Last week XAU/USD finished in “green area”. The oil price has updated new High of a year, which caused a rise in yields of US Treasury bonds and supported the demand for the precious metal. Finally, the &ldquoyellow metal” trading week has finished with 0,87% growth.
During the week the platinum group metals also were in demand amid falling of US dollar at the Forex currency market, as well as the growth of yields of US Treasury bonds. Week results show that platinum (XPT/USD) increased at 0.99%, and palladium (XPD/USD) - at 3.26%.
The US stock market was very volatility last week, but the bulls were able to complete trading in positive territory. The positive business activity in the service sector of the ISM in conjunction with a decrease in the unemployment rate to the level of 5.4% had little support for the US stock market. Against this background, the trading week on the stock index S & amp; P500 strong> has ended with moderate growth of 0.36%.
Weekly forecast 11– 15 May:
Flat, that we have seen the last 4 trading weeks, will continue on the new five days. The growth of oil quotations increased the short-term inflation expectations. The yield on US 10-year Treasury bonds increased to 2.14% mark last week. However, the precious metal was not even able to settle over the psychological level of $ 1200 / oz, indicating that the low interest by investors to this asset. Financial institutions still do not believe in the growth of inflation in the medium term and, on this background, they are not in a hurry to open long positions on the “yellow metal”. The conclusion: if gold does not buy that it will sell. However, the US dollar correction at Forex market prevents selling of noble metal. Against this background, in a week the sideways trend is expected to appear within the range of 1166 -1202.
XPT/USD and XPD/USD:
A sideways trend is expected in the charts of platinum group metals. On the one hand, the reduction in demand for automobiles in the United States, combined with a decrease in average earnings is a negative factor for both metals. On the other hand, the weakening of the US currency in the Forex market will keep demand for platinum and palladium, as their costs are denominated in dollars. Against this background, platinum (XPT/USD) has 1120 – 1160 range, and palladium (XPD/USD) has 770 -809 range.
In the past two months, the US stock market is consolidating within the 2038-2126 range, which indicates the set of institutional investor positions. Because the market has a long-term upward trend now, and the positions form in the direction of the main trend. Growth in April ISM index for the services sector, combined with a reduction in unemployment to 5.4% level, point to a recovery of the US economy after the recession in the first quarter. However, the indicator of average earnings shows a slowdown that would curb personal consumption. This is a negative factor for the economy, but at the current time could help the stock market. The decline in personal consumption will curb inflation. With low inflation expectations the US Federal Reserve would not rush to the tightening of monetary policy, which in turn is a positive factor for the stock market. The dynamics of the debt market clearly confirms: in the last few months we have seen the expansion of the yield differential of 2 and 10-year Treasury bonds, and spread continued to widen last week. Against this background, during the week you should open a Buy position on the reduction to 2095/2070 area and take profits around 2126. strong>