Taking cue from oil, gold will get down

13 July, 2015

XAU/USD:

This week we are selling precious metal on growth of quotations. Firstly, investors will open short positions on the back of a positive decision to extend assistance to Greece. Secondly, continuous negotiations in Vienna on the nuclear problem in Iran indicate that parties are ready to reach a compromise. On top of everything else, Iran oil increase supply on the market of black gold and it will lead to drop of Brent and WTI quotations. In its turn, it will weaken inflation expectations. Gold is traditionally used as an inflation hedging tool and financial institutions have no demand in this metal. We should open Sell positions on growth of quotations to the area 1170/1180 and hold the profit on the point 1145.

XPT/USD and XPD/USD:

This week, metals of platinum group can demonstrate a differently directed tendency. Platinum will stay under pressure on the back of decrease of inflation expectations caused by bearish mood on the oil market. Now investors are focused on two main factors: lifting sanctions from Iran as well as growth of supply from OPEC and Russia. As for the first factor, parties are close to consensus. Of course, Iran won't be able to recover a high production level but this factor is anyway negative because the world market shows a strong disbalance between demand and supply. As for the second factor, International Energy Agency declared about a gradual growth of production in some countries of OPEC and Russia which will work as a bearish factor for “black gold” in the back of economic slowdown in China. Since oil is a strong inflation component, decline of quotations will cut inflation pressure. On the contrary, palladium can show a moderate growth. Since this is a rare earth metal, current levels are quite attractive for long positions. Estimations of the most part of investment banks point out 663$ per ounce in their forecasts. Current quotations are 1.1% less than expected. Moreover, on the last day of the past week palladium showed the best growth which indicates a strong interest of investors. This week we should open Sell positions with XPT/USD on growth of quotations to the area 1050/1065 and hold the profit on the point 1015 and open Buy positions with XPD/USD on decline of quotations to the area 643/627 and hold the profit on the point 690.

S&P500:

Flat is expected for this week. From the one hand, a positive solution of Greek question will support demand in risky assets in the first half of the week and in this case we can expect growth of quotations to the area 2088/2100. VIX index confirms this dynamics: having reached High on the level of 20.05 on July 9, trading week was closed on 16.83, which signifies positive determination of investors. On Tuesday, release on June retail is published which can also encourage players. ISM release tells about growth of employment and orders in retail sector. In May, average salary in the USA grew by 0.3% having shaped a positive vector in retails for the last month of the second quarter. Though this is the end of positive tendencies for the US stock market. Instability on stock market of China will make bulls stay away. New sales are coming on stock market of China. This week we shall expect flat within the range 2060 -2100.


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