The market of gold has been losing its trading volume for 3 consecutive sessions. The price is still around $1600/oz. Among the major factors affecting the market of gold are a stronger US dollar (which presses gold) and inflation expectations (which support it).
The mentioned inflation expectations are connected with numerous economic stimuli introduced by central banks around the world. In particular, the ECB has recently given European banks an opportunity to borrow unlimited 3-year loans at 1% per annum. Italian banks are allowed to use such loans to buy T-bonds with interest yields above 6% and to use these bonds to re-borrow from the ECB.
On Monday European ministers of finance agreed to contribute $150B to the IMF to fight the eurozone crisis.
The Japanese ministry of finance is planning to emit more T-bonds to the amount of $2.5 trillion as a part of its plan to correct the Japanese Yen exchange rate against the US Dollar.
In the meantime the US Congress keeps disputing about tax rebates in order to stimulate consumer demand.
The current gold prices have resuscitated the demand for the precious metal in Thailand and Indonesia. However, India, the world’s biggest jewelry market, hasn’t reacted yet as its national currency has depreciated against USD.
In advance of New Year, numerous analysts are in a hurry to make their forecasts for 2012. At this point, most analysts expect gold to fall below $1500/oz within Q1 2012. It is not expected to recover up to September’s highs until mid 2012. Some of them even suggest a decline down to $1400/oz.
Forecast: According to the Department of Commodity Trading of Masterforex-v Academy, gold still may resume its rally, but it will have to stay above 1595 in order to do that. In this case the price may hit 1620-1625, 1640. Once the price consolidates below 1590, it will decline to 1575, with retesting last week’s low, a break below which will give way to 1555-1550, 1527.
As for silver, today it is probably going to retest 29.10-29.12. If the retest fails, the price will go down to 28.5, 28 and probably 27.50. In order to resume the rally, silver will have to consolidate above 29.10. In this case 29.5-30 will be the closest potential targets.
