Gold is losing its weight

July 20, 2015


This week we have at least three reasons to expect a descending tendency to go on. 1. US currency is demonstrating a confident growth of quotations. Speaking in the Congress, US Fed Reserve's Chair J. Yellen confirmed intentions of the monetary authorities to raise interest rates this year. In response, bond market reduced spread of yield of short- and long-terms US treasuries. Growth of the US dollar will exert a pressure on yellow metal. 2. Affect of the Greek factor has been almost exhausted – so, investors are not looking for a safer assets. 3. Descending tendency on the oil market brings inflation expectations down and makes choice of gold less critical to those who is looking to protect oneself against inflation. Yield of 10 years' US treasuries decreased by 4 p and this is the figure showing inflation expectations in the USA.This week we should open Sell positions on growth of quotations to the area 1139/1148 and hold the profit on the point 1125.


In the first half of the week, demand in the US dollar will put metals of the platinum group under pressure. Since cost of commodity assets is nominated in the US dollars, growth of the US currency brings metals of this group down. But then we can expect that traders will lock in profit in short trades and a certain technical correction will follow. Beige Book of the FRS indicates a notable growth of consumer expenses in the USA which boosts demand in cars and this, platinum and palladium. Secondly, China encourages investors with positive GDP release for the second quarter and manufacturing reports for June. Usually, strong Chinese macroeconomic figures is a positive factor for investors. Thirdly, platinum has already entered psychologically critical level 1000, whereas palladium is approaching to 600$/ounce. Usually, traders lock in profit on these levels . This week we expect flat both for XPT/USD 970-1030 and XPD/USD 600 - 630.


In the first half of the week we may expect continuation of an ascending tendency and growth of quotations to the area of historical High 2137.4 in contrast to growth of risky assets after a positive resolution of Greek debt. But then traders can lock in profits on long positions: 1) expecting release on house sales on primary and after markets. Growth of interest rates on mortgage of the last 2 months is reducing number of approved mortgage credite applications and can be negative for real estate. It was also the point of speech of the Fed Reserve's Chair J. Yellen in the Congress. 2) Bond market is showing reduction of of yield of short- and long-terms US treasuries which indicates toughening of the FRS monetary policy and is negative to stock market.This week we expect flat within 2101 -2139.

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