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COMMODITY OUTLOOK - Base Metals Reach Interim Low - Gold Begins 4th Wave Short-Covering Rally - Crude Oil Holds Critical Support

In This Edition: Commodities have been in decline this year as the US$ dollar began to recover from its February low following steep declines in 2017. The dollar has since reached an interim high with a corrective decline forecast through September – this month’s report takes a look at the relative Elliott Wave structure of key commodities, including base and precious metals, plotting their course as the dollar eases back. Copper’s -21% per cent decline from June’s high has shaken the market given the background of strong fundamentals but plagued with the geopolitical risk of trade war escalation. Other base metals remain in a similar rhythm, Aluminium, Lead, Zinc with Tin and Nickel expected to outperform although this year’s overall decline is not the end to the correction – more will unfold once the dollar’s shorter-term downswing has completed.

Precious metals have declined severely this year following high expectations of rising inflationary pressures. But as our annual forecasts predicted last December/January, these would ease off as depicted in the US10yr inflation TIPS chart, creating a pause in the ‘Inflation-Pop’ theme. Gold’s decline from January’s high is simply the final sequence in a 2-year counter-trend correction – this report takes an update look at its downside progress, highlighting its ultimate price completion. The US$ dollar’s temporary corrective decline is assisting a corrective bounce for gold and silver, platinum too. Palladium is update with some bullish prospects ahead.

The energy contracts of Crude and Brent oil have been this year’s best performers in the commodity space but both are now at important inflection points. This month’s EW-Commodities Outlook report highlights the critical price levels and assesses the probabilities for a continued push to higher-highs, or a slump below support in confirming a more protracted decline.