NikkeiThe gold-to-silver ratio is adjusted down from the historical maximum. Will the decline of XAU/XAG quotations continue?
Such dynamics is observed when gold becomes cheaper, and silver becomes more expensive. The cost of gold fell against the strengthening of the dollar after the publication of good macroeconomic indicators in the United States. Growth in retail sales in June exceeded forecasts and amounted to + 0.4% compared with June. Year to year, retail sales grew by 3.4%. Positive US statistics may limit the potential rate cut by the Fed. Silver quotations, on the contrary, soared yesterday a 4-month high. Some very important reasons for this growth have not been voiced. However, it can be noted that for 10 years the world balance of silver has a stable annual deficit, covered by global reserves. So, in 2018, the global deficit was 80 million ounces. In addition, investors have noted an increase in demand for investment coins and silver bars against the background of sharply rising gold.
On the daily timeframe XAU/XAG: D1 adjusted from the historical maximum. Various technical analysis indicators formed bearish signal. Decrease in quotations is possible if high demand for silver remains.
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The Parabolic indicator indicates signal to decrease.
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The Bolinger® bands expanded, indicating a volatility decrease. The top line slopes down.
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The RSI indicator is below 50. It has formed a divergence to decrease.
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The MACD indicator gives bearish signal.
The bearish momentum may develop if XAU/XAG drops below its last low: 89.9. This level can be used as an entry point. The initial stop lose may be placed above the last three upper fractals, the historical maximum and the Parabolic signal: 93.4. After opening the pending order, stop shall be moved following the the Bollinger and Parabolic signals to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop loss moving it in the direction of the trade. If the price meets the stop level (93,4) without reaching the order (89,9), we recommend to cancel the order: the market sustains internal changes that were not taken into account.
Technical Analysis Summary
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Position |
Sell |
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Sell stop |
Below 89,9 |
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Stop loss |
Above 93,4 |
Market Overview
- Equities pull back after Trump says ‘a long way to go’ on trade talks
- Dollar advances on strong retail sales data
US stock market inched lower on Tuesday after president Trump said an agreement on bilateral trade with China had ‘a long way to go’ despite strong economic data. The S&P 500 slid 0.3% to 3004.0. Dow Jones Industrial Average slipped 0.1% to 27335.6. The Nasdaq lost 0.4% to 8222.8. The dollar strengthening accelerated as retail sales rose above expected 0.4% over month in June instead of forecast 0.1%: the live dollar index data show the US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, jumped 0.5% to 97.37 and is higher currently. Stock index futures point to mixed market openings today
CAC 40 Leads European Indexes Gains
European stocks continued advancing on Tuesday supported by positive external trade data showing euro-zone ran May trade surplus of 23 billion euros. The GBP/USD and EUR/USD slump accelerated with both pairs lower currently. The Stoxx Europe 600 ended 0.3% higher led by construction and materials shares. The German DAX 30 added 0.4% to 12430.97 with gains limited by ZEW report economic sentiment deteriorated in Germany in July. France’s CAC 40 rose 0.7%. UK’s FTSE 100 advanced 0.6% to 7577.20.
Australia’s All Ordinaries Index Gains While Other Asian Indexes Fall
Asian stock indices continue retreating today after president Trump added he could impose tariffs on another $325 billion of imports from China after telling US and China ‘had long way to go’ before a deal Tuesday. Nikkei fell 0.3% to 21469.18 as yen inched higher against the dollar. Chinese stocks are falling: the Shanghai Composite Index is down 0.2% and Hong Kong’s Hang Seng index is 0.1% lower. Australia’s All Ordinaries Index however turned 0.5% higher with Australian dollar little changed against the greenback.
Brent Recovers
Brent futures prices are rebounding today. The American Petroleum Institute late Tuesday report indicated US crude inventories fell by 1.4 million barrels last week. Prices plunged yesterday after US Secretary of State Mike Pompeo said Iran is ready to enter negotiations over its missile program: September Brent lost 2% to $64.35 a barrel on Tuesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.