to continue their voluntary production cuts after December," Kikukawa said. Last week, top oil exporting countries, including Saudi Arabia and Russia, announced that they will continue to voluntarily reduce oil production until the end of the year, as concerns about demand and economic growth continue to drag down the crude oil market. OPEC stated on Monday that the fundamentals of the oil market remain strong and blamed speculators for the price drop. This producer organization has slightly increased its forecast for global oil demand growth in 2023 and adheres to its relatively high 2024 forecast. Investors should note that the next OPEC+meeting is scheduled for November 26th.
On Monday (November 13th) in the US market, crude oil prices were trading around $77.4 per barrel. Last Friday, oil prices rebounded by 2%, and market sentiment has rebounded. However, what impressed investors more over the past week was the sharp drop in oil prices in the first half of the week. At one point, WTI crude oil fell by over 7%. In the past period, investors have noticed that it is difficult for the demand side to withstand oil prices that have surged above $90. This is directly reflected in the significant decline in China's crude oil processing volume from high oil prices. In the November monthly report, the US Energy Administration surprised the market by significantly reducing 2023 crude oil demand. Over the past two months, the high drop in the product oil cracking difference on the futures market and the continuous weakening of the crude oil month to month difference also point to the weakening of the supply and demand side of the crude oil market. The short-term rebound of oil prices after a sharp decline is expected, but the market's expectations for the future of oil prices are still cautious or even pessimistic. The rebound is expected to be limited, and strong factors are needed to restore investor confidence. The key test for oil prices next is whether OPEC, especially Saudi Arabia, will make a decision at the December OPEC meeting to extend the existing voluntary production reduction until the first quarter of next year or even longer. From the increasingly pessimistic supply and demand scenario in the current market, it seems necessary for Saudi Arabia to continue extending its voluntary production reduction if it wants to remain committed to maintaining stability in the oil market. However, this seems to have a clear disagreement with the previous agreement reached by the United States, which will be the key decision for the next step in oil price selection. Technical analysis of crude oil; Last week, crude oil retreated in a wave of consecutive negative periods, and the weekly decline in three consecutive negative periods took up nearly half of the previous upward space. The weekly trend entered a broad range of fluctuations, with a large range of bearish and bearish trading, and did not go out of one side. After the daily negative streak retreats, it is corrected with the rebound of the small positive streak. Partial correction, the daily line is still in a downward trend. It's just that the rhythm is winding down while organizing and correcting. After 4 hours of consecutive negative declines, the chart paused and was accompanied by a wave of rebound correction in the late trading session of last Friday. This week, we will restructure the high point of the steps, which is also the critical point for the downward trend. The previous high point of 77.50 was damaged by a rebound, breaking the weak decline and transforming into a path of correction and further decline. At the beginning of the week, we focused on the 77.70 high point and did not break through. The 4-hour structure will rely on this position to form a fluctuating step down channel.
The upper short-term focus is on the 79.8-80 line of resistance,
Below, focus on frontline support from 77.3 to 77.5 in the short term.
On Monday (November 13), before the release of the US consumer price index (CPI), spot gold rebounded slightly due to the weakness of the US dollar and the decline in the yield of US treasury bond bonds. As the yield of US treasury bond bonds declined, the US dollar weakened as a whole, and gold prices rose due to some buyers.
Market News Analysis
Most traders are seeking the release of the US Consumer Price Index (CPI). Previously, a New York Fed poll showed that one-year inflation expectations were cooling, while prices in October were expected to drop to 3.3% from 3.7% in the same period last year. The core CPI is expected to be 4.1%, which is consistent with the previously recorded data. The yield of US treasury bond bonds rose slightly on Monday. In late New York on Monday (November 13), the yield of US benchmark 10-year treasury bond fell 1.79 basis points to 4.6340%, and intraday trading was between 4.6956% and 4.6221%. The two-year US Treasury yield fell by approximately 3.00 basis points, hitting a daily low of 5.0306%, while the US stock market initially rose to a daily high of 5.0793%. The yield difference between the three month Treasury bill and the 10-year US Treasury bond fell 3.208 basis points to -79.416 basis points. The yield spread of the 02/10 year US Treasury bond increased by 0.768 basis points to -40.280 basis points. The yield of 10-year inflation protected treasury bond bonds (TIPS) fell 1.30 basis points to 2.3073%.
Although the Israeli-Palestinian conflict is still ongoing, political risks still weaken according to market reactions. However, the escalation of the conflict still exists and may be beneficial to gold.
Meanwhile, gold traders will receive some clues from the Fed spokesperson this week. On Monday, Governor Lisa Cook was unable to provide any headline news on monetary policy, but Tuesday's agenda will be led by Federal Reserve Vice Chairman Philip Jefferson, New York Fed's John Williams, and Lisa Cook. On Wednesday, the leaders of China and the United States met at the Asia Pacific Economic Cooperation (APEC) summit.
