Ivan Zhigalov
Yesterday Iran warned about the possibility of blocking Hormuz Strait if Western powers impose sanctions against it. The news increased political risks. Iran is the world’s 5th biggest exporter of crude oil. Moreover, Hormuz Strait accounts for 30% of the global transportation of oil by sea. The strait is patrolled by the US Navy. Previously Nicolas Sarkozy, President of France, introduced the idea of imposing embargo on the crude oil exported by Iran. The UK supported the idea. However, the EU consumes some 18% of Iran’s oil. Any statements or actions connected with the blockade of Hormuz Strait increase the probability of an armed conflict in the region.
Yesterday’s auction of 10-year Italian bonds resulted in the 7% yield, even though at the beginning of the auction it was equal to 7.14%. Tomorrow Italy is planning to place more bonds, to the sum of 20B euro.
Analysts report about a significant outflow of capital from BRIC. The figure has reached $15B. Over the last 10 years the inflow of capital has reached $67B. The average economic growth for the BRIC countries is expected to reach 6.1% in 2012 against the highest value of 9.7% seen in 2007.
Against this background gold keeps being traded below $1600/oz. Even China’s central bank cannot improve the situation by its statement that China should keep accumulating gold in order to further diversify and secure its gold-and-currency reserves. The physical demand for gold in Asia remains very low.
Forecast: According to the Department of Commodity Trading of , today gold will probably continue its downtrend, with targets around 1575-1577. A break below those levels will give way to 1562, 1550 and maybe even 1541. Once there is a break above 1590, there will be a test of 1595-1597.
As for silver, it is expected to keep declining down to 28.5-28.4. and maybe even 28.10, December’s low. Once there is a break above 28.70, the price will probably test 28.80-28.95.
Ivan Zhigalov
