On August 10, we downgraded our outlook on WTI from neutral to bearish thanks to a significant deterioration of the trend. We determine trends for a number of major currencies and commodities based on price, trading volumes and changes in volatility. Following WTI’s latest top at $75.37/barrel, sell-offs in the commodity have been accompanied by accelerating trading volumes. This is a...

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Tags: Crude oil

In our previous commentary on gold, we wrote that gold prices would keep falling for three reasons: (1) accelerating US inflation, (2) decelerating growth outside the United States and (3) an ongoing slowdown across emerging markets. Ultimately, all three factors were supportive for the US dollar, gold’s ultimate nemesis. Since that time (May 17), gold prices have weakened from around $1,290 to $…

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Tags: Gold

In our last take on the outlook for gold, we wrote that the combination of slowing growth outside the United States and rising inflation meant more weakness lay in store for the precious metal. When both US growth and inflation are high, the Fed is more likely to raise rates with the aid of supportive data. In an environment where US growth is outperforming its major peers, the US dollar also ten…

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Tags: Gold

Last week, we wrote that weakness in the US dollar is masking growing risks. As equities, commodities and corporate credit are inversely correlated to USD, investors need to pay attention to the risk of a US dollar rebound. Since early 2017, gold prices have gradually strengthened. As the precious metal serves as a barometer for US dollar liquidity, the clear message from gold was that monetar…

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Tags: Gold

Since early 2017, gold has strengthened from lows below $1,080 to around $1,340 today. The underlying factors that have helped gold strengthen since that time remain intact. We argue that gold should continue strengthening in the longer-term thanks to (1) moderate sentiment, (2) continued weakness in the US dollar, and (3) a weak outlook for real interest rates. While recent price action is somew…

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Tags: Gold

US Oil production may be accelerating, but crude oil remained a strong commodity throughout 2017. However, as supply growth is showing signs of catching up with demand growth - what does this mean for the crude oil forecast in 2018 and beyond?

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Tags: Crude oil

Following yesterday’s statement from the Federal Reserve, the odds of a rate hike are soaring according to the CME’s FedWatch tool. The current market-implied probability for a hike on March 21, 2018 (the next Fed meeting) is 83.1%. One month ago, on December 29, 2017, the odds of a March hike were just 50.7%. According to prevailing wisdom, the Federal Reserve has significant control over moneta…

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Tags: Gold

Looking at the latest Commitments of Traders report, bullish extremes continue in long crude oil, long British pound and long euro speculator net positions. While long crude oil and British pound positions have grown, long euro positions have fallen this week. The purpose of this report is to track how the consensus is positioned across various currencies and commodities. When net long positions…

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Tags: Crude oil

Speculators have been adding to their long crude oil positions - but what does history have to say about this commodity? These positions are now at an extreme, with the trade becoming more crowded and US oil production increasing, but can it keep rallying? 

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Tags: Crude oil

Looking at this week’s COT report, long crude oil and short Swiss franc are once again in extreme territory. Notable extremes are bolded, and are highlighted when speculator positioning is more than two standard deviations above historical trailing 1-year and 3-year trends. Changes…

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Tags: Gold