Market Wrap: Pound loses ground ahead of BoE decision; SILVER and GOLD return to declines

Economic

Summary:

European markets were mixed ahead of BoE and ECB decisions, while the pound weakened, silver and gold resumed sharp declines, equities dipped modestly, and cryptocurrencies slid, with Bitcoin falling below $70,000.

We are slowly entering the second phase of Thursday's trading session.

The markets are still awaiting the BoE and ECB decisions on interest rates. The first will take place in less than 14 minutes, at 13:00. The ECB will decide at 14:15.

The European Central Bank is expected to keep interest rates unchanged for the fifth time, as the strong economy has so far withstood global tensions and the strong euro. The Bank of England is also expected to keep interest rates unchanged, despite growing concerns about the British labour market.

At present, Germany's DAX is down 0.46% on the cash market, France's CAC40 is up 0.2%, and the UK's FTSE100 is down 0.45%.

Precious metals return to dramatic declines: silver slumps 11% to $78, completely erasing the rebound of the last two sessions, gold retreats another 1.7% to $4,875, platinum contracts lose 6.5%.

The Stoxx Europe 600 index fell by 0.16%, with the technology and media sectors performing best and automotive stocks performing worst.

Market Wrap: Pound loses ground ahead of BoE decision; SILVER and GOLD return to declines_1

Rheinmetall AG recorded a decline of 6.9% after analysts' forecasts led to a downward revision of the consensus earnings forecast for this year.

A.P. Moller-Maersk A/S fell 3.8% after the Danish container giant announced it would focus on cost discipline in the face of deteriorating freight rates caused by the reopening of the Red Sea.

KGHM Polska Miedź SA fell by 4.9%, leading declines in shares of companies in the basic materials sector.

Meanwhile, the decline in silver prices provided a boost for Pandora A/S, whose shares rose 6.3%, offsetting a break in share buybacks following a forecast of slower sales this year.

Shell Plc fell 2.3 per cent after its profit missed expectations.

The Swiss franc and the US dollar are performing best on the Forex market. We are seeing declines, particularly in the British pound.

We are seeing significant declines in cryptocurrencies. Bitcoin has fallen below £70,000 for the first time since November 2024.

Source: xtb

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Ukadike Micheal

Political

Remarks of Officials

Russia-Ukraine Conflict

Russian and Ukrainian officials are engaged in a second day of U.S.-brokered negotiations aimed at ending the war, but major disagreements over Ukrainian territory and future security guarantees remain significant obstacles.

The talks, held in Abu Dhabi, have produced one small sign of progress: an agreement for another prisoner-of-war exchange. Steve Witkoff, the White House envoy leading the U.S. mediation effort, announced on February 5 that a total of 314 prisoners would be released. This move offers a rare moment of consensus in a conflict that has reportedly killed or wounded nearly 2 million people since Russia’s invasion on February 24, 2022.

Cautious Optimism Meets Sobering Reality

Ahead of the meetings, both sides hinted at the possibility of a breakthrough. Kirill Dmitriev, the Kremlin's lead negotiator, mentioned "progress" and positive movement on February 5. His Ukrainian counterpart, Rustem Umerov, described the first day of discussions as "meaningful and productive, focusing on concrete steps and practical solutions."

Despite these optimistic statements, Russia’s military actions continue unabated. On the eve of the talks, Russia launched one of its largest aerial assaults of the war, targeting Ukraine's energy infrastructure and compounding the suffering of civilians in the middle of a harsh winter.

Kremlin spokesman Dmitry Peskov reinforced Moscow's firm stance, telling reporters that Russia's position remains unchanged and is "absolutely clear and well understood by both Kyiv and the American negotiators."

The Core Sticking Points

The gap between Moscow and Kyiv has narrowed slightly, but fundamental disagreements persist. The negotiations are centered on two critical issues that have stalled previous efforts.

The Status of Donbas

The primary point of contention is the territory in Ukraine's Donbas region that Kyiv currently controls but Moscow claims as its own. Ukrainian President Volodymyr Zelenskyy has proposed creating a demilitarized zone, potentially monitored by European peacekeepers, but Russia has unequivocally rejected this proposal.

