2023 Commodities Forecast by Solidecn.com

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GBPCHF Forecast: Swiss Bond Yields Surge​

• The return on Switzerland's 10-year government bond has gone up past 1.2, according to the rates quoted between banks for this bond's term.​
• The CH20, a stock market index in Switzerland, has dropped to a 12-month low, reaching 10313.​

Technical Analysis

The GBPCHF currency pair has been on a downward trajectory after failing to close above the Ichimoku cloud on the weekly chart. This trend has continued, with the bears breaking down the price from the range channel last week. Despite the Stochastic indicator being in the oversold area for weeks, selling pressure remains strong.

A closer look at the daily chart provides more insight into the GBPCHF price action. With the Relative Strength Index (RSI) bouncing back above the 30 level, the price is now testing the broken support at 1.094. If the price stabilizes below S3, we can expect the decline to continue within the bearish channel, with 1.075 as the next target.

The bearish scenario remains valid as long as the pair stays within the bearish channel or below the 1.11 pivot.

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EURUSD

The eurusd graph indicates a sharp decline, potentially in five distinct stages. We're currently experiencing a temporary rise in the fourth stage. The third stage seems finished, and now we're in a phase of slight recovery.

The price is moving along a track at 1.07, corresponding to a key financial marker known as the 38.2 Fibonacci level. Our hope is for prices to adhere to this boundary and then plummet swiftly to round off the fifth stage. We anticipate the price might settle around 1.03000 when the fifth stage ends. Our projection is that the euro will become more robust as 2023 progresses.

Inflation rates in Europe are dipping, and the prediction is that the European Central Bank (ECB) will maintain the current interest rates throughout 2023. Expenses, especially for fuel, are surging due to turmoil in the Middle East. If these expenses stabilize, the euro is likely to fortify against other currencies.

Upcoming crucial updates this week: On EURO 23rd October, we expect news on French and German manufacturing and services. October 25th will bring insights into the German business climate and a speech from ECB President Lagarde. October 26th will feature announcements on interest rates, the ECB's financial strategy, and a major press event.

Potential high points: 1.07; 1.07580; 1.083
Potential low points: 1.04; 1.036; 1.03​

 

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Crude Oil

The U.S. oil industry, known as "Big Oil", is seeing growth in production and mergers. Active drilling rigs increased to 502 for oil and 122 for gas last week, marking a second week of growth. Daily oil production has hit a record 13.2 million barrels per day.

Crude oil stocks are 4% lower than last year, possibly encouraging more investment in oil production. The U.S. government's decision to buy oil for its Strategic Petroleum Reserve may have also played a part.

Chevron is buying Hess for $60 billion, following Exxon Mobil's acquisition of Pioneer Natural Resources for $58 billion. The easing of sanctions on Venezuela could benefit U.S. oil producers with operations there.

Long-term factors like Middle East conflicts and potential supply disruptions are encouraging investment in U.S. oil production. Despite this, OPEC+ countries are limiting production to maintain prices.

This could signal a shift from focusing on profits to a battle for market share, a challenging task given years of record interest rates. However, major players with substantial capital reserves and strong government lobbying power are now involved.

Crude oil prices are currently testing the lower boundary of a bullish channel, with the Stochastic oscillator indicating an oversold market condition. If prices manage to settle below this critical level, we could see a continuation of the downward trend, potentially reaching the S2 support level around $83.​

 

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Gold​

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The price of gold has retreated from the $2,000 mark and is currently testing the $1,949 support level. This decline was anticipated as the RSI and Stochastic indicators were in the overbought zone.

A closer look at the 4-hour chart provides a clearer picture of gold's price action. The precious metal formed a hammer candlestick pattern at the pivot point ($1,962), and the stochastic oscillator is nearing the overbought zone, indicating a potential exit from this area. The RSI indicator remains above 50.

Considering current market data, technical indicators, and key levels, if the price can maintain above $1,949, it's likely that the XAUUSD price will rise to R3 ($2,025).

Conversely, if bears manage to push the price below $1,949, we could see a continued decline towards the upper line of the bearish channel around $1,900.​

 

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Silver

The price of silver is currently testing the pivot point at 23.14, with the Relative Strength Index (RSI) maintaining a position above the 50 level. The XAGUSD's inability to close below the S1 support level of 22.59 suggests that the price movement range since October 23 is likely a correction to the upward trend that began earlier this month.

