Gold Price Forecast – April 2, 2020

Gold rallied today as expected and overcame the $1623 target discussed in yesterday’s update. The move up is now poised to reach $1651. This is the 62 percent retracement of the decline from $1698.0. A close above $1651 would strongly suggest the move down is over. Closing above $1685, the 89 percent retracement and highest the wave up from $1576.0 projects, would confirm the move down is over and clear the way for $1707 and higher.

Gold – $10 Kase Bar Chart

The move down from $1698.0 is forming a bullish flag that will have broken higher upon a close over $1651. Nonetheless, the move up from $1576 is due for a pullback soon, so there is a reasonable chance for a test of support before $1651 is overcome and almost certainly before gold settles above $1685.

Any move down will most likely be corrective and is expected to hold $1616. Key near-term support is $1601, a close below which would call for $1582 and possibly $1567, the latter if which is in line with the flag’s lower trend line.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

May natural gas fell to a new contract low of $1.580 today and settled below the $1.593 larger than (1.618) target of the first wave down from $2.044. The move down is poised to extend. Based on the waves down from $1.782 and $1.731, the prompt month should reach at least $1.56 and likely $1.50. The $1.50 objective is most important. Once met, there is a good chance for another test of resistance before prices fall to the next objectives at $1.46 and lower.

Natural Gas - $0.025 Kase Bar
Natural Gas – $0.025 Kase Bar

Support at $1.56 may initially hold because this is the equal to (1.00) target of the wave down from $1.782. Nonetheless, should prices rise form this level before reaching $1.50 look for resistance at $1.64 to hold. Rising above this would call for $1.67 and possibly $1.71. There is nothing on the charts that calls for a move above $1.67, so overcoming this level is doubtful during the next few days. Even so, key resistance and the barrier for a bullish near-term outlook is $1.71. Settling above $1.71 would clear the way for $1.76 and higher.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil

WTI crude oil held support around the psychologically important $20.0 level again and formed a bullish inverted hammer on the daily chart. This suggests the move down is hesitant to break $20.0 and clear the way for the next leg of the move down. Nonetheless, WTI has settled below the smaller than (0.618) target of the primary wave down from $28.49 for the past two days. Therefore, the outlook remains bearish and odds favor a continued decline toward the next major targets at $18.4 and $17.5.

Tomorrow, look for WTI to fall to at least $19.7. This is the smaller than (0.618) target of the wave down from $21.89 and the 89 percent retracement of the rise from $19.27. Falling below this will call for $18.4 and possibly $17.5 during the next few days. Both are crucial objectives due to their confluence as wave projections and are therefore potential stalling points.

The inverted hammer pattern suggests trading could be choppy as the move down extends during the next few days. Even so, there is initial resistance at $21.0 and then $21.7. The higher of these is expected to hold. Key resistance is $22.7, a close above which would call for a larger test of resistance before the decline continues to challenge targets below $20.0.

WTI Crude Oil – $0.65 Kase Bar – Wave Projections and Retracements

Brent Crude Oil

Brent crude oil is struggling to take out support around the $25.6 equal to (1.00) target of the primary wave down from $32.87. Nevertheless, the outlook remains bearish and today’s move down after holding near-term resistance around $28.1 is poised to challenge $25.6 again. Closing below $25.6 will clear the way for $24.8 and then the next major objective at $24.1. The importance of $24.1 makes it a likely stalling point, but any move up from that objective will most likely be corrective.

Initial resistance at $27.4 is expected to hold. Key resistance is $28.6. Settling above $28.6 is doubtful but would call for a larger upward correction to $29.6 and even $30.2 before the move down reaches the targets below $25.6.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil

The near-term outlook for WTI crude oil leans negative. Today’s long upper shadow and close below $50.0 does not bode well for bulls. Even so, major support at $49.3, the smaller than (0.618) target of the primary wave down from $71.83 has held so far. Therefore, there is still a reasonable chance for a larger upward correction before falling to a new low.

The intra-day waves down from $52.2 met targets at the $49.42 swing low that connect to $48.7 and lower. In addition, the small waves down from $50.69 call for another test of $49.3. There is immediate support at $49.6 but $49.3 is key. A close below $49.3 will be long-term bearish and open the way for the next leg lower.

This is a tight call for the near-term though due to the importance of $49.3. Oversold daily and weekly momentum and intra-day Kase StatWare buy signals suggest the upward correction might extend first. Overcoming $50.6 early tomorrow will increase odds for key near-term resistance at $51.2. Closing above $51.2 would call for a larger test of resistance at $51.9 and possibly $52.2 during the next few days.

