Dynamics
On Thursday, Jan. 21 quotes for gold and silver have completed trades with a decrease in value against the background of strengthening U.S. dollar on the foreign exchange market, FOREX, and also because of the negative dynamics of equity markets and adjacent areas.
As a result of trading on the COMEX, division of the New York Mercantile Exchange (NYMEX), quotes gold futures dropped to 9.40 to U.S. $ 1103.20 per troy ounce, quotes, silver futures f1000ell 37 cents to 17.51 dollars per ounce.
Causes
On Thursday 21 January futures on precious metals have completed trades with a decrease in price under the following factors: 1 - strengthening of the dollar in the FOREX market to the weakening of the tendency of investors to take risks after makrostatistiki and economic news (concerns about the financial situation in the euro area and the tightening of monetary policy in China), 2 - the fall of the stock sites, where the major U.S. stock indices closed in the red zone after disappointing quarterly results and economic news (Dow Jones industrial average - 10389.88 (-213.27, or -2.01%), Nasdaq Composite - 2265.70 (-25.55, or -1.12%), SP 500 - 1116.48 (-21.56, or -1.89%)), 3 - negative dynamics of the neighboring markets, namely the drop in oil prices, 4 -- technical reasons, namely, that there were holes in the strong resistance levels (U.S. $ 1110.00 per troy ounce), resulting in protective orders have worked, 5 - economic news - a proposal the administration of U.S. President Barack Abamy limit the size of banks, many of which are trade commodities contributed to the decline in prices for precious metals. Obama made a proposal to limit the size of financial institutions and prohibit commercial banks from engaging in certain types of investment activities, including the acquisition of hedge funds and trade securities for its own account. This plan may lead to radical changes in the major market participants, including commercial banks such as JP Morgan Chase Co., Goldman Sachs Group Inc. and Morgan Stanley.
From news can note that China"s international reserves have grown over the past year by 23,3% and accounted for at the end of December, nearly 2.4 trillion. U.S. However, only the last quarter of 2009. growth reserves of 126 billion dollars. The next year, most experts predict a further increase in capital inflows into the country, and as a consequence, the further growth of international reserves. International reserves of China are the largest in the world. Their structure is a state secret, but experts estimate that about 70% of China"s gold reserves are located in dollar-denominated (mostly in U.S. Treasury bonds and bonds of U.S. federal agencies), others - in euros, Japanese yen. It is believed that in recent years as China seeks to increase the share of gold in its international reserves, because Beijing fears that risky fiscal and monetary policy the U.S. will lead to a significant drop in the dollar and the depreciation of the currency reserves.
What to expect?
Traditional purchase of precious metals in the early years of the funds, the overall improvement in investor sentiment, as well as decrease the U.S. dollar will provide sustained support to the quotations of gold and silver. However, the situation could change dramatically if the dollar will resume its strengthening, as the inverse correlation between the dollar and the prices of precious metals continues.
Why worry?
volatile changes in the currency market may be reflected in the sharp fluctuations of prices for precious metals.
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