The pivot point serves as a hurdle for the bulls. To drive the price towards R1 (23.9), they must ensure a close above the pivot point.

Conversely, the S1 level (22.5) acts as a safeguard against further price decline. If this level is breached, the bears could potentially target S2 (21.8) next.​

 

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Gold prices hit $2000 as Middle East tension escalates

As tensions rise in the Middle East, gold prices have shot up over $2000 due to increased fighting on the ground.

While all eyes are on the shifting situation, gold has jumped over the crucial $2000 level because of the growing battles. At the same time, oil prices have stabilized above $83, as people investing in the market are on alert for any interruptions in supply from this key oil-producing area. This week is also important because big banks like the Federal Reserve, the Bank of England, and the Bank of Japan will make decisions on interest rates, which could shake up the markets even more. Investors and market experts around the world are paying close attention to these developments as they influence the economy.

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MetaMask and Blockaid Unite Against Phishing​

MetaMask has partnered with Blockaid to unveil a feature designed to enhance the safety of its users against phishing attacks.
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Proactive Defense with New Security Feature​

Starting from today, MetaMask's desktop users can enhance their security by opting into an experimental feature that includes the Privacy Preserving Offline Module (PPOM). This module, crafted by MetaMask, functions as an offline safeguard, meticulously checking transactions and signatures before they're executed, without exposing sensitive information to any external servers.

Bárbara Schorchit, a senior figure at MetaMask, highlights the integration of Blockaid's dApp scanning technology as a pivotal element in this new security layer. This technology is capable of emulating user interactions with dApps to identify any potential malicious intent.
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Gradual Rollout and Privacy Assurance​

Initially, users who enable this feature will receive alerts for potentially harmful transactions. MetaMask is set to expand this feature to its mobile users come November and aims for a full integration for all users by early 2024. This careful rollout strategy is to ensure the accuracy of the feature, avoiding misidentification of safe transactions as threats.

Schorchit reassures users that privacy is a priority; the PPOM negates the need to share transaction details externally, keeping the validation process confined to the user's device.
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The Persistent Threat of Phishing in Crypto​

Phishing scams continue to be a prevalent danger in the crypto world. Blockaid's data suggests that a concerning percentage of dApps could be harmful, and many potential crypto adopters are deterred by the prevalence of scams.

Reports indicate a surge in crypto-related hacks and the staggering losses incurred in recent times. Bitrace's findings point to fake wallet applications as a significant risk, with their authentic appearance deceiving users into compromising their assets.

This collaboration between MetaMask and Blockaid represents a proactive step towards mitigating these risks and safeguarding the crypto community. (source)​

 

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Gold

Gold is currently undergoing a test of its support level at $1,970. Interestingly, it's trading below the pivot point in the market. The Relative Strength Index (RSI) is showing signs of divergence, indicating a potential correction in the price of gold. This correction could possibly extend to a level of $1,934.

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Crude Oil

Crude oil is currently showing a bearish trend, consistently trading within a bearish channel. The Relative Strength Index (RSI) is attempting to cross the crucial 50 mark, a movement that could indicate potential market shifts. However, it's not a guaranteed sign of a bullish reversal.

The oil price is testing a significant resistance at $83.2. The result of this test could offer insights into future price trends. A break above this resistance might suggest a shift in market sentiment, while failure to do so could reinforce the bearish trend.

The oil market remains bearish as long as the price stays within this channel, indicating that sellers currently have the upper hand. If the bearish momentum persists, the oil price might drop to $80. However, this is a prediction and actual market movements can vary. (source)​

 

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Spain's Stock Market: A Steady Climb

Spain's stock market, particularly the IBEX 35 index, has been on an upward trajectory, marking its fourth consecutive session of gains. On Thursday, it reached 9,680 points. This rise is largely attributed to a positive shift in market sentiment. Investors are increasingly optimistic, hoping that central banks may halt further rate hikes. This optimism is a sign of growing confidence in the market's stability and potential for growth.


Key Players in the Market's Rise

The rally has been led by notable companies. Cellnex Tel, a prominent telecom infrastructure company, saw a 1.8% increase in its stock value. Naturgy Energy, a major player in the energy sector, recorded a 1.6% gain. Iberdrola, another key name in the energy industry, experienced a 1.5% rise. These companies' performances indicate strong sectoral growth and contribute significantly to the overall health of the stock market.


