Yesterday, after Angela Merkel and Nicolas Sarkozy announced a new plan of coming out of the crisis, Standard and Poor’s warned that it was ready to cut the ratings of all the 17 eurozone members, including Germany and France. It means the eurozone’s 2 largest economies may lose their highest (AAA) rating within the next 90 days.
Germany and France’s joint plan, which will be considered during the EU summit, suggests tougher budget discipline for all the eurozone members, with veto powers for EU authorities. Both the countries are ready to back all the necessary changes in the basic EU agreements in order to reach the goal.
Most big-scale investors start closing their trades at the end of the year. That is why others should be ready for low trading volume and high volatility till the end of the year, especially this week: the ECB’s interest rate decision on Thursday, the EU summit on Friday, S&P’s rating cuts at any moment.
In the meantime, yesterday Italy’s spending reduction program received full support of the Italian cabinet of ministers. The Italian 2-year bond yield instantly lost 85 base points to reach 5.78%. Ireland also announced a €2.3B spending reduction plan.
Gold and silver made one of the biggest declines in 2 weeks, thus reacting to the uncertainty in Europe. US gold market analysts reported about a sharp decline in the demand for gold coins, down to the lowest level seen in 3.5 years. The Japanese minister of finance announced a program of stimulating investments in Japanese T-bonds: an investor who spends over 10M yen on bonds will get a 15.6-gram gold coin (10K yen), an investor who spends over 1M yen on bonds will get a 31.1-gram silver coin (1K yen).
The US exports seem to be accelerating. The exports to emerging markets grew by 20% during the first 9 months of 2011 while the exports to the eurozone grew by 14%. Emerging economies consume 55% of the US export. The US has become the net exporter of oil products for the first time since 1949.
The auto sales boom in the USA makes analysts revise the forecast for the consumption of platinum in 2012. The demand for platinum is expected to reach 3.82M ounces ($7B), which is 17% more than in 2011. This well may reduce the excessive demand for platinum from 295K down to 81K ounces.
Forecast: According to the Department of Commodity Trading of , after yesterday’s decline gold will look for an opportunity to recover. The first level to test is 1719-1720. If the price breaks and consolidates above it, we may see a recovery up to 1735 and even 1748-1750. A failure will probably resume the downtrend, thus making gold depreciate down to 1696-1700 and maybe even 1680-1683.
As for silver, it has been testing $32/oz since the early morning. If the test is successful, the price may recover up to 32.5, 32.75. Otherwise, the price may go down to 31.5 or 31.