Future Security Guarantees

Kyiv is also demanding binding security guarantees from the United States and other Western allies. These guarantees would legally obligate other nations to intervene if Russia were to launch another attack in the future.

Ukrainian political analyst Ihor Reiterovych has urged the West to provide strong assurances and avoid repeating the mistakes of the 1994 Budapest Memorandum. That agreement, signed by the U.S., Russia, and Britain, was supposed to guarantee Ukraine's territorial integrity in exchange for the country giving up its nuclear arsenal.

Expert Skepticism and the Path Forward

Analysts remain skeptical about the prospects for a comprehensive settlement. Markus Ziener, a fellow with the German Marshall Fund and former Moscow correspondent, acknowledged the prisoner swap as a positive step but expressed doubts about a broader resolution.

"I'm rather skeptical if we get to the nitty-gritty," he told RFE/RL, adding, "So far, there is not really much that gives us hope that a settlement of the war is within reach."

Ziener questioned Russia's sincerity, noting the incongruity of negotiating for peace while simultaneously launching massive aerial attacks. "If I want to negotiate a peace settlement, I would not hammer Ukraine and pound them the way they do," he observed.

For Ukraine, the immense sacrifices made during the war make concessions difficult. "Given all the sacrifices Ukraine has made so far... it's very difficult for Ukraine to say, OK, well, we'll cede to the Russian demands," Ziener explained.

The talks, which include current and former intelligence officials, mark a continuation of direct negotiations that resumed last May after a long pause. President Donald Trump has expressed frustration that the war continues, having made its resolution a top foreign policy priority. The U.S. delegation includes not only Witkoff, who has met with Russian President Vladimir Putin seven times in the past year, but also Trump's son-in-law, Jared Kushner.

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

In early September, shortly after Indian Prime Minister Narendra Modi held a chummy meeting with Vladimir Putin and Xi Jinping in China, he dispatched his national security adviser to Washington to help smooth over fraying ties.

Ajit Doval came with a message for Secretary of State Marco Rubio: India wanted to put the acrimony between the two nations behind it and get back to negotiating a trade deal, according to officials in New Delhi familiar with the meeting, who asked not to be identified because the discussions were private.

Doval told Rubio that India wouldn’t be bullied by US President Donald Trump and his top aides, the people said, and would be willing to wait out his term, having faced other hostile US administrations in the past. But New Delhi wanted Trump and his aides to dial down their public criticism of India so they could get relations back on track, Doval said in the meeting.

At the time, India was smarting from Trump’s insults and the 50% tariffs he’d slapped on its goods in August. The US president had called India a “dead” economy with high tariffs and that it was funding Putin’s war in Ukraine by buying Russian oil.

It wasn’t long after Doval’s meeting, which was previously unreported, that the first signs of an ease in tensions emerged. On Sept. 16, Trump called Modi on his birthday and praised him for doing a “tremendous job.” By the end of the year, the two leaders had spoken four more times on the phone as they inched toward a deal to bring down the tariffs.

Randhir Jaiswal, spokesman for India’s Ministry of External Affairs, denied that the Doval-Rubio meeting took place when asked about it at a regular briefing on Thursday. A spokesperson for the US State Department said that in keeping with standard diplomatic practice, it does not disclose the details of private discussions.

GLOBAL REACT: US Deal Revives Indian Export Competitiveness

On Monday, Trump announced he’d reached a trade agreement with Modi that would reduce tariffs on India’s goods to 18%, lower than most of its peers in Asia. A punitive 25% duty that the US leader had slapped on India for buying Russian oil was also scrapped. In turn, Trump said, India agreed to purchase $500 billion of US goods, switch to buying Venezuelan oil, and reduce tariffs on US imports to zero. Modi’s government hasn’t confirmed those details and neither side has published any documentation to codify the agreement.

“The past year has been one where negotiators, both in the US and India worked feverishly to get us to this point,” Nisha Biswal, partner at The Asia Group and former US Assistant Secretary of State for South and Central Asian Affairs, said in an interview with Bloomberg TV. “It benefits both the US and India that you have an India that is finally really opening up on global trade.”

Publicly, there had been no indication from either side that a deal was imminent. As recently as last week, US Trade Representative Jamieson Greer said India still had a long way to go to convince Washington it was halting Russia crude buys.