The Other Side of the Market

However, not all companies shared in this upward trend. Repsol, an energy company, saw its stock value decrease by 0.9%, influenced by a drop in oil prices due to unexpectedly high inventory levels. ArcelorMittal, a steel manufacturing giant, also experienced a slight decrease of 0.7%. These dips highlight the market's volatility and the impact of external factors like global commodity prices.


Corporate Developments and Political Influences

In other news, ACS, a leading construction and services group, remained stable despite the announcement of a significant investment in Spain's first data center, worth 100 million euros. This development could signal a strategic expansion and diversification for the company.

On the political front, the debate in the Spanish parliament over a new term for acting Premier Pedro Sanchez is of interest. His proposal of an amnesty to Catalan separatists in exchange for support is a pivotal move that could have far-reaching implications for Spain's political stability and, by extension, its economic environment.


Economic Impact: A Mixed Bag?

The recent trends in Spain's stock market seem to be more beneficial than detrimental to the economy. The consistent gains in the IBEX 35 reflect investor confidence and could signal a strengthening economy. However, the fluctuations seen in individual stocks, influenced by global market dynamics and domestic political decisions, remind us of the inherent uncertainties in the financial markets.

In conclusion, while the overall upward trend in the Spanish stock market is a positive sign for the economy, the nuances and fluctuations within different sectors and companies underscore the need for cautious optimism. Balancing these factors is key to understanding the complex interplay between financial markets and the broader economy.​

 

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Oil

The price of crude oil has recently experienced a decline, reaching the median line of its bearish channel. This downward trend aligns with expectations set when a bearish engulfing pattern emerged close to the bullish flag's upper boundary.

It's anticipated that the oil price may stabilize somewhat near the bearish flag's central line. Nevertheless, the projected target appears to be the S1 level, corresponding to a support point around $72.​

 

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FTSE MIB Index: A Snapshot of Italian Market Stability

The Italian stock market, specifically the FTSE MIB index, showed minimal changes on a recent Thursday, hovering around the 20,200 level. This steady trend mirrored the overall cautious sentiment prevailing in European markets at the time. Investors and traders were in a phase of evaluating new information, particularly the latest PMI surveys. These surveys revealed that the rate of contraction in the Eurozone's business activities for November was slowing down, a detail that held significant interest for market participants.

Influence of Political Developments: Additionally, the financial world was closely monitoring political events, notably the victory of a right-wing populist party in the Dutch elections. Political events like these can have far-reaching impacts on the stock market, influencing investor confidence and future economic policies.

Leonardo's Strategic Moves: One of the standout performers in the Italian market was Leonardo, which saw its stocks increase by 1.2%. This rise came after Mariani, the co-director general of Leonardo, confirmed the company's active pursuit of partnerships in the land armaments sector. Such strategic alliances often indicate growth potential and can positively affect a company's stock price.

Challenges for Diasorin and Prysmian: Conversely, companies like Diasorin and Prysmian experienced a downturn, each losing about 1% in their stock value. Fluctuations like these are common in the stock market and can result from various factors, including company performance, sectoral trends, or broader market sentiments.

Effect on the Economy: The stability of the Italian stock market, as seen in this instance, generally indicates a balanced economic environment. While modest movements in major indexes like the FTSE MIB don't signal significant growth, they also suggest that the market isn't facing immediate instability or decline. This kind of stability can be reassuring for investors and beneficial for long-term economic planning.

The Bigger Picture: The interaction of corporate performance and political events with stock market trends provides crucial insights into the health and direction of the economy. For instance, Leonardo's growth in stock value might signal a strengthening in the defense sector, whereas the losses for Diasorin and Prysmian could point to challenges in their respective industries.​

 

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XAGUSD

FxNews - In our Silver analysis, a bearish long-wick pattern was observed. The silver price has been fluctuating between the 78.6% and 61.8% Fibonacci levels.

The 4H chart shows a bearish engulfing pattern. The $23.4 support level is crucial. If breached, the target is the $23 threshold. The analysis is based on the price staying below $24.1. If this level is breached, the bearish scenario is invalidated.

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Analyzing the Shift in Colombian Business Confidence

In Colombia, the business landscape has recently seen a notable shift. October 2023 marked a decline in the country's industrial confidence indicator, falling to -3.7. This figure represents a significant drop from the previous month's reading of 0.84 and is the most considerable decrease observed since May 2023. The industrial confidence indicator is a crucial measure, as it reflects the overall sentiment of manufacturers and their expectations for the future.

