Commodity Chart Deck #17 Weak Softs, wired Precious Metals and Crude Oil upside

-The Newsletter publishing time is getting changed to Monday 06:00 (CEST) German time-

Overall it was a bad week for commodity prices. The Energy sector was, once again, the best performing sector over the last trading week and the only sector which was up. Metals are still tricky, especially precious ones. While the 10Y Realyield was this week lower again, Gold, Silver and Platinum couldn’t benefit from this but instead sold off again too. The Softs sector is also losing some ground, which I had anticipated in the recent weeks.

Here is my latest playbook:

  1. Softs are still very high priced and most of them are at very important technical levels. I’m already Short Cotton and Sugar but I’m looking to increase my position size, once I see more momentum favoring the short side here.

  2. What the hell are Precious Metals doing. Realyields are even more down, but PM arent rising yet. The current correlation between Gold and EURUSD is very clear. Still, in this environment, any weakness is a long-time buying opportunity IMO.

  3. Markets were headed for a 5-day losing streak. In today’s world, this is already a fearful environment. Nevertheless, I will use this weakness for long entries. (most likely via index products--NQ or ES)

  4. Can Crude Oil break out to the upside? The make or break point from a technical perspective is near. If we won’t see a higher high, the price is likely to fall back to about 61 USD. If we see a higher high, 76 USD is likely IMO.

US Dollar Update - In a nowhere territory

I think that the direction of the USD is still not really clear. I position myself still neutral. (Seasonality till December is in favor of a higher USD)

If Europe is starting to go back into lockdowns again during Autumn and Winter, the Euro could lose some additional ground against the USD.

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Open Positions:      
- Long Gold @ 1785 USD   
- Short Cotton @ 92.72 USX 
- Long Crude @ 69.71 USD
- Short Sugar @ 19.50 USX

Closed Positions:

Elsewhere In The Macro World

Producer Price Index came in, once again, hotter than the consensus estimations. Moreover, the wage growth story seems to be different this time, rather than in the previous 20 years. Low-skilled job wages are rising rapidly and more than high-skilled job wages. An important piece of the “higher median inflation puzzle” over the next year IMO.

This week look out for:

  • Latest US Consumer Price Data on Monday (what does inflation do / peak inflation already in?)

  • Oil and NatGas inventories on Wednesday and Thursday (can the production recover from the rapid loss, caused by Ida’s impacts?)

  • US Retail Sales data on Thursday (how is consumer spending going?)

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via Twitter or Mail.

(The Commodity Report is not investment advice)