Economists from ANZ Bank analyzed the prospects of gold. They stated that central bank gold purchases remain strong, and new political tensions will protect the downward space for gold prices. In addition, the US monetary tightening cycle has ended and the US dollar is about to peak. "We expect the central bank's gold purchases to remain strong. Based on the current procurement speed, we will increase the demand forecast from 750 tons in 2023 and 800 tons in 2024 to 1050 tons
Goldman Sachs expects an increase in commodity returns over the next 12 months, thanks to the easing of monetary policy and concerns about economic recession leading to an increase in spot prices, and the asset class also strengthening due to hedging against political supply risks. The bank predicts that the S&P GSCI Commodity Index, which is mainly focused on oil, will have a return rate of 21% on commodities within 12 months, with returns on energy and industrial metals being 31% and 17.8%, respectively.
The bank stated in a report on Sunday: We recommend going long on commodities in 2024, as we anticipate that due to the improvement of the cyclical background, structural positive factors will bring significant spread returns, spot commodity prices will rise, and we believe that hedging value will offset negative supply shocks. Core deflation indicates that the Federal Reserve and European Central Bank have completed interest rate hikes, which may alleviate GDP growth pressure and support commodity demand
Goldman Sachs stated that the decline in oil inventories driven by OPEC and the demand for so-called green metals will also boost returns on commodities. The bank wrote, "In the context of slower growth in other assets, especially risky assets, energy and gold can also effectively hedge against negative supply shocks from political or other developments
Analysts pointed out that there has been a heavyweight news coming from the Asian trading session of major countries, which further heats up market risk appetite and continues to weaken the safe haven buying of gold. Spot gold closed last Friday with a sharp drop of $20.38, or 1.04%, at $1938.07 per ounce. Fawad Razaqzada, a market analyst at Citigroup Index, stated that Powell's hawkish remarks were the main reason for the weakness of gold last week. The improvement in investors' risk appetite in the past few weeks has also put pressure on gold prices. Kim Wyckoff, senior analyst at Kitco Metals, said, "Gold will continue to decline in the short term unless we see geopolitical events escalate, US economic data is weak, or the Federal Reserve suggests that interest rate hikes have been completed
Analysis of the Prospects of Gold Technology: Beware of Gold Price Breaking Important Supports and Triggering Greater Selling
FXStreet analyst Eren Sengezer pointed out that the gold daily chart shows that the relative strength index (RSI) has fallen back to 50, reflecting that gold has lost its bullish outlook. Important support levels seem to be forming in the 1925-1930 USD/oz region, where the 200 day Simple Moving Average (SMA), 100 day Moving Average, and 50 day Moving Average intersect.
Sengezer stated that if the gold price falls below the above area and begins to use it as a resistance level, then $1900 per ounce (psychological level, 38.2% Fibonacci retracement of long-term upward trend) may be considered the next bearish target, followed by $1875 per ounce.
On the upward path, Sengezer added that $1960 per ounce (23.6% Fibonacci pullback) constitutes a short-term resistance level, Next is $1975 per ounce (20 day moving average. If the daily closing price of gold is higher than $1975/ounce, it may attract gold buyers and open the door to a psychological level of $2000/ounce. The well-known financial website Economics said that gold prices further moved away from $1962.35/ounce last Friday, thereby strengthening the expectation that gold prices will continue to be bearish in the coming trading days. The next target for gold prices is $1933.30/ounce. Economics said that random indicators have been passed recently Present a clear negative signal. Gold prices need to remain below $1962.35 per ounce and $1974.80 per ounce to continue bearish.
Technical analysis of gold: From a daily perspective, the Bullin band closed and the gold fluctuated slightly after opening. Currently, there has been no effective breakthrough, and there is no intention of breaking through after hitting the 1933 line again at its lowest point in the morning. On the contrary, there has been an increase, and the European bulls have been suppressed below 1940. Therefore, the probability of gold continuing to break in the evening is high, and it is most likely that there will be a small correction before rebounding, In the short term, the key pressure above the gold line remains at the 1945 front line, which is also a key defensive position in the evening. The support below is initially maintained at the 30 front line, reaching the support of the golden section point of 0.382, serving as the first retreat support in the daily upward trend. At the beginning of the week, pay attention to whether the support strength between 1932 and 1930 can stabilize. Although the short-term chart is still slightly short, the daily chart serves as a correction in the trend. If it can stabilize and recover in the first support, the daily line can still emerge from its strength, and if it falls further, it will change the upward structure of the daily line. From the 4-hour chart, it can be seen that the opening of the Bollinger Belt is downward, and the price of gold encounters resistance and falls after rebounding to the mid track. The trend is volatile and short. In the short term, focus on the two resistance positions above, one is the 1956 line, which was the top to bottom transition position of last week's rebound, and the other is the resistance of the 4-hour Bollinger Belt mid track, which is the 1965 line. Although gold is currently severely oversold and there is a demand for short-term rebound repair indicators, once the market rebounds and repairs, it is expected to usher in a new round of decline. Currently, repairing 1932 and 1930 is a key support in the early stage, as well as weekly Bollinger and mid track support, as well as support from the 10th and 20th moving averages. Therefore, this point also determines whether gold short positions can continue further! The 1-hour diagram steps down. The previous high point was the critical point, breaking the low point from 1945 to 1950, forming resistance. Looking at the small cycle structure alone, it fell in the short term, but the daily line differentiated and touched the support point area of the pullback.
The upper short-term focus is on the resistance on the 1958 1960 front line, while the lower short-term focus is on the support on the 1930 1933 front line.
