The debt crisis keeps poisoning the eurozone economy. Today Spain and France are going to hold bond auctions. Investors are expected to focus on the final bond yields. An increase in the yields may cause serious concerns, thus intensifying the pressure on the common European currency. In the meantime, Germany and France, the eurozone’s two major economies, still cannot agree on the role and authority of the ECB in the process of overcoming the debt crisis.
The talks between the two political parties of the US Congress still haven’t resulted in an agreement on budget deficit reduction. If on Monday the budget committee of the Congress fails to present an agreed plan, the $ 1.2B reduction plan will automatically take effect.
Another economic committee of the US Congress has published a 406-page report, according to which the Chinese Yuan will become a much more serious rival for the US Dollar within 5-10 years.
It means that the precious metals will remain attractive for investors as they need safe-haven assets when other markets are unstable.
In particular, the experts of GFMS, a consulting company, are sure that in 2012 the price potential of gold is $45 per ounce. According to them, investment demand will be able to absorb any extra supply. They expect the investment demand for silver to reach 278M ounces and to keep growing in 2012. The industrial demand for silver is expected to grow by 4% in 2011. According to the analytic team of Morgan Stanley, China will eventually become the world’s largest consumer of gold within the next 2 years, thus outpacing India, which is currently number 1.
Forecast. According to the Department of Commodity Trading, , gold is currently flattish and deciding on the direction of the future trend. The price well may test the 1768-1770 area. A rally is possible only if the price consolidates above 1777. A failed test followed by a break below 1760 will result in the price falling down to 1746 and may be down to 1720. Silver will probably be testing the 34-34.25 area. Once the price consolidates above the area, it will get a chance to go further up to 34.7-35. If the attempt fails, the price well may test 33.8. A break below the level will allow the price to test 33.5 - 33.15.
