Safe haven gold has been falling out of favour since the start of this week. Investors have apparently been piling into equities, especially in the US where the S&P 500 climbed to a new all-time high on Monday and the index future points to a new record high open this afternoon.
Last week saw crude oil prices fall sharply on the back of a rebounding U.S. dollar, plus news of a smaller-than-expected decrease in U.S. oil inventories and a rise in drilling activity there. Prices have extended their declines marginally as the new week begins. Net long positions on WTI have been trimmed further by a good 145,365 contracts in the week to July 5, according to data from CFTC and are now at their lowest level since early March.
Since the outcome of the Brexit vote two weeks ago today, the dollar has risen sharply against both the euro and more noticeably the pound; government bonds have repeatedly rallied to new highs -- that’s to say their yields have fallen to record low levels, while the equity markets have been all over the place.
The daily chart of the U.S. dollar/Swiss franc (USD/CHF) currency pair (see chart below) continues to show constructive technical signals as far as the bullish case is concerned. Obviously the biggest risk to any technical outlook is sudden changes in sentiment because of some fundamental stimuli, such as the ongoing Brexit risks and Friday’s US jobs report among others.