Brent Crude Oil

The outlook for Brent remains negative but a daily bullish Harami pattern, daily RSI divergence, and the wave formation up from $53.11 imply that a larger upward correction might unfold before prices fall to a new low.

Nevertheless, while $54.9 resistance holds the small wave formation down from $54.69 favors $53.7, which then connects to $53.2 and lower. Should Brent overcome $54.9, look for a test of key near-term resistance at $55.5. Settling above this would clear the way for $56.0 and higher during the next few days.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

The long-term outlook for natural gas remains bearish and the recent move up from $1.804 is most likely corrective. However, Tuesday’s confirmed daily bullish RSI divergence and the wave up from $1.804 call for a larger test of resistance before the decline continues.

Today, natural gas stalled just below $1.84 support and the subsequent move up most likely forms the impulse leg of the primary wave up from $1.804. The $1.88 smaller than (0.618) target of this wave has nearly been met this afternoon and the equal to (1.00) target is $1.91. Settling above $1.91 will call for key near-term resistance at $1.96, a close above which will clear the way for a larger upward correction to $2.00 and higher.

Support at $1.83 is crucial because a move below this would take out the $1.825 intra-day swing low and invalidate the wave up from $1.804 that projects to $1.91 and higher. In turn, this would shift near-term odds back in favor of $1.79 and lower.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil

WTI crude oil settled right at the $49.6 target. Support at $49.6 is highly confluent and may still prove to be a stalling point. However, given WTI fell to $49.66, rose to $51.55, then fell back to $49.6 at the end of the day implies that the move down will extend to at least $49.0 and likely $48.6 tomorrow. These are the intermediate (1.382) and larger than (1.618) targets of the wave down from $51.55, respectively. Settling below $48.6 will call for the next major objective at $47.8.

Today’s inverted hammer suggests another test of resistance might take place soon. Initial resistance is $50.3 and then $51.0, the higher if which is expected to hold. Key resistance is $51.6, a close above which would call for $52.6 and possibly higher before the decline eventually continues.

Brent Crude Oil

Brent’s move down is poised to extend and the next target is $53.6. Closing below this will clear the way for $52.9 and lower. A daily inverted hammer suggests another test of resistance might take place soon, but $55.0 is expected to hold. Key resistance is $55.7, a close above which would call for $56.3 and higher.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Any company with substantial involvement in either the production or consumption of energy will always want to manage its energy price risk. Energy price fluctuations are a normal occurrence and can have a major impact on a company’s bottom-line. Therefore, company’s generally want to manage this risk in an effective way so that they can protect their investments. With this, the question arises, how does one manage price risk? The simple answer to this is the use of energy hedging and an energy risk management plan that can enable the company to meet its risk appetite goals.

Understanding the Difference between Speculative Trading and Hedging

It is very important that the difference between energy risk management, or energy hedging, and speculative trading be understood. Although hedgers and speculators are basically both placing trades their long-term goals are much different.

Speculative traders don’t produce or consume large quantities of energy. They are only concerned with placing trades in the direction of market trends and generating profit based upon those moves. Their holding period may be minutes, to days, to weeks, or more and their strategies vary greatly.

The end goal of a hedger is to protect the price of energy that is being produced or consumed by their company. For example, a producer wants to ensure that they get the highest price possible for commodities like crude oil or natural gas. Therefore, when prices are high and favorable, they use futures or derivates to lock in the price of their products for several months or even years.

Forming an Energy Hedging Strategy

A hedging strategy is the most crucial part of an effective energy risk management program. It can have long-term implications and help define the bottom line of a company’s yearly profit margins.

To arrive at the right decisions for your company the best way forward is validation by statistically analyzed data. To obtain this data you can turn to data analysis tools that an energy hedging solutions company of good standing can provide you. The company you choose will also provide you with a comprehensive series of charts and models to enable the study and monitoring of long-term price cycles.

The consultant will then guide you on how to use these price cycles to time hedges. The charts will give better insights on when to hedge, how much to hedge, and what types of instruments to use. In this way, you’ll be able to use the data that was collected by studying the charts and convert it into valuable information that will help mitigate the risks of price fluctuations in the energy markets.

Using Reports and Forecasts

Any effective energy risk management program should fit in with the hedging company’s goals and risk appetites. Reading the reports provided by a good energy hedging and risk management consultant can be of great help in this case. Ideally, these reports should offer you a quarterly forecast of the energy markets and should contain everything from the future curves in terms of energy pricing to recommendations on the right instrument to use for your hedges.

