 Hello and welcome to CMC Markets on Tuesday the 21st of July and the weekly market update. It's been a couple of weeks since I last did one of these and since then, equity markets have pretty much gone one way, particularly in Europe. We've rebounded off some significant low points, particularly on the DAX, the Euro stocks 50, the Cat Caron and for the time being the problems within Greece do appear to be slightly marginalised but make no mistake, they're by no means buried and they won't be buried for quite some time to come. I think we're going to continue to find that Greece is going to dominate the headlines for quite some time. That being said, we also saw last week the Humphrey Hawkins testimony from Janet Yellen and she appeared to indicate that she was prepared to raise rates before the end of this year. Now equity markets in general in the US have shrugged that coming off. Certainly there has been some significant divergence in the performance of US equity markets and I'm going to show you that in a chart that I've outlined for you, an overlay chart but also the effect that it's had to a lesser extent on commodity prices. Now we've heard an awful lot of narrative that perceptions about a US rate rise have pressured gold prices in particular to a five-year low but also oil prices have started to drift off as well. Now let's put to bed one particular theory as to why gold has come off quite aggressively and that's the Fed is about to raise rates. For me that is just complete nonsense. That is not the reason why gold prices have come off and I'm going to explain a little bit as to why I think that in the course of this video. So we're going to be looking at gold, going to be looking at crude oil and we're going to be looking at the divergence on US equity markets which could well act as a warning that the record highs that we're seeing in the NASDAQ might not be the catalyst for further gains in the S&P the Dow or the Russell 2000. So let's make a start with our US markets overlay chart and this is a daily chart and it's over the last 12 months or so and we can see straight away the purple line the NASDAQ 100 has made a significant advances to record highs but actually if you look at the red line which is the Russell 2000 we've actually struggled to get anywhere near the record highs that we saw in the middle of June and the same really I think goes for the S&P and the DAX. The S&P is just below its record highs and as I'm talking right now could actually take those previous record highs out but the fact that the rest of the US markets are really struggling to track the NASDAQ higher. So just to me the US markets I think remain significantly overvalued certainly in the context of the stronger dollar story that we're seeing starting to play out over the course of the last few days so I think if we're looking for further gains in the S&P the Dow and the Russell I would want to see record highs in all four of those indices to give me a little bit more confidence that we're not actually undergoing a bit of a fake out here and could be at risk of a significant correction. Let's move on to gold and we saw a very aggressive move lower in gold late on Sunday night early Monday morning as a result of a large sell order which went through the Shanghai exchanges and that pushed us below the November lows that we saw 1130 at the end of last year and has pushed us down towards a very, very key Fibonacci retracement level and that can be highlighted on the chart that I'm very, very long-term monthly chart that I'm putting up in front of you right now. It's the 50% retracement level of the move from Brown's bottom and that's the low before anyone starts sniggering in the back there. That's the low where Gordon Brown the UK Chancellor of the Exchequer sold gold at the very low of the market $250 an ounce to the highs that we saw in 2011. Now we've broken down below the 1130 level and we've rebounded round about off $1,080 an ounce that's the 50% retracement level. Now to stabilise gold prices I think we really need to get back above $1,135. If we don't then the likelihood is we could well see further losses through the 1080 level towards $1,000 an ounce. So why are gold prices tracking lower? Well I don't think there's any single reason. If you actually look at the broader commodity space the whole commodity sector not only precious metals but also base metals has been under pressure for quite some months. If you look at oil prices, if you look at iron ore prices, if you look at copper prices they've all been very, very weak and it's largely I think been as a result of a lack of demand. Too much supply and too little demand. You look at what's happening in China the slow down there. China has historically been one of the biggest consumers of not only base metals but precious metals and I think demand there is nowhere near at the levels that we've come to expect. There's also a benign inflationary outlook and that reduces the attractiveness of gold as a store of value. Usually people look at gold, view it as an inflation hedge, there's no inflation. We do have a strong dollar that is undoubtedly a factor but is also no inflation. There was also that report out at the end of last week about Chinese gold reserves. All of that has served to weigh on the gold price over the course of I would suggest the last few months. So I don't think there's one single catalyst apart from the fact that we broke below the lows that we saw in 2014. It triggered some stops. Now we're below that level and we're looking to push lower and that can be seen from this daily chart that I've put in front of you right now. Since we posted the highs this year around about 1360 we've been in a slow steady decline and that looks likely to set to continue over the course of the next few trading sessions unless we break above that horizontal line that I've drawn in at 1132. So reinforce the weaker narrative of weaker commodity prices. Brent prices have now started to break lower as have WTI. WTI prices are now below $50 a barrel but also Brent prices are now tracking back down towards $54 a barrel after peaking just below $70 a barrel in early May. Now again same number of reasons can be articulated as to why oil prices are lower. Again too much supply, too little demand. The Iranian oil deal is likely to bring in much more supply and unless demand picks up then certainly oil prices could well track lower. That is going to be deflationary and against that backdrop I think it's going to make it very very difficult for the Federal Reserve to look at hiking interest rates in September despite what many people in the market are predicting could well happen in a few weeks time. So that's it for this week all that's left for me to say is tune in to Analyst Debates on Thursday with my colleague Jasper Lawler and Colin Sizinski, our man in Toronto. I unfortunately won't be able to attend that particular webinar but Jasper is a more than adequate substitute. They will be discussing the key market events, the key market drivers and no doubt gold and crude oil are likely to come up in the conversation. So until then or until next week this is Michael Houston talking to you from CMC Markets.