On Monday, officials in New Delhi were taken by surprise when Trump posted about the deal on social media. Many senior bureaucrats in the foreign and commerce ministries, even those who had been directly involved in the trade negotiations, were oblivious that a call had been scheduled between the leaders that day. Some were unable to confirm key details related to the tariff announcement when contacted by reporters late in the day.

Behind the scenes, though, New Delhi had been working to get relations gradually back on track. Doval’s meeting with Rubio in September was a signal to Washington that it sees the US as a long-term strategic partner and couldn’t afford to allow ties to deteriorate further.

The prevailing view in New Delhi was that India needed US capital, technology and military cooperation to deter China and meet Modi’s goals of making the South Asian nation a developed economy by 2047. Trump was just a blip over that time frame, officials in New Delhi said, and India needs to stay focused on doing what’s best over the long term.

“New Delhi was never going to sever relations with Washington following last year’s downturn in bilateral relations,” said Chietigj Bajpaee, a senior research fellow for South Asia at Chatham House. “India-US relations remain ‘sticky’ given the plethora of institutionalized and people-to-people linkages between both countries.”

“That being said,” he added, “the irrational exuberance that marked New Delhi’s earlier assessments of the bilateral relationship have faded.”

Relations had spiraled downward ever since Trump claimed credit in May for resolving a four-day clash between India and neighboring Pakistan, a boast that Modi vehemently rejected. In a tense call between the two leaders in June, Modi declined Trump’s request to come to the White House, where the US president was hosting Pakistan’s army chief at the time. In October, Modi skipped a summit in Malaysia to avoid a possibly awkward meeting with Trump.

The arrival of new US Ambassador Sergio Gor to New Delhi in December appeared to kick off more serious efforts to get relations back on an even keel. Gor, a former senior White House official and longtime member of Trump’s inner circle who is also close to Rubio, has repeatedly underscored the importance of US-India ties.

In his first public speech in his new role, Gor cast the tensions between the two countries as disagreements among “real friends,” which he said both sides were sure to resolve. He also announced India would be invited to join a US-led alliance, called Pax Silica, to strengthen supply chains.

A further thaw in ties was evident during a meeting between Gor and External Affairs Minister Subrahmanyam Jaishankar last week, according to people familiar with the matter. Gor said in a social-media post that the two sides discussed “everything from defense, trade, critical minerals, and working toward our common interests,” adding: “Stay tuned for much more!”

Jaishankar is currently in the US, where he’s held talks with Rubio on trade and supply chains.

“This appears to conclude a difficult six-month period for US-India relations,” said Alexander Slater, former India head of the US-India Business Council. “It also adds to recent signals about where India’s economic future is likely headed” and “removes a key impediment to what had been India’s gradual but steady alignment with the West.”

Despite the rapprochement, India has reason to proceed cautiously with Trump, and is keen to assert its strategic autonomy. Modi’s viral moment with Xi and Putin, clasping hands and chuckling together, was meant to show Trump that it has other options, officials in New Delhi said. Modi rolled out the red carpet for Putin in December, showcasing ties with a country that remains an important source of weapons and diplomatic support dating back to the Cold War.

Last week, Modi clinched a free trade pact with the European Union after almost two decades of talks, coming just months after India’s trade deal with the UK — deals that showed India was serious about diversifying its trade relationships in the face of the impasse with the US, according to an official aware of the details.

Later this month, Modi will host Canada’s Mark Carney and Brazil’s Luiz Inacio Lula da Silva in New Delhi, further using Trump’s new world order to forge closer economic and political ties with so-called “middle power” countries.

Still, the US remains a crucial partner for India, both as a market and as a source of investment. The nation ships about a fifth of its exports to the US, a large share of which are mobile phones and electronic goods, sectors that are key to Modi’s manufacturing ambitions. US companies lined up big investment pledges in India in recent months, especially in AI, including a combined pledge of $52 billion by Amazon.com Inc. and Microsoft Corp. in December. Alphabet Inc.’s Google announced $15 billion of investment in data centers in October.

India is also becoming more important for the US financial industry. Goldman Sachs Group Inc. has its biggest office outside of New York in the southern Indian city of Bengaluru, where it provides sophisticated IT and financial technology support to clients around the world.

