EUR 504.74 For Business Accounts Only

COMMODITY OUTLOOK - Base Metals Engaged in Multi-Month Corrections - Gold Preparing Fake-Out Break-Out - Crude/Brent Oil Resume Uptrend

In This Edition: President Trump’s trade tariff plans have gained momentum since we first discussed this possibility last January. Going back a few months, we could see from the Elliott Wave pattern progress of Base Metals and the close positive-correlation with China’s Shanghai Composite index that sooner or later, a change of direction would be triggered, causing metals and indices to begin counter-trend declines in response to ending a 2-year impulse upswing. At the time, there were hints that President Trump was preparing a round of U.S. import tariffs as he sought to implement the next stage of his ‘America First’ programme of protectionist policies. But that has now gained momentum during the last few weeks to the point where China and Europe are preparing retaliatory measures. In this month’s report, we update all the base metals, their current location in the early stages of corrective declines that began late-December for Copper and Aluminium amidst increasing metal arrivals into LME warehouses. Where did all this material suddenly come from? On March 5^th, Reuters reported that a trade entity dumped 78,950 tonnes of zinc into LME warehouses. Now zinc has been one of the outperformers over the last couple of years – and its huge advance into last year’s highs was built upon tightening supplies. That’s suddenly changed now but this directional price-reversal was already signalling a downturn basis Elliott Wave analysis ahead of the metal inflows.

This month’s report updates the US$ dollar’s path having declined into an impulse downtrend over the last year. In last month’s Global Independent Research Conference, delegates were polled on their US$ dollar outlook – over 95% per cent voted for continued declines in 2018 – our Elliott Wave analysis says otherwise. We know that sentiment extremes occur at important junctures, within a month or two, and so it seems likely the dollar will soon form a sound platform of support. The dollar’s impact in commodities is important, of course, especially precious metals. Gold and Silver’s recent activity testifies their negative-correlation to the currency unit has remained constant with a lessening impact from inflationary pressures or safe-haven attraction. We explore what Elliott Wave pattern is unfolding for gold and silver in relation to the US$ dollar’s expected path. The results are surprising, not mainstream consensus, but we believe, plots the most likely course for price development over the coming month and for the remainder of this year.

Energy markets were initially marked down rather dramatically at the end of January into early-February as global stock markets underwent a necessary corrective fall-out. Crude oil declined from 66.66 to 58.07 whilst benchmark Brent oil pulled lower from 71.28 to 61.77. Crude/Brent oil has since returned to those January highs, resuming dominant uptrends, but can this continue? The XLE energy index is still languishing near its February low of 64.45, which means the correlation must be examined in order to determine the next price movements. This month’s report also takes a look further out, examining the medium-term outlook within the existing ‘INFLATION-POP’ scenario.