The forecast for the week September 28 - October 2:
Last week, the precious metal took advantage of weakness of the stock markets against scandal around Volkswagen corporation. Investors sold off shares worldwide and went into safe assets, especially gold. Gold feels very comfortable in events of force majeure and in such time. But now the "yellow metal" is very expensive and, in this regard, it must be sold. The upward trend of the US currency is gaining momentum, that will put a pressure on the gold price - the dollar basket index USDX is now traded at the level of the High of the last month. The dollar strengthened primarily due to strong macroeconomic statistics from the USA, and only after that - due to weakness of its competitors. Because there are stable fundamental factors, growth of the US dollar quotations will continue this week. Inflationary expectations have not changed and continue to remain low. Despite the fact that last week the precious metal set a fresh peak of the current month - yield of 10-year government bonds of G-7 states in the first month of autumn demonstrate negative dynamics. Growth of gasoline stocks in the United States does not allow Brent and WTI quotes to consolidate at 50 and 47 dollars per barrel. Growth of "black gold" could strengthen inflationary expectations, however there is no such growth - investors actively build up short positions once quotes approach to these levels. This week we open Sell positions on growth of quotations to 1151/1165 and take profit around 1103.
XPT/USD and XPD/USD:
This week we expected dominance of bears for two reasons. Firstly, commodities are waiting for the downward trend due to strengthening of the US dollar. Economic growth in the United States is gaining momentum and therefore, investors will build long positions in the US currency against its major competitors. As the cost of raw material is denominated in US dollars - growth of the US dollar quotations will help to reduce them. The case with Volkswagen also carries risks for the platinum group metals, as these metals are mainly used in production of automotive catalysts. The company may be subject to substantial fines such as $18 billion, which will contribute to a strong structural change within the corporation and lead to drop of car industry figures. You can not ignore one negative factor: growth in production of platinum in South Africa against slowdown of the manufacture sector in China. China's manufacture PMI for 7 months in run has been below 50%. Other industrial metals such as copper, aluminum, zinc responded to this event by a strong decline. Now it is the turn of PGM. This week we open Sell positions with XPT/USD on growth of quotations to 965/985 and take profit at 930 and open Sell positions with XPD/USD on growth of quotations to 670/685 and take profit at 615.
This week will eventful. On Monday, we should pay attention to the speech of the New York branch Federal Reserve Bank's President William Dudley. Positive economic data of the US personal consumption figures indicates that FOMC can tighten its monetary policy. William Dudley is a supporter of this approach: in the environment of economic growth, the interest rate must be raised. According to the final data published on Friday, September 25, the US GDP for the first half rose by 3.25% against the same period a year earlier. It is worth noting that in 2014, GDP grew by 2.09%. In this regard, William Dudley will share the mission of Presidents of Kansas City and Atlanta's Federal Reserve Bank, who spoke for a speedy raise of the interest rate the past week. This factor, in turn, is negative for stock exchange and stock rates can drop. In the enf of the week, the labor market report will be published for September, where you can also expect a moderately positive data, which will increase the yield of two years treasury bonds. That growth will put a pressure on the stock market. Dynamics of market sectors confirms the negative trend: last week there was an outflow of capital from high-tech and small-cap companies and the inflow of capital into the safe sector of utility market. Investors alter structure of their portfolios based on increase of the risk. Bearish sentiment at the Chinese stock market against slowdown of economic growth also carry risks for the US stock market. This week we open Sell positions with S&P500on growth of quotations to 1946/1970 and take profit at 1909.
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