On Friday S&P downgraded the sovereign ratings of 9 eurozone countries, including France, Italy and Austria and confirmed the current rating of Germany, Belgium and Ireland. Investors were reserved in their reaction to the rating cuts: the 10-year French and Italian bond yield gained only 0.03% and 0.01% correspondingly.
This week EU leaders will keep getting ready for the next EU summit in order to sign an agreement aimed at toughening the EU’s budget discipline. The Greek authorities will resume the talks with private investors on Wednesday.
Next week Chinese companies will be closed for holidays – Chinese New Year. That is why this week Chinese investors will be reducing exposure and taking profits. More and more foreign investors express concerns over China’s banking system. According to some estimation, up to $1.6 trillion may be some shady loans. Moreover, in Q4 2011 China’s economy grew only by 8.7%, which is the lowest pace in 10 quarters.
A week before Jan 13th major gold investors reduced their long and short trades by 3077 and 4866 contracts correspondingly. Small-scale speculators accumulated long trades by 896 contracts and reduced short trades by 2046 contracts. The situation in the market of silver is similar: -421 and -1854 contracts for big-scale investors, +430 and -1393 contracts for small-scale investors.
Forecast: According to the Department of Commodity Trading of , today gold will probably be continue its rally up to 1647, 1650, and maybe 1655. There is a chance of retracing down to 1637 - 1633. If an H1 bar closes below 1630.50, it will initiate a downswing to 1622, 1617.
As for silver, it will probably be testing 29.76, 29.95-30. If an H1 bar fails to close above 30, the price will most likely go down to 29.50 and 29.30. Otherwise, the closest targets are 30.50 and 31.
