Japan keeps surprising with better-than-expected economic stats. This time it was manufacturing orders that showed some growth. As a result, the Japanese Yen seems to be turning into a safe haven asset again. A stable economy usually allows unprecedented borrowing. This financial year Japan’s public debt is expected to reach 219% of its national GDP. The Bank of Japan is expected to announce the expansion of its bond purchase program during the forthcoming meeting scheduled for April 27th.
The Italian and Spanish bond yields keep growing. Investors grow unconfident about Spain ’s ability to handle its public debt, thus betting on the weakening of the Euro currency and expecting the ECB to introduce some extra economic stimuli.
European problems suggest a further slowdown in China’s economic growth as Europe is the major exporter of Chinese products. The IMF is ready to downgrade the forecast for China’s trade balance.
China imported over 39 tons of gold in February, which was 20% more than a month before.
Yesterday’s US economic stats showed a more-substantial-than-expected increase in the US trade stock, which may suggest an economic slowdown. US stocks have been showing weakness for the 5 consecutive day amid investors’ uncertainty. The investment capital is being withdrawn and reinvested in T-bonds in advance of quarterly reports (which are expected to be poor).
The current uncertainty in the USA and Europe may well provide extra support for gold prices. However, there are no fundamental data that could ensure a steady gold rally.
According to the Commodity Trading Department of , gold may resume its rally once the price consolidates above 1662. In this case, 1675, 1681 will turn into the closest levels of resistance. Alternatively, the price may go down to 1644-1645, and even 1625.
As for silver, it has been traded in the 31-32 price range over the last few days. A break out the rage will define the direction of the future short-term trend. Once the top is overcome, the closest targets will be around 31.9, 32. Alternatively, a break below the bottom of the range may start a bearish move down to 31.50, 31.25.
