Yesterday’s eurozone PM report came out better than expected, thereby showing an increase against the previous reporting period. This may suggest a revival in consumer demand. Meanwhile, capital markets are looking forward to seeing the results of tomorrow’s ECB meeting. At this point, it is clear that the central bank is planning to toughen the control over the eurozone’s banking activities.
The ISM manufacturing PMI report (USA) came out worse than expected, going away from the crucial level of 50.0 and disappointing analysts. Construction spending showed an unexpected decline as well. These are extra signs of an economic slowdown, which speaks in favor of QE3. Tomorrow’s employment report will show us whether the Federal Reserve will finally have to stimulate the US economy.
China’s manufacturing and services PMI reports came out negative this morning. The Chinese government announced their intension to invest in the domestic infrastructure, including railway and healthcare. China warned the USA against supporting one of the sides in the territorial dispute between Japan and China.
India keeps fighting the growing budget deficit and export decline. Therefore, some analysts forecast further gold duty hikes up to 7.5%. For reference, in March 2012, the Indian government doubled the import duty up to 4%. Gold is the 3rd commodity after oil and silver in terms of import volume.
According to GFMS, central banks are expected to buy up to 493 tons of gold this year. In the 1st half of the year, they purchased 273 tons, which is 34% more than a year before. They also expect jewelers to buy 952 tons in the 2nd half of the year. Experts report that gold production costs increased by 19% up to $727/oz earlier this year. In the 1st half of the year, the global production of gold increased by 0.1% up to 1366 tons. The 2nd half promises to increase it by 1.7% up to 182 tons.
Today’s forecast:
According to the Commodity Trading Department of , gold is expected to test 1692-1693. A break below 1693 will give way to 1675, maybe 1660. A failure to consolidate below 1693 may trigger a rally up to 1715, maybe 1725.
Silver is expected to test 32.0-32.1. If an H1 price bar closes below 32.0 it will give way to 31.75, 31.5. If the price fails to stay below 32.0, we may see the price rallying up to 32.40-32.50. A break above 32.50 will give way to 32.75, 33.0.
