Forecast for the week June 19 through June 23:
Two weeks in a row gold has closed trades declining. Many traders are wondering whether it is reversal of uptrend that started in December 2016 or correction before reaching 1330/1350 area. We believe, the second scenario is more likely to occur for two reasons. First of all, investors are gradually leaving risk assets and invest into safe assets, which will positively affect gold prices. American statistics shows no progress, so investors are not ready to ramp up long positions on American shares, which are close to their historical highs. Second of all, 10-year American Treasury Bonds yield is by 0.25% higher than inflation rate in USA, during such periods gold shows positive dynamics. Trading recommendation: Buy 1250/1239 and take profit 1274.
Oil trades in red zone for the last four trading weeks and we believe that this week oil rise may be expected. The first reason to expect uptrend is US dollar decline. Inflation in USA is slowing down and investors are downgrading their forecasts on Fed rate hikes. Now Chicago futures market estimates that there will be no rate hikes up till the end of the year. That is bad for greenback, and as you know oil and US dollar have inverse correlation. Second reason is unreasonable pessimism of the market participants. From the beginning of second quarter US oil inventories have fallen by 23.9 million barrels but market seems not to notice this tendency. Such divergences occur from time to time and don't last for a long time. Trading recommendation: Buy 47,15/46,08 and take profit 49,60.
It's hard for American stock market to move to the upside in view of weak macroeconomic statistics. Retail sales in May have fallen by 0.3%, and June Consumer Confidence Index by University of Michigan is at its lowest for the last six moths. American economy showed rapid growth in 2014 and 215 and now we are observing fall of business activity. That is not good for stock market that is reaching its historical high. On the other hand, Treasury Bonds yield drop positively affects shares. It looks like it's too late to buy already and too early to sell yet. Trading recommendation: flat 2400 -2440.