Sell oil and gold after correction | 30 Desember 2016

The forecast for week 26-30 of December:

XAU/USD:

Despite significant gold sales in the past two months, we do not see considerable upward correction. For the last six days gold is in the narrow flat of 1125.75 -1142.31, and considering the strong US Dollar upward trend we might expect quotes decline to 1100/1120. Gold and the dollar historically move in opposite directions. The United States continues to please investors with positive macroeconomic statistics. Despite the November decline in mortgage lending, housing sales on the primary and secondary markets have grown, despite the pessimistic forecasts of Wall Street investment banks economists. The housing market is a strong economy's health indicator and, in this regard, the financial markets begin to emerge a strong opinion that the FOMC in 2017 can fulfill its promise to raise interest rates three times. Of course, this is only a rumor and the FOMC may again increase interest rates only once, but the market always full of rumors, and now these rumors are on the side of dollar bulls. Trading recommendation: Sell 1143/1155 and take profit 1120.

Brent:

During this week, we might expect a moderate decline in quotes for two reasons. Firstly, the US dollar traded steadily at the 13-year highest and investors are in no hurry to take profits on long positions. Last week USX dollar basket index showed correction of only 1%, later we again saw demand. Since hydrocarbons are traded for the US currency, the dollar growth of quotations leads to lower oil prices. Now both tools are at significant highs, and one of them is bound to fall. Which one will it be: dollar or oil? I'm leaning toward the latter, because of the US strong macro-economic statistics. Moreover, OPEC's decision to cut oil output starting from January 1, 2017 no longer influences prices and there are no other new positive factors are. Secondly, Baker Hughes once again reported about the growth of drilling rigs number in the US by 13 units, in general, there are 523 units. This trend has continued for eight weeks in a row. Number of drilling rigs is now at the year's highest. Considering all these, we might expect an increase in oil production and rising oil inventories, which will also put pressure on the quotes. Trading recommendation: Sell 56,00/58,00 and take profit 54,10.

S&P500:

During this week, I expect side trend development. Many institutional investors are now on the Christmas holidays, so the market will be quiet. Active trading will only begin from January 2. Next week will be full of important macroeconomic statistics. Given the current positive dynamics of key economic indicators, we can see the strong data on business activity from the ISM and employment growth, that will allow S&P500 index to set a new historic high. So, if quotes will decline to the lower flat border 2250-2280, one need to open Buy position. Trading recommendation: Buy 2250/2230 and take profit 2281.