“The larger geopolitical factors or strategic factors that bind Indian and the US together are still in place,” said Milan Vaishnav, director of the South Asia Program at the Carnegie Endowment for International Peace. “India requires a great amount of capital, of investment, of technology transfer, investments. So the US is critical.”

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Gold and silver prices are sharply lower in early U.S. trading Thursday, with silver leading to the downside. Weak long liquidation in the futures markets is featured today, as the shorter-term futures traders that became would-be bargain hunters and dip buyers earlier this week may now be getting their fingers burned late this week. A higher U.S. dollar index and lower crude oil prices today are bearish outside market elements for the precious metals. April gold was last down $69.40 at $4,880.80. March silver prices were down $8.411 at $75.90.

Gold and silver have become unstable again after posting solid recoveries earlier this week. Spot silver plunged as much as 17% overnight, having flickered briefly above $90 an ounce in early Asian trading, Bloomberg reported. After a record-breaking rally that appeared to run too far, too fast, the metal has retreated by more than a third from an all-time high hit on Jan. 29. The sudden and sharp decline in precious metals also weighed on sentiment in base metals markets, with copper falling more than 1% to slip below $13,000 a ton. Meanwhile, spot gold dropped as much as 3.5% in choppy trading.

The recent steep downdrafts in gold and silver prices put some downside pressure on many raw commodity futures markets, as well as denting risk appetite across the general marketplace.

U.S. dollar index hits two-week high. The U.S. dollar index overnight notched a two-week high and has made a strong recovery after hitting a four-year low in late January. The greenback has appreciated amid mostly upbeat U.S. economic data releases and following the announcement from President Trump that he has nominated Kevin Warsh as the next Federal Reserve chair. Warsh has in the past leaned hawkish on U.S. monetary policy. Meantime, the European Central Bank is widely expected to keep interest rates unchanged today, as policymakers weigh the impact of a stronger Euro currency. The ECB has held its monetary policy steady since last June. The Bank of England also holds its regular monetary policy meeting today and is also expected to keep rates steady.

Crude oil prices back off as U.S.-Iran talks to proceed. Crude oil futures prices fell overnight for the first time in three days after Iran confirmed it will hold negotiations with the U.S., easing the immediate risk of military strikes against the OPEC producer. Brent dropped toward $68 a barrel, after adding 4.8% over the previous two sessions, while West Texas Intermediate was near $64 a barrel. Iranian Foreign Minister Abbas Araghchi confirmed in a social media post that the negotiations will be held in Oman on Friday, clarifying the location of the encounter, Bloomberg said. “Differing positions over the parameters of U.S.-Iran negotiations mean it remains unclear whether the two sides can realistically bridge major differences at a time of heightened tensions in the region, which supplies about a third of the world’s crude. That has reinserted a risk premium into oil prices, which have rebounded this year after slumping in the second half of 2025 on signs of a growing global glut,” said the report.

The key outside markets today see the U.S. dollar index higher, with crude oil lower and trading around $64.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.27 percent.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Price pressure on gold, silver amid bearish outside markets_1

Technically, April gold futures’ price action last week has formed a big and bearish “key reversal” down on the daily bar chart, which is one chart clue that a market top is in place. Bulls’ next upside price objective is to produce a close above solid resistance at $5,250.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $4,423.20. First resistance is seen at $5,000.00 and then at the overnight high of $5,045.00. First support is seen at the overnight low of $4,805.00 and then at $4,700.00. Wyckoff's Market Rating: 6.0.

Price pressure on gold, silver amid bearish outside markets_2

March silver futures see that a bearish pennant pattern has formed on the daily bar chart. The next upside price objective is closing prices above solid technical resistance at this week’s high of $92.015. The next downside price objective for the bears is closing prices below solid support at $70.00. First resistance is seen at $80.00 and then at $82.50. Next support is seen at the overnight low of $73.415 and then at $72.50. Wyckoff's Market Rating: 5.0.

Source: kitco

Risk Warnings and Disclaimers

Add to Favorites

Michael Ross

Central Bank

Data Interpretation

Daily News

Remarks of Officials

China–U.S. Trade War

Economic

German factory orders posted an unexpected and dramatic increase in December, rising at the fastest rate in two years and signaling a potential rebound for the nation's critical manufacturing sector.

