Global Commodity Market Wrap-Up

Last week, commodities prices continued to trade in a bearish trend amid recession fears and the rising US dollar index. Gold prices traded in a downward trend and settled with a weekly loss of 3.24%, while silver prices also follow the yellow metal and declined sharply making a new 52-week low and settled at a weekly loss of 2.19%. Base metals also traded in a weak momentum. Copper prices have witnessed a weekly decline of 3.11%, while Zinc price has shown some respite and settled with a weekly gain of 3.01%.

On the Energy front, Crude oil prices settled at a weekly decline of 3.36%. However, Natural gas prices improved last week and settled at a weekly gain of 5.31%. Agricultural commodities prices have shown some positive moves from lower supporting levels. Notably, Soybean and Corn prices witnessed 0.23% and 2.18% weekly gains, respectively. Also, Sugar prices surged last week and settled at a weekly gain of 5.26%.

In the recent week, primarily all the commodities prices are trading in a weak tone. The precious metals prices are unable to pick up an upside momentum and still trading in a short-term downtrend, while Base metals are continuously moving down towards new 52 weeks’ lows due to weak demand. On the energy front, Crude oil prices are extending weakness this week as well, while Natural gas is showing some positive movement. However, prices are still trading near the resistance levels and might decline in the coming sessions. The agricultural commodities basket is also showing some correction from higher levels.

The upcoming macroeconomic events that may impact the market sentiments include an update on Consumer Price Index, Unemployment Insurance Weekly Claims, Natural Gas Inventories, and US Retail Sales released monthly.

Having understood the global commodities performance over the past one week, taking cues from major global economic events, and based on technical analysis, noted below is recommendation with the generic insights, entry price, target prices, and stop-loss for Natural Gas August Futures (NYMEX: NGQ22) for the next 1-2 weeks’ duration:

Natural Gas August Futures Contract (NYMEX: NGQ22)

Price Action and Technical Indicator Analysis:

NYMEX Natural Gas August Futures' prices recently broke a falling wedge pattern by upside and achieved its breakout target price. Now, the prices are facing stiff resistance of its 21-period SMA which indicates a downside movement in the coming sessions. Prices are currently hovering below its 21-period and 50-period SMA which further supports a negative stance. The leading indicator RSI (14-period) is trading at ~46.58 levels, supporting a weak stance. Now the next crucial support levels appear to be at USD 5.57 and USD 4.74, and prices may test these levels in the coming sessions (1-2 weeks).

As per the above-mentioned price action and technical indicators analysis, Natural Gas August Futures (NGQ22) is looking technically well-placed for a ‘Sell’ rating. Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of ‘Sell’ recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, WASDE report, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the commodities prices:

Futures Contract Specifications 

Disclaimers 

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 1-2 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact the commodity prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note 1: Individuals can consider exiting from the commodity if the Target Price mentioned as per the Technical Analysis has been achieved and subject to the factors discussed above.

Note 2: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest. 

Stop-loss: In general, it is a level to protect further losses in case of unfavourable movement in the stock prices. 

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is July 13, 2022 (Chicago, IL, USA 06.17 AM (GMT -5). The reference data in this report has been partly sourced from REFINITIV. 

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals before any commodity evaluation. The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.