Gold Price Forecast – April 8, 2020

There is little doubt that gold’s decline from $1742.6 is corrective of the larger scale move up. So far, prices have fallen to $1670.7 but have not been able to close below $1679. This is the smaller than (0.618) target of the primary wave down from $1742.6 and the 38 percent retracement of the rise from $1576.0. Nonetheless, there is still a good chance for the correction to extend to $1660 first, especially upon a move below $1670 early tomorrow. The $1660 objective is the equal to (1.00) target of the primary wave down from $1742.6 and the 50 percent retracement of the rise from $1576.0. Support at $1660 is expected to hold. Closing below this would call for a test of key near-term support at $1639.

Gold – $10 Kase Bar Chart

The corrective move down will likely be short-lived, and once $1660 is met odds for a move back up will increase substantially. There is also a reasonable chance that the move down has already stalled and that prices will press higher before reaching $1660. Should gold overcome $1698 first look for a test of $1716. Settling above $1716 would strongly imply the corrective move down is over and would clear the way for $1479 and higher.

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.

Natural gas rose in an aggressive manner again today and settled above the 62 percent retracement of the decline from $2.044. This suggests prices will likely rise to challenge $2.00 and possibly higher again soon. There are no reversal patterns or setups that call for the move up to stall. However, there is a significant objective at $1.93 as the larger than (0.618) target of the only decipherable wave up from $1.521. This is also the 78 percent retracement of the decline from $2.044. Therefore, because the move up currently lacks a wave structure that can support a move above $2.00, there is a good chance natural gas will stall near $1.93. From there, a downward correction should take place before prices rise to $2.00 and higher.

The key for the move up will be holding resistance at $1.76 on a test of support. Since February, there have been two other moves up on the continuation chart to challenge resistance around or just above $2.00. Both moves, one up from $1.753 to $2.025 and then other from $1.610 to $1.998, failed on the first sign of any weakness and a test of support. Therefore, until a reasonable test of support holds it will be hard to call for a sustainable move above $2.00.

Natural Gas – $0.035 Kase Bar

For May natural gas the key threshold is $1.76, the 38 percent retracement of the move up from $1.521. Closing below this would suggest the move up has failed again and would call for $1.67 and possibly $1.59. The latter of these is the smaller than target of the wave down from $2.044 and connects to targets well below the current $1.521 contract low.

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 Price Forecast

WTI crude oil’s decline from $29.13 accelerated this afternoon and took out the $25.4 and $24.5 targets discussed in yesterday’s update. Based on the primary wave down from $29.13, the move is still poised to challenge the crucial $23.3 objective. This is near the 62 percent retracement of the move up from $19.27, and more importantly, the $23.34 swing low. Taking out $23.3 would invalidate the wave up from $19.27 that projects to $31.5 and higher. This would also put near-term odds in favor of falling to challenge $22.0 and lower.

Nonetheless, WTI met support around the $23.5 larger than (1.618) target of the sub-wave down from $28.24. Also, the small wave up from $23.54 met its smaller than (0.618) target, which suggests a test of the $25.0 equal to (1.00) target will probably take place first. This is near today’s midpoint and will likely hold.

WTI Crude Oil – $0.65 Kase Bar

Rising above $25.0 would call for an extended upward correction to $25.7, the larger than target and 38 percent retracement from $29.13. For the move down to extend to $23.3 and lower during the next day or so $25.7 must hold.

Closing above $25.7 would call for key near-term resistance at $27.1. This is the highest the wave up from $23.54 projects, is the 62 percent retracement from $29.13 and is the smaller than target of the sub-wave up from $23.34. Settling above $27.1 would shift odds back in favor of $28.5 and higher.

Brent Crude Oil Price Forecast

Brent’s move down from $35.0 still looks to be corrective but should reach at least $30.9 tomorrow. Falling below this will call for an extended correction to $29.7. This is the 62 percent retracement of the move up from $28.01 and the smaller than (0.618) target of the wave down from $36.29. For the move up to have any reasonable chance at extending during the next few days $29.7 must hold. Closing below this will clear the way for $28.9 and eventually $26.7.

Brent Crude Oil – $0.65 Kase Bar

The small move up from $31.74 suggests Brent could test $33.4 first, but this level is expected to hold. Key resistance for the near-term is $34.2. Overcoming $34.2 would invalidate the recent waves down from $35.0 that project to $30.9 and lower. This would also shift odds back in favor of challenging $35.0 again, above which the next major objective is $36.1.

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.

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.