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Gold and Silver: Market Outlook. Jan 27th 2012

27 January 04:43 AM

The debt writedown talks in Athens are said to see some progress. Today the talks will be resumed in advance of the EU summit scheduled for Monday. Yesterday the ECB helped Italy to lower its bond yield below 6%. However, Portugal ’s 5-and 10-year bond yields reached the highest levels on the fears that the country may need further financial support from the EU.

The Pentagon published its plans to reduce the budget spending by $487B within 10 years starting from 2013.

The US Mint reports record sales of gold coins. According to Barclays Capital, the inflow of capital in gold ETP will increase the gold reserves in this segment by 250 tons in 2012. Since the beginning of 2012 gold has appreciated by 9.2%. The market is waiting for Asian investors and traders to come back next week after the holidays.

The President of Iran has recently made a statement that Iran is determined to resume the nuclear talks with Western powers. In the meantime, Iranian banks keep raising their deposit interest rates (up to 21%). The current rate of inflation is 20.6%.

Investors expect the Bank of Japan to perform another currency intervention in order to curb the strengthening of the Japanese Yen. Japan’s CPI has declined for the 3rd month in a row.

According to the Department of Commodity Trading of Masterforex-V Academy, today gold may retrace down to 1710 and 1700. The closest levels of resistance are 1726-1727. A break and consolidation above 1727 may resume the rally, with targets around 1736, 1750.

Silver may well try to make another monthly high. In order to do that, an H1 bar will have to consolidate above 33.75.  If such an attempt fails, it will increase the probability of falling down to 33.50, and maybe further down to 33.1, 33.0.
 

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