Valuable Rules to Remember

To successfully carry out an energy hedging program you should consider some general rules. Hedge when the opportunity presents itself, not based on a specific fiscal or calendar year or long-term price forecast. Opportunities occur when strips are at extremes. Choose to not hedge the first nearby contract and often postpone the second and third. Hedge for a longer duration like six months to a year or more, because it often takes this amount of time for a market to revert to its price mean. Lastly, fix forward in small increments, instead of one lump, over a three-to-four-month time span.

Conclusion

A carefully formed energy hedging strategy based on statistically analyzed data can enable companies that produce or consume energy to mitigate risks in the highly volatile energy markets.

WTI Crude Oil

The near-term outlook for WTI crude oil became positive today, and although October did not settle above $69.8 it rose above that level late this afternoon. There is a lot of resistance near the upper limit of the $69.8 target, right around $70.0 still, so there is an outside chance the move up will stall early tomorrow. However, given today’s surge higher, and because prices have overcome the 62 percent retracement of the decline from $71.4, any pullback will most likely be a corrective buying opportunity for bulls while today’s $68.4 midpoint holds.

The next objective is $70.4 and a close above this would call for $70.9 and eventually the next major objective of $71.5. This is the last target protecting October WTI’s $71.63 swing high. Therefore, settling above $71.5 would open the way for a new high of at least $72.0 this week.

Immediate support is $69.3 and key support for tomorrow is $68.4, which should hold. Settling below $68.4 would suggest today’s move up was based on weak external factors that could not support the move up. In that case, look for prices to challenge $67.9 and possibly the $67.33 intra-day swing low. A move below the latter would invalidate the wave up from $66.86 and shift odds to be solidly back in favor of a continued decline.

Brent Crude Oil

Brent’s move up accelerated again today and the pattern up from $75.64 has unfolded as a five-wave formation that met its Wave V targets at $79.54 this afternoon. The move up is poised to continue and $79.9 and likely $80.5 should be challenged tomorrow.

That said, because the five-wave pattern met its target at $79.54 a corrective pullback might take place first. Such a move is expected to hold support at today’s $78.2 midpoint, which means the pullback will be a buying opportunity. However, a close below $78.2 would suggest the move up has stalled again and that another major test of support will take place over the next few days. Given today’s rise, this is doubtful.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

WTI Crude Oil

WTI crude oil has been trading in a very indecisive manner as traders seem to be waiting for clarification of recent events or new external factors to drive the next leg lower or higher. This was most evident today after the early move up overcame $68.1 as expected but stalled before reaching key near-term resistance at $69.1. The subsequent decline suggests that whatever factors drove prices higher late yesterday did not fully pan out today and that the overall outlook remains neutral-to-negative.

There is crucial support at $66.3 and prices are already working their way toward that objective this afternoon. The key, however, will be a close below $66.3, which would then clear the way for prices to fall toward the next major objective at $63.9. Even so, the move down will most likely remain a grind, so there is a reasonable chance that prices could temporarily stall at $65.8 and $65.1 as prices fall toward $63.9.

Immediate resistance is $68.1, a level that should continue to hold on a closing basis. Key resistance in the short-term is $69.2, a close above which would shift the near-term outlook to positive and call for another attempt at $70.4 and higher.

Brent Crude Oil

Brent crude oil’s move up stalled again today at $73.93, which was just above last Wednesday’s $73.5 midpoint and the 100-day moving average. The move down from $73.93 then formed a wave that projects to $71.9 as the smaller than (0.618) target. This is an important near-term objective because a close below this would open the way for $71.3 and lower.

Resistance at $73.7 is expected to hold, though $74.7 is still most important for the short-term outlook. Closing above this would be positive and call for key upper resistance at $75.3. Such a move is doubtful though without a surprise bullish shift in external factors.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural gas has adopted a much more positive near-term bias during the last week and is pushing toward key thresholds that could open the way for a longer-term bullish outlook. Today’s settle above $2.94, the upper end of the tolerance range around this week’s $2.91 target, calls for a test of $3.00. There is immediate resistance at $2.96 but $3.00 is now the next major objective. A close above this would be long-term bullish, calling for $3.10 and higher.

Natural Gas Daily
Natural Gas Daily

That said, the move up is becoming somewhat extended and a pullback to test support should take place before prices overcome $3.00. Such a move would likely be corrective and should hold $2.88 support. Key support for the near-term is $2.85, an important retracement of the move up from $2.671 and $2.74, which is also in line with the 50-day moving average. Settling below this would be a likely reflection of a negative shift in underlying fundamentals. For now, though, while $2.85 holds any move down will present a short-term buying opportunity that could become a longer-term uptrend upon a close over $3.00.

This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.