Demand surged by 7.8%, a figure that far outpaced all predictions from a Bloomberg survey of economists, whose median estimate was a 2.2% decline. According to the statistics office, this marked the fifth consecutive monthly gain. Even excluding large-scale orders, the metric still would have climbed by 0.9%.

Figure 1: German factory orders showed a significant monthly increase in late 2025, defying previous periods of volatility and contraction.

An Economy Seeking Sustainable Growth

A revival in industrial activity is widely seen as essential for a lasting recovery in Europe's largest economy, which managed to narrowly avoid a triple-dip recession in 2025. Chancellor Friedrich Merz has labeled the country's recent growth as "unsatisfactory" and made its revival a key priority.

The government is forecasting gross domestic product to expand by 1% this year, largely driven by increased spending on infrastructure and defense. Some institutions are more bullish; the Bundesbank anticipates stronger growth, and Deutsche Bank has projected a 1.5% expansion.

Support is also expected from the delayed impact of previous interest-rate cuts by the European Central Bank. ECB officials are set to conclude their first policy meeting of 2026 on Thursday, with no changes to borrowing costs anticipated.

Persistent Risks and Structural Challenges

Despite the positive data, Germany's economy still faces significant headwinds. Key risks include potential disruptions from US President Donald Trump's trade policies and intensifying competition from China.

Internally, the country continues to grapple with long-standing structural issues, such as excessive bureaucracy and a shortage of skilled workers. Bundesbank President Joachim Nagel, along with many economists, has urged Chancellor Merz to act on promises to cut red tape and enhance the nation's competitiveness.

Domestic Demand Fuels the Jump

The German Economy Ministry confirmed in a statement that the surge in factory orders was primarily driven by domestic demand.

"For several months now, large domestic orders... have been causing fluctuations in monthly orders," the ministry explained, citing public procurement for the modernization of the German armed forces and orders related to the Special Fund for Infrastructure and Climate Neutrality.

In contrast, the ministry noted that "the order intake from abroad has tended to be weaker and subject to greater fluctuations in view of trade and geopolitical uncertainties."

A Mixed Picture Across Europe

Looking ahead, German industrial production figures are scheduled for release on Friday, with economists expecting a modest decline of 0.3%.

Meanwhile, separate data from neighboring France painted a different picture for December. According to the Insee statistics office, French manufacturing weakened, with both industrial and factory production falling month-over-month due to a slump in aeronautical manufacturing.

Figure 2: French industrial and manufacturing production data from late 2025 showed a period of weakening, contrasting with the surprising strength in German orders.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Henry Thompson

Central Bank

Data Interpretation

Remarks of Officials

Forex

Economic

The European Central Bank is holding its course, keeping interest rates unchanged in a widely anticipated move on Thursday. The bank signaled it isn't letting recent volatility in the U.S. dollar dictate its policy, stressing that its medium-term inflation outlook remains largely intact.

Policy on Pause Amid Stable Outlook

Since ending a year-long cycle of rate cuts in June, the ECB has maintained a steady policy stance. A combination of surprisingly resilient economic growth and easing price pressures has removed any immediate pressure on policymakers to provide more support.

In a press conference, ECB President Christine Lagarde described the current situation as "broadly balanced" regarding upside and downside risks to the economic outlook. She reaffirmed that monetary policy remains in a "good place."

While acknowledging ongoing uncertainties from global trade and geopolitics, the ECB’s updated assessment confirmed its view that inflation will stabilize at its 2% target over the medium term.

Dollar's Impact on Eurozone Inflation

A key focus was the recent swing in the U.S. dollar's value. A stronger euro can lower the cost of imports, particularly energy, which in turn can suppress inflation. However, Lagarde played down the currency's immediate impact on the bank's strategy.

She noted that the rate-setting Governing Council had discussed the matter but pointed out that the dollar's depreciation trend dates back to March 2025.

"In the last few weeks, in fact since the summer, it has fluctuated in a range," Lagarde said, explaining that policymakers concluded that foreign exchange movements since last year were already "incorporated in our baseline."

