Forecast for the week September 11th through September 15th:
This week there are mixed signals. On the one hand, drop in precious metal quotes may be expected due to USDX uptrend. On the other hand, funds outflow from risk assets will support gold rates, as gold along with Japanese Yen is one of the safest assets in the world. For this reason bulls are likely to start ramping up long positions during rollbacks, which will cause quotes growth. At the moment it's difficult to tell where the price will eventually go. Trading signals: flat 1319-1360.
Sell oil for two reasons, First of all, vacation season in USA is over, so gradual increase of oil inventories may be expected, which will put pressure on oil quotes. According to the latest US Energy Information Administration report, oil inventories increased by 4.58 million barrels over the last week and that is only the beginning. Until now inventories dropped nine weeks in a row, currently we are observing inverse dynamics. Second of all, I expect US dollar to strengthen, that will push oil quotes down. Investors are likely to take profit on EUR/USD when two-year high will be renewed, as on September 7th Mario Draghi made several references to the single currency’s strength. Trading signals: Sell 53,80/54,60 and take profit 52,22.
Within this week downtrend development may be expected. VIX is growing, which means that risk appetite is falling. Volatility Index is growing in European and Asian markets indicating global funds outflow from risk assets. Now simultaneous drop of S&P500 and American Treasury bonds that happened in 2014 may recur. Back then broad market index dropped by 11%. Will it happen again? This is highly likely. According to CFTC, speculators are reducing long positions, which indicates downtrend: over the last week net long positions decreased by 41.8 thousand contracts, that is two-and-a-half-month maximum. Trading signals: Sell 2468/2485 and take profit 2437.