This week we have to expect that a descending trend would continue. Firstly, investors expect that FRS will toughen monetary policy which will boost demand in USD and, in its turn, to increase pressure on precious metal. The last week, yield differential of short- and term US treasuries decreased by 6.7 points which proves the above-mentioned statement the best. Secondly, there is an information that Indian government prompts purchase of other financial instruments but for gold. Demand in metal from India is starting to gradually decline which also works against XAU/USD. Thirdly, based on results of Friday's OPEC summit in Vienna, no changes should be expected from its policy. The first quarter report says about increase of oil production. Besides, current quotations are higher than January Lows for 41%. This week you may open Sell positions on growth of quotations to the area of 1197/1208 and take profit on the level of 1171.
XPT/USD and XPD/USD:
As for the metals of platinum group, bears are expected to dominate this week and platinum (XPT/USD) will be the weakest. Consolidation of US currency reached due to moderately positive data from the USA will put a pressure on both metals, because its cost is nominated in US dollars. Investors will actively augment long positions on US dollar expecting the news about toughening of monetary policy from Fed Reserve. It is worth mentioning that positive data from the USA will be a sign of a possible increase of car sales which can boost palladium (70% of demand in this metal is ensured by car industry). In this regard, palladium will decline at slower pace than platinum. This week you may open Sell positions on XPT/USD on growth of quotations to the area of 1121/1131 and take profit on the level of 1095 and Sell XPD/USD on growth of quotations to the area of 783/790 and take profit on the level of 771.
Curiously enough, but positive macroeconomic data from the USA will put a pressure on US stock market. In its last protocol on monetary policy, Fed Reserve points that slump of the economy in the first quarter is temporary and we ought to expect recovery of the economy in the second quarter. In this regard, we can expect positive macroeconomic release on ISM indexes for manufacturing and service as well as positive reports on labor for May. Strong reports will consolidate expectations of investors regarding increase of rates on federal funds which finally will press on corporate securities on NYSE exchange. This week you may open Sell positions on growth of quotations to the area of 2114/2125 and take profit on the level of2088.
Analyst of «FreshForex» company