The recent unwinding of the dollar's dip has left the euro weaker on a trade-weighted basis than it was at the ECB's December meeting. This reinforces market expectations that interest rates will likely remain unchanged through 2026, with potential policy tightening to follow later in 2027.

Economic Resilience and Future Path

Despite the central bank's primary focus on inflation, which recently slipped to 1.7% on lower energy costs, longer-term expectations have been firming up. This is supported by solid economic activity data.

The eurozone economy has proven remarkably resilient, particularly in the face of international trade friction. Strong domestic consumption appears to be compensating for weaknesses in exports and industrial production. Economists believe that high domestic savings and a robust labor market will continue to fuel this growth. Further expansion could be supported by the German government's planned fiscal spending on defense and infrastructure.

Looking ahead, Lagarde reiterated the bank's official stance: future policy decisions will be data-dependent, with no pre-determined path for interest rates.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

EIA Storage Report Takes Center Stage

Natural gas futures are flat ahead of the release of today’s U.S. Energy Information Administration’s (EIA) weekly storage report at 15:30 GMT. After a gap lower opening on Monday on warm weather forecasts to their lowest level since January 20, prices have stabilized for two sessions on cold temperature warnings and expectations of tighter inventories. Traders will be watching today to see how the EIA numbers impact the current storage surplus.

At 10:03 GMT, March Natural Gas Futures are trading $3.457, down $0.008 or -0.23%.

Monday’s Warm Weather Gap Gives Way to Stability

Other than the Monday price dump, it’s been a relatively quiet week compared to the previous week’s volatility.

Arctic Blast Drove Prices to 3-Year High

On Wednesday, January 28 prices surged to a 3-year high on strong demand driven by a massive Arctic blast of cold weather. Not only did the frigid temperatures drove up demand, but it also caused freeze-ups in gas wells, leading to disruptions in Texas and other places.

Freeze-Ups Cut 15% of U.S. Production

According to reports, about 50 billion cubic feet (bcf) of natural gas came offline last week, or about 15% of total U.S. natural gas production.

Last Week’s Draw Beat Estimates but Surplus Remains

These events should have a dramatic impact on this week’s weekly storage report. On January 29, the weekly EIA storage report was potentially supportive for prices on paper, as natural gas inventories for the week-ended January 23 fell by 242 bcf. This was a larger draw than the 238 bcf estimate and the 5-year weekly draw of 208 bcf.

The EIA report also showed that natural gas inventories were up 9.8% y/y and were 5.3% above their 5-year seasonal average. This evidence signals ample natural gas supplies.

Today’s Report Could Show Massive 379 bcf Draw

Today’s report is expected to show a massive 379 bcf draw. Last year’s weekly change was 195 bcf. The 5-year Average Weekly Change is 190 bcf.

Technical Picture Shows Downtrend Intact

Daily March Natural Gas

echnically, according to the daily swing chart, the main trend is down. A trade through $3.155 will signal a resumption of the downtrend. Taking out $4.425 will change the main trend to up.

The moving average trend indicator is neutral. Holding above the 200-day moving average at $3.408 is supportive, but trading on the weak side of the 50-day moving average at $3.773 is bearish.

Key Support and Resistance Levels

Additional support is being delivered by a retracement zone at $3.502 to $3.284 and potential resistance is the retracement zone at $3.790 to $3.940. The 50-day moving average at $3.773 and the 50% level at $3.790 also forms a resistance cluster.

What to Watch After the EIA Release

Looking ahead to today’s trade, the EIA storage report will be the main catalyst. The cold weather forecast for the Northeast through February 8 is likely to be a minor catalyst.

Look for a bullish tone to develop if buyers can hold above the 200-day moving average at $3.408 while taking out the 50% level at $3.502. The key upside target is $3.773 – $3.790, followed by $3.940. The tone will flip to bearish on a sustained move under the 200-day, which leads to an eventual break down under the $3.155 swing bottom.

In my opinion, gains are likely to be limited by $3.773 to $3.940 as long as the EIA doesn’t report a draw over 450 bcf and the cold weather forecast doesn’t extend beyond February 8.

The question is, will the massive draw flip the surplus to the 5-year average into a deficit? Look for volatility and a possible two-sided trade after the EIA report is released.