Gold will show the white flag
Forecast for the week August 31 - September 4:
During the week we expect downward trend. Firstly, the world stock markets stopped panic sales, which makes investment in "safe assets" (gold) less attractive. Investors begin to re-evaluate risks of slowing down China's economy on the back of strong data on the US GDP for the second quarter. The United States and China have close trade ties and growth in the United States has a positive impact on the Chinese economy. Secondly, strong economic data in the US on consumer confidence, sales of real estate and cars points at the strong labor market data that will strengthen expectations about raising of the interest rate by the Fed's meeting on 17 September. The last week, yield of two-years' US treasury bonds recorded growth in 11.5 basis points, which is the best proof of that. This factor will support the US currency and cause the sale of gold. Against this background, it is necessary to open Sell positions on growth of quotations to 1139/1149 and take profit around 1105.
XPT/USD and XPD/USD:
During the week we expect predominance of bearish mood. The main factor that will put pressure on prices of the platinum group metals will be strengthening of the US currency. This week labor market report for August will be published, which may enhance investors' expectations about toughening of the monetary policy. The United States shows a steady economic growth and positive labor market data can "untie the hands" of the FOMC. Yield on two-years' US treasury bonds, which reflects investors' expectations about raising of the interest rate, now stands at 0.72%, which is by 4 basis points below the annual maximum. Breakthrough of the level 0.76% will cause a strong demand for the US currency, which would put pressure on the metal, because price of commodities is denominated in dollars. Against this background, in the middle of the week we open Sell position with XPT/USD on growth of quotations to 1032/1052 and take profits at 995 and Sell positions with XPD/USD on growth of quotations to 599/615 and take profit around 575.
In the first half of the week we expect dominance of bulls. The world's leading stock markets had recovered from the "Black Monday" (panic sales on August 24), which will support demand for "risky assets". Flow of the capital to emerging markets is the best proof of that. If investors are willing to take risks, they primarily come to Emerging Markets. ETF, which invest in this group of markets, noted the high inflow of the capital after August 24. The last week, yield of 30 -years' US treasury bonds decreased by 4 basis points, which also confirms flow of capital from the "safe" assets to "risky" assets. Against this background, we can expect growth to 2000/2020, after which we expect a reversal. On Friday, September 4, the report on labor market will be published and growth of Non-Farm figure above 200 thousand will strengthen investors' expectations about toughening of the monetary policy by the Fed Reserve. In this context, investors will close long positions before the weekend. Against this background, during the week we expect the flat within the range of 1970 -2020.
Alexander GoryachevAnalyst of «FreshForex» company
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