Yesterday, the European leaders argued about the emission of common Eurobonds and urged Greece to continue implementing the austerity plan in order to stay in the eurozone. Spain wasn’t offered any extra financial aid even though the Premier asked the ECB to resume the bond purchase program. Yesterday, the Spanish Government provided Bankia (a risky Spanish bank and the major lender in Spain ’s housing market) with €9B. The markets reacted negatively. The Euro currency depreciated. The eurozone’s new manufacturing orders showed unexpected growth yesterday. At the end of yesterday’s summit, the European authorities offered European banks to work out an emergency plan in case Greece leaves the eurozone.
The US mortgage loans report came out worse than expected but the HPI and new home sales grew much higher than expected. If the reports came out positive next month, this will suggest recovery in the US housing market. However, this factor may prevent the Federal Reserve from further stimulating the national economy.
China’s preliminary PMI report came out worse than last month’s one (below 50). Therefore, China’s manufacturing activity has been declining for 7 months in a row. This factor together with the eurozone uncertainty dropped Chinese stocks.
As the US Dollar strengthened, gold price went down. Despite lower demand, platinum followed gold. Later on the day, gold recovered on European news. The market of gold is expected to grow more volatile today. Dealers report that the demand for gold is reviving on lower prices.
Forecast
According to the Commodity Trading Department of , gold will probably be resting 1548-1550, and maybe 1540. The price is expected to resume the rally after testing these levels of support. The probable targets are 1575, 1577, 1590-1595. On breaking and consolidating below 1548, the price may re-test 1535.
As for silver, today it may test 27.5, 27.25 and then resume the rally up to 27.75, 28.0, maybe 28.25. A break and consolidation below 27.5 will intensify the downswing. If this is the case, 27.25, 27.0 will become the closest levels of support.
