Yesterday the ECB held another 3-year credit auction. Therefore, it increased the overall liquidity of eurozone banks by 529B euro amid higher unemployment in Germany and lower consumer spending in France.
In the meantime, the USA revealed its GDP data for Q4 2011, which turned out to exceed the forecast.
The improving business activity and higher GDP in the USA suggest economic growth. Nevertheless, during yesterday’s speech Ben Bernanke, Fed Res Chairman, pointed out to the reserved economic picture but made no hints at the possibility of Q3. This statement naturally caused a decline in stocks, Euro and precious metals.
China’s PMI increased in January. India’s PMI preserves confident growth as well. The rate of inflation declined down to the 26-month low, which suggests their ability to resist the consequences of Europe’s economic weakening.
According to the US Mint, the demand for physical gold (gold coins in particular) declined by 83% in February. Yesterday gold depreciated by 5% on negative news. This was the biggest decline in 3 years. Such sharp moves may force major investment funds into restraining their investments into this commodity.
Forecast:
According to the Department of Commodity Trading of , gold may encounter resistance around 1725 and1733. If the price fails to consolidate above 1725, it will most likely continue its downtrend. Once the price consolidates below 1711, it will get a chance to go down to 1670, 1660. If an H1 bar closes above 1725, it will trigger the bullish scenario (the targets are1733 and 1750).
Silver has recently tested 35.25 and is currently retracing down to 34.65, and may be 34.50. If an H1 bar closes below 34.5, the price may go further down to 34.0. However, if the price does stay above 34.65, the probability of going up to 35.5 will increase.
