Where Are Gold, Silver and Crude Oil Prices Headed Next?
Commodities prices have been sliding? Let’s check the charts to see where prices are headed next.
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As the first half of the calendar year draws to a close, let’s speculate.
Will commodities prices continue their slide? Will disinflation be the big story in the second half of the year?
Declines in agricultural commodities should give consumers a much-needed break, while hard commodities like gold and silver continue to consolidate after massive gains. Let’s check the charts to see where commodities prices are headed next.
WTI Crude Oil
The August NYMEX WTI crude oil futures contract has fallen sharply since June 11. Crude oil futures should continue falling to at least $67, in order to fill a gap left behind back in February (point A).
Soft Commodities Fall
The Invesco DB Agriculture Fund (DBA), which climbed steadily from the beginning of this year through mid-May, has experienced a significant decline over the past six weeks. DBA could soon challenge its recent lows of $26.16.
Wheat
The September contract for soft red wheat just hit a four-month low. The contract is trading below its 200-day moving average (red). It’s also breaking down from a head-and-shoulders pattern (shaded), indicating further downside ahead.
Corn
Meanwhile, September corn contracts are falling sharply and just hit a new low. Downside momentum appears to be increasing.
Gold and Silver Tumble
The damage hasn’t been limited to agricultural commodities. Gold and silver prices have also tumbled.
Gold is considered a hedge against inflation. If inflation fears are subsiding, as seen in the charts above, then a decline in gold would be expected. This is especially true after the massive gold rally of 2024/2025.
Based on this chart, we should see gold below $4,000 soon. However, the downside momentum has slowed considerably, so a big selloff from here seems unlikely.
September silver futures have been halved since peaking in late January. Silver is trading near its year-to-date low, with decent support in its current price area. However, if that support breaks, silver could drop into the $48-$49 area.
Fly in the Ointment
Fed chairman Kevin Warsh has named price stability as his main concern. With commodities prices falling, does the Fed really need to be hawkish?
While agricultural prices are generally falling, the cost of smartphones and laptops could rise sharply, due to supply chain disruptions and shortages. AI-infrastructure demands on energy and water supplies could also place upward pressure on inflation.
Don’t expect Warsh’s Fed to be moved by the decline in commodities prices. Annual consumer inflation (CPI) has been running above 2% for over five years, since March 2021.
A Glimmer of Hope
Last week, shares of Apple (AAPL) took a beating, due to price increases for MacBooks and iPads. Those increases were necessitated by rising memory prices. Apple’s decline may have been somewhat overdone, since its competitors are facing similar issues.
Later this year, pending regulatory approval, the CME intends to launch futures contracts for computing capacity. This opens the door for potential contracts specifically tied to memory and storage. The contracts, and options based on those contracts, could help companies manage risk by offering protection against volatile price swings.
At the time of publication, Ponsi was long AAPL.
