Forecast for the week August 21 through August 25:
This week we are observing unclear situation. On the one hand, rates rise may be expected for two reasons. First of all, greenback is now trading at its one-year low, that supports gold. Second of all, according CFTC speculators are increasing buy positions: over the last week such positions volume has grown by 38.9 thousand contracts. On the other hand, easing of geopolitical tension between USA and North Korea gives a certain advantage to gold sellers. On the previous week gold experienced strong demand due to threat of nuclear war, however the end of the week gave relief as the parties of the conflict decided to take a pause. Trading signals: flat 1270-1300.
The season of high oil demand is not over yet and for this reason, going long anticipating uptrend continuation might be a good idea. Oil inventories in USA are at their year-and-a-half low, that encourages traders to go long. Besides, according to Baker Hughes rig number fell by 5 units to 763 units over the last week. Both conventional and slant rig number has decreased indicating that at the end of August we are likely to see oil inventories fall. Due to that we may expect rates rise till the end of the month. Trading signals: Buy 52,50/51,65 and take profit 53,80.
The last two weeks American stock market ended up in the red zone, due to geopolitical tension between USA and North Korea. For now the situation has been stabilized and the world's major index rates may be expected to grow again. There are two reasons why uptrend will continue. First of all, majority of the companies reported net profit rise in the second quarter, which is a positive factor as shares price moves along with profit. Friday release of Michigan Consumer Sentiment Index showed that positive dynamics in third quarter will remain, as in August the index hit its five-month high. Second of all, ten-year Treasury bonds yield hit its six-month low, which is also good for S&P500, as when yield is low it's profitable to buy shares and vice verse. Trading signals: Buy 2425/2410 and take profit 2465.