Republican’s plan, Fed, past and future volatility explosions

29 lip 2020

As soon as we had analyzed the current situation in the precious metals market from the standpoint of the general fundamental background yesterday, a record for recent months volatility explosion in gold and silver prices was detected.

Considering that there were no changes in the general fundamental background yesterday, we think yesterday movements were the result of technical moments, such as profit fixing and the involvement of that part of traders who catch reversal moments in price dynamics. Again, since the fundamental background is unchanged, we do not see any reason to revise our position yet. Thus, purchases of gold and silver only added to the relevance, and did not lose it.

The main event of yesterday, outside the context of price dynamics, was the discussion of the Republicans' plan with the Democrats, since without their support it will not be possible to implement it in practice. So far, the gap between parties does not even allow to approach a compromise, but, in our opinion, it is inevitable - the whole question is what form it will take and when it will be reached.

In this light, we continue to believe that the dollar has every chance of a correction this week.

Today, the Fed's Open Market Committee will announce its decision on the parameters of monetary policy in the United States. Analysts are not expecting any changes. The point is rather in the comments on the future actions and plans of the Central Bank.

Today the heads of the largest tech corporations in the United States will be interviewed at an antitrust hearing in Congress, which could potentially provoke a surge in volatility in the quotes of Amazon, Google, Apple and Facebook. By the way, they will all report on the results of the second quarter as early as Thursday. So there are very volatile days ahead of us.