A key element of this change is the diminished optimism among manufacturers regarding their production forecasts for the next quarter. The expectation for output has worsened, with a decline to -16.5%, a steep fall from -10.3% in September. This downward trend suggests that manufacturers are anticipating a slowdown in production.

However, it's not all negative. There's a silver lining in the form of an increase in new orders, which rose to 4.6 from a previous -2.8. This improvement indicates that demand for products may be on the rise, which could potentially offset some of the pessimism about future output.

Additionally, there was an increase in finished goods inventory, moving up to 1.4 from -4.5. An increase in inventory levels could mean that manufacturers are preparing for anticipated demand or facing slower sales than expected.

Economic Implications

The decline in industrial confidence can have mixed implications for the Colombian economy. On one hand, reduced optimism about future output might lead to cautious investment and hiring decisions by manufacturers, potentially slowing economic growth. On the other hand, the rise in new orders suggests there is still robust demand, which could drive future economic activity.​

 

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Turkish Manufacturing Confidence Hits a Low

In recent months, Turkey has witnessed a notable decline in business morale, reaching its lowest point in nearly a year as of November 2023. This downturn is primarily reflected in the manufacturing confidence index, which saw a decrease from 103.3 in October to 100.2 in November. This figure is significant as it represents the lowest level since December of the previous year, indicating a shift in the business climate.

Analyzing the Key Factors

Several factors contribute to this decline in confidence. Firstly, there's a noticeable drop in expectations for production, which decreased from 106.6 in October to 108.5. This decline suggests a reduction in anticipated manufacturing output, which can impact the overall economic productivity. Secondly, the outlook for export order books also showed a downturn, moving from 107.9 to a lower 100.3. This change hints at a possible decrease in foreign demand for Turkish products, which can affect the country's trade balance and revenue from exports.

However, it's not all negative. There's a silver lining as the anticipations for total employment over the next twelve months have risen slightly from 109.5 to 111. This increase could mean that businesses are still planning to expand their workforce, possibly indicating a belief in future growth or stability.

Another area of concern is the decrease in fixed investment expenditure, which fell from 118 to 115.6. This reduction may imply a hesitancy in committing to long-term investments, possibly due to uncertainty in the market or economic forecasts. Additionally, the general business situation also experienced a slight downturn, moving from 92.8 to 91.7.

Economic Implications

The decline in business confidence in Turkey can have both direct and indirect effects on the economy. Lower confidence can lead to reduced investment and production, which in turn can slow down economic growth. The decrease in export expectations suggests potential challenges in the international market, which could affect Turkey's trade balance and foreign exchange earnings. However, the increase in employment expectations might cushion some of these negative impacts by supporting consumer spending and economic activity.

Assessment and Recommendations

While the decrease in business morale poses certain challenges, it also opens opportunities for strategic planning and adaptation. Businesses might need to diversify their markets, improve efficiency, or innovate to maintain competitiveness. Policymakers could also consider measures to boost business confidence, such as providing financial incentives, improving trade relations, or investing in infrastructure.​

 

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Madrid Stocks Cautiously Higher

Madrid's stock market exhibited a cautious uptrend, with the IBEX 35 index slightly surpassing the 9,900 mark on Friday. This movement marked a continuation of the rising trend for the third consecutive session, touching the highs of 2020. Market participants are keenly observing the influx of economic data and any indications of forthcoming decisions by major central banks. There is a heightened focus on the scheduled public appearances of European Central Bank (ECB) President Christine Lagarde and Vice President Luis de Guindos. Despite this, there remains an underlying concern about a possible economic deceleration. This apprehension is fueled by Germany's shrinking GDP and the persistently contracting Eurozone PMI indices, which remain below the critical 50-point mark.​

 

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Malaysian Palm Oil Market Overview

In recent trading, Malaysian palm oil futures were seen hovering around 3,900 MYR per ton. This movement indicates an effort to bounce back from the recent decline in prices, which had dropped to a low of 3,886 MYR. The potential recovery is spurred by positive signs in export figures.

Export Trends

Data from AmSpec Agri Malaysia, an independent inspection company, reveals that between November 1 and 25, there was a 7.2% increase in the export of Malaysian palm oil products, reaching 1.15 million tons compared to 1.08 million tons in the period from October 1 to 25. Similarly, Intertek Testing Services, another cargo surveyor, reported a 13.6% increase in exports during the same time frame, with figures rising to 1.26 million tons from 1.11 million tons.

