During the previous trading week the market of precious metals continued its bearish tendency.
The US Dollar was strong versus most global currencies. The EU unemployment rate in November reached 10.1%, confirming the forecasts. The European GDP in the 3rd quarter of 2010 was 1.9% higher, coming up to the expectations. The German trade balance in November made up €11.8B, lower than expected.
The downtrend of gold results from the following macroeconomic peculiarities: the US Dollar strengthens, the US economic recovery accelerates, investors leave the “heaven” precious-metal market for riskier assets (like currencies or stocks), making gold lose in value.
Gold was also undermined by the fears of more complicated speculative activities. Last week the gold sales were suspended by the employment change release. The private sector created only 113k new jobs in December against expected 200K. The only positive thing was a 0.4% decline in the unemployment rate from 9.8% to 9.4%.
News from China:
For the last 6 years the country has been expanding the production and output volume, which doesn’t favor gold. China gradually becomes a major player at the global market of gold with an ability to influence its value. It has recently reached success in fighting India, which is the biggest importer of gold. Some experts say China is going to excel India in terms of gold imports in a couple of years.
AngloGold Ashanti (ANG SJ) and De Beers (DBRSY) are the world’s biggest producers of metals and minerals, which created a joint enterprise to search for underwater gold deposits. They have already started a gold-searching project off the coast of South Africa, which may cause a further decline in the gold prices.
Moreover, numerous central banks around the world keep expanding their gold reserves. China and Russia increased the domestic production of gold, a big share of which is bought by their central banks. The central banks of the Middle East do the same (they expand their gold reserves). It should be noted that the IMF and the ECB are the world’s major gold sellers. The IMF’s gold reserves have already been reduced by 158.6 tons.
The weakness of gold and the strength of the US Dollar didn’t allow silver to grow even though the Indian import predicted significant growth. They say that the Indian import may have doubled (increasing by 2500 tons) as the Indian buyers consider silver to be a cheaper and more attractive trading instrument than gold.
It was reported the US Mint, which started to accept orders from the certified dealers for the production of American Eagle Gold and Silver Coins 2011, sold almost 1.7 million of silver coins on the 1st working day of 2011, which should support silver.
The LME Copper reserves reached 379 525 tons. The Shanghai reserves made up 132 166 tons, reaching the highest level since June 18th 2010.
The growth of the prices on copper is expected to be supported by the high actual demand for the metal with simultaneously low pace of filling up the copper inventories.
Provided by the Department of Portfolio Option Sales, Masteforex-V Academy
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