In advance of New Year numerous analysts are trying to look into the near future. UBS thinks that the Swiss Franc and gold will lose their status of “safe haven” assets in 2012, unlike the US Dollar, US and Japanese T-bonds. The reasons include rather volatile gold and the SNB’s currency intervention. The volatility of gold has reached its highest level since 2009.Other banks are reducing the share of gold in their investment portfolios. In particular, HSBC have reduced its investments in gold from 15% down to 6% of the capital.
According to the CFTC, on Dec 16th big-scale investors reduced their long trades in gold by 8248 contracts and increased their short trades by 924 contracts. Small-scale investors reduced their long trades by 2755 contracts and increased their short trades by 3320 contracts. As for silver, big-scale investors increased both long and short trades, which suggests high volatility in the market of silver.
The eurozone crisis keeps pressing the markets. At the weekend Fitch Ratings warned France and 6 other eurozone members about possible rating cuts. In the meantime, Mario Draghi confirmed that the ECB was not going to expand the QE program. Instead, Europe’s central bank will provide 17 eurozone countries with unlimited 3-year loans.
China is said to see a manufacturing slowdown in December for the 2nd month in a row. Some analysts expect Chinese bank to conceal the actual lending data. The estimated sum is $622B, but there are concerns that the real figures can be much higher, which suggests that the banks may need governmental support.
Near-term forecast: According to the Department of Commodity Trading of , gold still has a chance to resume Friday’s rally. In order to do that, the price will have to stay above 1585, and then to break and consolidate above 1596-1600. In this case, gold may rally further up to 1625, 1640. However, if the 1585 turns into resistance, gold may depreciate, thus reaching 1575 and retesting last week’s low at 1560. If the test is successful, the next potential targets are 1555-1550, 1527.
As for silver, it will have to consolidate above 29.10 in order to resume its rally. In this case, the price may reach 29.5 and 30. Otherwise, the price will most likely go further down to 28.5, 28 and even 27.50.
