American legislators have failed to agree on the budget-deficit-reduction plan. After two months of working on the plan the “Super Committee” of the US Congress had to admit that the interparty disputes hadn’t allowed them to work out an efficient deficit reduction plan. It means that another plan will automatically take effect. According to it, the US budget spending will be cut by $1,2 trillion. For big-scale investors it also suggests uncertainty concerning taxation and spending for the next 12 months until the next elections.
The USA’s major rating agencies said there would be no instant rating cuts. However, Standard & Poor's reported that the news only confirmed that they were right when downgrading the US credit rating in August. Moody's refused to take any steps. Fitch promised to consider the country’s rating by the end of November.
In the meantime, the eurozone crisis is far from being over. According to the Fed Reserve, the deposits of non-US banks in the FRS reached $715B, which is more than twice as much as $350B seen in late 2011. The amount of such banks increased from 22 up to 30. Germany’s central bank downgraded the forecasts for the country’s GDP growth in 2012 from 1.8% down to 0.5-1%. Obviously, the eurozone uncertainty will last in mid-term perspective.
All the mentioned factors make investors risk-averse. On Thursday all the US markets will be closed (it’s Thanksgiving Day). Investors will probably be closing their trades and buying T-bonds before the long weekend.
Gold and silver are still following the major downtrend in commodity markets. According to the latest data, China imported only 250.6 tons of silver in October 2011 (as compared to 265.69 tons in Sep 2011 and 340.9 tons in Oct 2010).
Forecast:
According to the Department of Commodity Trading of , gold is likely to continue its downtrend. However, today we may witness a slight recovery. Once the price consolidates above 1685, gold will get a chance to test 1700 and 1706. Otherwise, gold may hit 1655 and even 1646.
Silver is expected to test 31.2. Once there is a break below 31.2, the price will probably test 30.60. Otherwise, it may hit 31.8, 32 and 32.4.
