Forecast for the week July 17 through July 21:
This week I expect gold flat. It is possible to refer US dollar fall to positive factors. Gold and dollar historically move in the opposite directions. Greenback is now trading at its 10-month lowest. June consumer prices release is to blame, traders were disappointed, which caused huge dollar sales because the probability of Fed raising interest rate till the end of this year is almost equals to zero. High risk appetite can be considered as a negative factor. S&P500 has renewed its historical high over positive statistics of banks' quarterly earning reports and GDP of China ensures commodities uptrend continuation, which will boost demand of energy companies's shares. Gold and shares also move in the opposite directions, so this factor is positive for gold. Trading signals: flat 1205-1245.
I believe it's time to open Buy positions for two reasons. Firstly, it's the middle of vacation season in USA, so US oil inventories are falling. During the last two trading weeks oil inventories have reduced by 13.86 million of barrels, and petrol inventories have fallen by 5.3 million barrels. These data turned out to be a nice surprise for investors, as few had expected such a substantial petroleum inventories decrease. Secondly, Friday US inflation statistics left investors disappointed with weak data release that caused large-scale sales of greenback. Oil and dollar move in opposite directions so bulls currently have a certain advantage. Trading signals: Buy 48,90/48,42 and take profit 50,15.
Earnings season in US has started on a positive note. The largest bank by total assets JPMorgan Chase reported increase in net profit by 17,4% in annual terms, due to the increase of bank's interest income. Two Fed's rate hikes in the first half of the year strongly affected the bank's report. Along with that Broad Market Index has renewed its historical high. This week is about to see many earning reports: IBM, Bank of America, Morgan Stanley, Microsoft, Visa, Colgate-Palmolive release their reports Tuesday through Friday. The majority of reports are expected to be positive due to traditional increase in economic growth in USA. ISM Manufacturing and Non-Manufacturing indexes grew significantly in May and June, what is a confirmation of the hypothesis. Another positive factor for the market is Treasury bonds yield fall. Shares and bonds traditionally compete for investments, so 10-year bonds yield fall will be positively received by stock market participants. Trading signals: Buy 2454/2443 and take profit 2480.