Citigroup strategists said investors were betting heavily on U.S. stock futures at the end of June, making positions look "excessively large" and increasing the risk of a pullback.
Figure 1 U.S. stock bull profits (Source: Bloomberg)
A July 3 report by the bank showed that the S&P 500 index added about $7.1 billion in longs last week, and investors already had "larger profits" in hand. Chris Montagu, a strategist at Citi, said that while overall positions are below recent record highs, "given how far the market has come, investors may still liquidate positions in the coming week to protect profits."
U.S. stocks rebounded sharply in 2023, with the tech-heavy Nasdaq 100 posting its biggest gain ever in the first half of the year on high sentiment in the artificial intelligence sector and fears that the Federal Reserve would soften its policy outlook. But market strategists warned that the boom could fade in the second half of the year amid fears of a recession and a gloomy outlook for corporate earnings.
So, in addition to the strong performance of US stocks, what other factors have affected the market of gold and crude oil? Let's take a look together!
The dollar strengthened
The dollar index moved in a narrow range near the 103 mark, closing up 0.136% at 103.12.
Figure 2: Chart of the US Dollar Index (Source: https://www.marketwatch.com/investing/index/dxy)
The stock market turned lower
On Tuesday, the market traded relatively lightly due to the US Independence Day holiday. Major European stock indexes closed down collectively, with Germany's DAX30 closing down 0.26%, Britain's FTSE 100 closing down 0.1% and the Euro Stoxx 50 closing down 0.16%.
Figure 3: U.S. stock chart (Source: WSJ)
Saudi production cuts have prompted top buyers to look elsewhere to buy crude
Asian refiners are preparing to buy crude elsewhere in case Saudi Arabia and Russia's latest promised production cuts cause them to lose supplies. Yesterday, Saudi Arabia and Russia announced they would extend production cuts until August, with traders saying producers outside OPEC have ample crude supplies, especially in the United States, West Africa and the North Sea. If the region does get hit by the recent cuts, they will turn to these producers. Any influx of oil from the Atlantic basin into Asia is a mixed blessing for Middle Eastern producers. On the one hand, it may help deplete supplies to the United States and Europe. On the other hand, it could mean that they will lose share of the fastest-growing demand market.
Summary and forecasting
From the above analysis, we can draw the following conclusions:
- Gold prices have fallen recently, mainly influenced by the hawkish views of Federal Reserve Chairman Jerome Powell.
- Factors such as falling stock markets and the prospect of rising interest rates have also had a certain impact on prices.
- In the coming period, investors will continue to pay attention to the words and actions of Fed Chairman Jerome Powell, as well as the Fed's policy movements and data performance.
- Investors should pay attention to risk management and opportunity seizing.
From a technical point of view, yesterday coincided with the US holiday, the overall gold price long and short trading is relatively cold, in terms of internal operations, short-term still avoid chasing higher, if the gold price can not continue to rise this week, the overall daily and weekly level pattern will be different, will not be conducive to the subsequent market upward, the lower support focus on the five-day line of 1914 US dollars / ounce. Crude oil prices are in a volatile trend, and the recent operation pays attention to the dip layout is dominated by single opportunities, and the US government will continue to replenish the war reserve oil (SPR) at a price of $67-73 per barrel. Resistance is around $72.5/b.
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