The Next Major Move in Precious Metals Is Close
September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.
Natural gas prices are giving back a portion of the post inventory report gains from last week. As I have been discussing at length in this newsletter the price of Nat Gas futures is not in sync with what the current fundamentals will support. The weather is moving toward another round of very hot weather over major portions of the US but the new round of very high temperatures will not last as long as the last bout of hot weather nor will the extreme heat cover as much of the US as the last round. There will be a call on Nat Gas for cooling demand over the next several weeks but based on the latest NOAA forecast the demand pull for Nat Gas may not be as strong as it was back in June.
The gold market swung around on both sides of unchanged today and after the weak morning action that might be considered a psychological victory for the bull camp. In addition to a reversal in the dollar, gold was also benefited at times by renewed US easing talk in the wake of a much softer than expected US retail sales report. As opposed to last week, when silver periodically outperformed the gold market, gold generally outperformed the silver market today. Apparently the rest of the metals complex was undermined by residual slowing fears, while gold was able to break away from the pack and avail itself of some speculative interest ahead of this week's Fed testimony.
Posted courtesy of The CME Group
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