Dynamics
On Wednesday, Jan. 20 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 27.50 to 1112.60 on dollars per troy ounce, quotes, silver futures fell 92 cents to 17.88 dollars per ounce.
Causes
On Wednesday 20 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 after the release of economic news makrostatistiki and 2 - the fall of the stock sites, where major stock indexes United States were closed in the red zone after disappointing quarterly reports and the background of falling commodity (Dow Jones industrial average - 10603.15 (-122.28, or -1.14%), Nasdaq Composite - 2291.25 (-29.15, or -1.26%), SP 500 - 1138.04 (-12.19, or -1.06%)), 3 - negative dynamics of the neighboring markets, namely the drop in oil prices; 4 - technical reasons, namely, that there were holes in the strong levels of resistance have been activated protective orders; 5 - Economic News - News about curbing lending in China have put pressure on the metal due to fears of lower demand for those used in industrial products such as copper and oil. China is the world”s largest consumer of commodities. Concerns about lending in China has also eased inflationary concerns in conjunction with other signals that inflation is not expected in the near future and will not put pressure on gold. This metal is used as a hedge against inflation.
From news can be noted that India, the world”s largest buyer of gold bullion in 2009. reduced the import of gold by 18% compared with the previous year because of declining demand from households and jewelers. India, according to the Bombay Bullion Association, in 2009. bought 343 tons of gold compared to 420 tons in 2008. In particular, in December, imports amounted to 34 tons to 3 tons in December 2008. This 200 tons of total imports accounted for the purchase of gold from the IMF in November. Demand for gold in India in the third quarter of 2009. increased by 26% compared to the same period last year, to 137.6 tons. In particular, demand from jewelers increased by 27% to 111,6 tons. Gold has completed the ninth consecutive year growth. In December of 2009. price of precious metal reached a record level - U.S. $ 1227.5 per ounce, as the weakening dollar attracted investors” attention to precious metals. According to research London Bullion Market Association, analysts and traders expect the price of gold in 2010. an average of 1,199 dollars per ounce, that figure will exceed 2009. 23%.
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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