In Nov 2011 China reduced its investments in US T-bonds by 0.1% or $1.5B down to $1.13 trillion, the lowest level since July 2010. China is the biggest lender the USA. In 2011 Chinese investments in US bonds were reduced by 2.4%. A slowdown in the Chinese economy and a decline in the US bond yield may force Chine to keep reducing its investments in the USA.
December’s report released by the Fed Reserve indicates a production increase, mainly due to the country’s motor industry and the production of equipment and construction materials.
In the meantime, JP Morgan still doesn’t allow the clients of MF Global (the bankrupt broker) to withdraw millions of dollars as the investigation continues.
Investors are reassured by the rumors that the IMF will probably help the eurozone to resolve its debt crisis. The IMF representatives will discuss the issue today and tomorrow. Investors keep watching the talks between Greece and its lenders. Any stabilization may result in the outflow of capital from the market of gold, which is currently considered a safe asset. They also expect the People’s Bank of China to ease its monetary policy in order to stimulate the country’s export and economic growth.
Iran is about to resume talks with the West on its nuclear program. In general, multiple political risks around the world keep supporting gold prices.
Forecast: According to the Department of Commodity Trading of , today gold will probably resume its rally. The closest levels of support are 1657-1660. The closest targets are 1686, 1695-1700. If an H1 bar closes below 1657, the price may go down to 1638.
As for silver, it will probably be testing 31.30, 31.50. A break above 31.50 will give way to 31.85-32. The closest support is 30.30. If an H1 bar closes below 30.30, it may trigger the bearish scenario with targets around 30.1-30.
