Today the market will be reacting to the results of the EU summit in Brussels. EU leaders managed to reach an agreement to toughen the budget discipline in all the 17 eurozone countries.
The agreement suggests instant sanctions for violating the budget deficit limit. The summit participants also approved the permanent size of the EFSF. It is equal to 500 billion euro. The EU countries agreed to contribute extra 200 billion euro to combat the crisis. The funds are expected to be handed over to the IMF.
Yesterday the ECB reduced its key interest rate by 0.25%. But it left the QE program unchanged. Investors were disappointed as there was no major increase in Europe’s liquidity. During yesterday’s American trading session gold lost $30 per troy ounce. China’s economy is slowing down.
Amid these economic factors, November’s investment inflow in the market of gold reached $4.8B, which is the highest figure among all other assets. The capital was withdrawn from US and EU stock market.
Forecast: According to the Department of Commodity Trading of , today gold and silver will be volatile, with abrupt moves during news releases.
On consolidating below 1709-1712, gold will head for 1697-1700, and may be even further down to 1680-1683. If the price consolidates above 1712 and breaks above 1718, it will probably recover up to 1724, 1732.
As for silver, it will probably continue its downtrend. To do that it is sufficient to go below 31.6, which will give way to 31.2 and 31. If the buyers manage to make the price break above 31.8, they will get a chance to initiate an upswing with targets around 32, 32.25 and even 32.50.
