Over the weekend the G20 finance ministers and central bank governors offered the EU to expand their stabilization funds prior to asking the G20 for external financial support. This increases the pressure on Germany because it is the eurozone’s biggest donor (both for the EFSF and the ESM).
Some analysts assume that Europe won’t probably need any external financial support. It would be sufficient to merge the €250B EFSF and the €500B ESM, which will succeed the EFSF in July 2012. This is expected to be the key issue on the agenda of the forthcoming Euro summit (scheduled for March 1st-2nd). If Europe meets the G20’s requirements, they promise to expand the ESM up to $2 trillion.
Growing oil prices (as the result of the embargo imposed on Iran’s oil) keep exerting extra pressure on the EU economy. Oil has appreciated by 20% since mid December 2011.
Last week the ECB offered 3-year LTRO for European banks. Analysts expect the total amount of loans to reach €492B, which will influence the eurozone’s liquidity.
The Bank of Japan has finally made the Japanese Yen weaken by 7% down to the record-low level since 2007. Higher gold prices triggered a wave of sales in Japan’s market of secondary gold.
Forecast: According to the Department of Commodity Trading of , gold is still depreciating. Once an H1 price bar closes below 1776, it will only strengthen the downswing. The targets are 1770, 1757, 1750, and maybe even 1736. If an H1 bar closes above 1781, it may trigger a rally up to 1786, 1800, 1805.
Silver will have to consolidate above 35.67 in order to resume its rally. However, a failed test is more probable. In this case, the price will most likely decline down to 35.35, 35.2, 35.0. If the 35 level is broken, the price may go further down to 34.75-34.50. Once an H1 price bar closes above 35.67, it may well trigger a rally up to 36.
