During yesterday’s American trading session precious metals sharply depreciated together with other commodities and US stocks. Investors keep reducing exposure at the end of the year.
Yesterday the ECB published its balance sheet. Within a week the ECB increased the amount of loans for European banks by 214B euro up to 879B euro. Italy held a couple of bond auctions. As a result it attracted 1.7B euro form selling 2-year bonds with 4.85% yield (as compared to last month’s 7.8%) and 9B euro from selling 6-month bonds 3.25% (which is twice as low as last month’s yield).
This month India may reduce its import of gold by as much as 50% after the depreciation of its national currency. India has already signed a currency swap agreement with Japan, according to which the latter is to provide the former with a $15B loan. India hopes that it will help to stabilize the Indian Rupee after it has lost 16% of its value versus the US Dollar this year. Japan is looking to invest $1.2 trillions of its currency reserves in global markets.
In the meantime, China has reduced its gold trading, thus leaving only 2 authorized spot-and-futures marketplaces in Shanghai.
The US Mint says it has enough gold and silver coins American Eagle to supply the demand and is not planning to emit more of them in early 2012. This may imply a decline in the demand for coins.
Asia’s physical demand for gold is still rather low. Dealers report about demand problems as numerous companies, dealing in gold bullion delivery, are currently closed for holidays.
Forecast: According to the Department of Commodity Trading of , today gold may keep consolidating before trying to start another short-term downtrend. If there is a break below 1554 will give way to 1540, 1535, and maybe 1520.
In order to recover, the price should stay above 1554 and break above 1559.50. In this case an upswing is possible, with targets at 1565, 1575.
Silver is probably going to continue its trip to September’s low 26.15 and may be even 25.75. The 26.95-27 range will act as resistance for a recovery swing. A break and consolidation below it will give way to 27.25.
