Forecast 14 - 18 of December:
This week we expect continuation of the long-term downward trend for two reasons. Firstly, FOMC meeting on December 16 can decide to tighten the monetary policy, which will contribute to a growing demand in the US dollar in the foreign exchange market. Since the value of the precious metal is denominated in US dollars, strengthening of the US currency reduces value of gold. Secondly, sell-off in the oil market will help to reduce expectations on inflation in the G-7 countries, which causes investors to get rid of the the yellow metal. The last week, OPEC had reported November's increase in production by 0.23 million barrels per day as compared to the previous month. Now the level of production of the oil cartel is 31.69 mln. barrels/day, whereas demand is 29.4 mln. barrels per day. Thus, an imbalance of supply and demand is still increasing, which puts a pressure on the oil quotations in its turn will have a negative impact on gold. Against this background, we should open Sell position with XAU/USD on growth of quotations to 1080/1091 and take profit around 1042.
XPT/USD and XPD/USD:
This week, the platinum group metals will be under pressure. According to the results of the last week, CRB Commodity Index lost 3.2%, indicating lack of optimism among investors. Even moderately positive data on China's trade surplus could not support the commodity markets. In the first eleven months of this year, net exports has been increased by 543.24 billion US dollars, which is by 64.74% more than was recorded for the same period in 2014. This report indicates that talking about a significant decline in the economy of China is too early. Apparently, investors needed more information, but none of the economies of G-20 provides enough information. In contrast, China, Australia, New Zealand, the Eurozone suggest the need of further stimulation of the economy. You can not ignore the factor of strengthening of the US dollar caused by expected raise of the interest rate by the Fed. If FED raises the rate by 0.25%, it is possible to expect strengthening of the US dollar, which will cause an outflow of capital from the market of commodities and thus will contribute to decrease in quotations of industrial metals So this week we should open Sell position with XPT/USD on growth of quotations of 852/872 and take profit around 820 and open Sell position with XPD/USD on growth of quotations to 553/563 and take profit around 526.
Investors continue to close positions on the risky assets that is dragging down the US stock market. Reasons remain to be the same: the coming meeting of FED as well as sales on the oil market. The last week, oil and gas sectors largely contributed to the sell-off in the stock market. The energy sector lost 3.60%, with an overall decline in the market by 3.79%. Leaders of the last week included a "protective" sector of non-cyclical goods, which added 1.37%. It is usually observed during periods of outflow of the capital from the carry trade. When investors have a lower risk appetite, the market attracts capital into the safer sectors. Many players are concerned with the question: Will Christmas rally be this year? In my opinion, no, because US corporations demonstrate recession of profit and the FOMC is still ready to tighten the monetary policy. Positive November's PPI for indicates that the CPI data on Tuesday may also please investors. For the first time from May 2014, CPI could demonstrate 2% annual growth, which in turn will reduce the number of pessimists in the Federal Reserve. Fed officials will insist on the fact that a further raise of the interest rate in 2016 will depend on the macroeconomic data, but the upward trend of inflation and employment will contribute to a more rosy comments about the outlook of economic growth in the United States. Thus, we can expect outflow of capital from the US stock market.Against this background, we should open Sell position with S&P500 on growth of quotations to 2033/2060 and take profit around 1977