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EW-Commodities Outlook Oct/Nov. 2022

by WaveTrack International| October 7, 2022 | No Comments

EW-Commodities Outlook – Base Metals & Energy set for Rebound Rally – Precious Metals Bottomed, Beginning New Multi-Year Uptrend

EW-Commodities Outlook covering Central Bank impact on Commodity Prices

There’s been a noticeable pick-up in Central Bank activity over the last month with rate hike acceleration becoming the mandate amongst most of the developed countries across the world. The U.S. Federal Reserve are leading the assault higher with aggressive 75bps basis point increases with expectations of more on the way. Just this week, Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Minneapolis Federal Reserve Bank President Neel Kashkari said the central bank will need to raise interest rates to a range between 4.50% and 4.75%.

Other Central Banks are not far behind the Fed. However, this lag means the US$ dollar has remained on an upward trajectory, weakening all of the G10 currencies in its wake – see fig #1. And a few Commodities too!

EW-Commodities Outlook October 2022 - Fig #1 - Central Bank Hikes - Source: Refinitiv Data

Fig #1 – Central Bank Hikes – Source: Refinitiv Data

British Pound collapsed against the US$ Dollar

Earlier this week, the British Pound collapsed against the US$ Dollar, causing the Bank of England to implement a support mechanism that prevents further declines for the Pound whilst creating a ceiling in long-dated Gilt yields. These emergency measures are also being considered in continental Europe. Japan is already restraining inflationary pressures by holding JGB 10yr yields below a threshold level of 0.25% per cent. Clearly, monetary policy changes in non-U.S. Central Banks will ultimately cause a US$ Dollar peak as they catch-up with inflation pressures. That’s not too far off, at least from an Elliott Wave perspective.

EW-Commodities Outlook WaveTrack International - Fig #2 - Recession odds still rising - Source: BofA Global Fund Manager Survey

Fig #2 – Recession odds still rising – Source: BofA Global Fund Manager Survey

Recession?

Fears of a global recession have risen over the last month. This is weighing heavily on monetary policy decision-makers, both in the U.S. but more so in Europe – see fig #2. So much so that sentiment has now entered extreme bearish territory, as shown in stock market surveys – see fig #3.

EW-Commodities Outlook - WaveTrack International Fig #3 -FMS Asset Allocation - Source: BofA Global Fund Manager Survey

Fig #3 -FMS Asset Allocation – Source: BofA Global Fund Manager Survey

Interestingly though, a majority of global fund managers think inflation has peaked – see fig #4.

EW-Commodities Outlook - www.wavetrack.com - Fig #4 -FMS Has Inflation peaked - Source: BofA Global Fund Manager Survey

Fig #4 -FMS Has Inflation peaked – Source: BofA Global Fund Manager Survey

Ordinarily, surveys like these provide really important information when they’re measuring historical extremes. They’re contrarian indicators. And these suggest risk-assets are currently approaching important lows. That’s something can confirm that from an Elliott Wave perspective.

Stock markets are retesting or modestly breaking below the March/July lows. Although we’re expecting a big turn-around, lifting prices back inside the last 6-month range for a revisit back to August’s highs. Meanwhile, commodities like Copper which completed the first stage of corrective declines last July is expected to resume higher for another month or two. Crude oil, another bellwether of the economy has just completed the first stage of its own correction that began last March and is now about to head higher for another month or two.

And look at Gold! Prices have now declined into long-standing downside targets just above $1600.00 dollars. This ends a 2-year correction from the Aug.’20 high of 2072.00. That’s really exciting when we look at its upside potential alongside Silver and Platinum…

Get more insights in our latest EW-Commodities Outlook report and video update!

Category: central banks, Commodities, Copper, CRB, Crude oil, Elliott Wave, GDX, Gold, Gold Mining, Mines, Mining, Palladium, Platinum, Precious Metals, Silver, Zinc

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WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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