Factors Influencing Market Dynamics

However, the upward trend in palm oil futures is being restrained by several factors. Notably, there's a decline in competing Dalian oil prices, and there are concerns about upcoming economic activity data from China for October. The uncertainty surrounding China's economic indicators and the impending rainy season are causing market caution.

Moreover, the Indian market, a significant buyer of Malaysian palm oil, is reducing its orders for December and January. This decrease in demand is attributed to the rising cost of palm oil and the negative profit margins faced by refiners, who have recently made substantial imports.​

 

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Natural Gas Futures Hit 12-Week Low: Factors Behind the Fall

US natural gas futures have witnessed a significant drop, falling more than 5% towards $2.7/MMBtu, the lowest in twelve weeks. This decrease is attributed to factors such as high storage levels, record production, and a decrease in demand.

Storage and Production Factors

The US Energy Information Administration (EIA) reported a lower-than-expected withdrawal from gas storage for the week ending November 17, at only 7 billion cubic feet (bcf). This figure is substantially less than the 60 bcf withdrawal during the same week last year and below the five-year average decline of 53 bcf. Currently, gas stockpiles in the US are about 7% above the typical level for this time of year.

Impact of Weather on Demand

One key factor contributing to the surplus is the warmer-than-average winter weather, resulting in a reduced need for heating. Forecasts suggest a 4% decrease in heating degree days compared to the last 10-year average, leading to a 2% drop in space heating consumption from the five-year average. Additionally, average gas output in November has increased to 107.6 billion cubic feet per day (bcfd), up from the previous record of 104.2 bcfd in October.​

 

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Lithium Prices Continue to Fall

The price of lithium carbonate, a key ingredient for making batteries, has dropped to CNY 120,000 per tonne. This is the lowest price since August 2021. The reason for this price drop is that there is more lithium than people need. People are not buying as many electric vehicles (EVs) as expected in China, which is the biggest market for lithium batteries. Instead, battery makers are using up their existing stocks of lithium, which they bought when the Chinese government gave them a lot of subsidies in 2021 and 2022. Some experts now think that there will be enough lithium for everyone until 2028. This is a big change from the previous predictions that there would be a shortage of lithium soon. In November 2022, the price of lithium was as high as CNY 600,000 per tonne.

The situation is not much better in other countries. In the US, people are not buying many EVs either, because they have to pay more interest on their loans. This makes them less willing to spend money on big items like cars. Meanwhile, the production of lithium is still going strong. Mineral Resources, the second-largest producer of spodumene, a type of lithium ore, plans to double its output in Western Australia next year.

The Effect of Lithium Prices on the Economy

Lithium prices are an important indicator of the economic health of the battery and EV industries. They show how much demand and supply there is for lithium, and how much profit and cost there is for the producers and consumers of lithium. They also affect the employment, tax revenue, and business activity of these industries.

Therefore, the fall in lithium prices could have a negative impact on the economy. It could reduce the income and profits of the lithium miners and battery makers. It could also lower the tax revenue and the public spending of the governments that support these industries. It could also discourage the investment and the innovation of these industries.

However, the fall in lithium prices could also have some positive effects on the economy. It could encourage the consumers to save more and spend less. It could also motivate the lithium miners and battery makers to improve their efficiency and quality. It could also stimulate the diversification and the transformation of these industries.​

 

[Solid ECN]

EURUSD: Easing Near the Cloud

The EURUSD currency pair's downtick slowed near the lower line of the bullish flag. This pivotal mark is additionally supported by the Ichimoku cloud. For the bullish trend to maintain, the price should hold above the cloud and/or the 23.6% Fibonacci level. In this case, we can expect the EURUSD to continue its upward trend inside the flag.

To trigger a long trade on the pair, it is recommended to patiently wait for the technical indicators to support the bullish scenario. The Stochastic oscillator hovers in the oversold zone, while the ADX indicator is about to cross above the 20 level. While the ADX indicator demonstrates that the trend is lacking momentum, the stochastic oscillator or RSI should cross above the signal lines.

Conversely, the bullish flag will be invalid if the bears close and stabilize the price below the 23.6% Fibonacci level. Please note, this event won't invalidate the bullish trend as long as the EURUSD hovers above the Ichimoku cloud.​