Silver and Gold are expected to trade higher and base metals lower
In the coming fortnight, gold and silver are expected to trade at higher points, but base metals will go lower than now.
International equity markets ended up in turmoil due to all the uncertainty around ECB’s (European Central Bank) decision to hand out monetary stimulus’s, elections in Greece and the fact that SNB (Swiss National Bank) scrapped Euro exchange rates. China’s slowing economic growth and IMF’s cutting the 2015 and 2016 global growth forecast by 0.3% didn’t help the market either.
Still, according to MSCI a rather fast rebound was experienced as soon as ECB announced their 60 billion Euro per month monetary stimulus, which will start in March this year and continue until September 2016.
Rupee improved by 1.5% and RBI slashed the repo rate as anticipated thanks to inflation pressures. There was a boom in capital inflow but gains were restricted because of the mixed market estimates and the DX strength.
Gold prices went up 5.85% and MCG gold 3.97%. Switzerland’s bank suddenly abandoned the 3-year cap they had on franc, causing turmoil in the global bond and shares market.
After the forecasts for the next two years were cut buy the World Bank, the global stock market experienced a sharp fall. Fears rose that anemic growth will offset cheap the benefits from cheap oil and deflation will occur.
Dollar index went up 3.15% and EXB measures caused a raise in gold prices. As it was expected, ECB did launch a bond-buying program, worth billions of Euros, to revive the economy in the Euro Zone. According to Mario Draghi, as much as 60 billion Euros will be printed per month to buy sovereign bonds. Inflation in the Euro Zone is at -0.2%, much lower than the expected 2%.
Silver prices went up 10.67%- The raise was caused by the same reasons as the raise of gold prices. Investors are now focusing more on precious metals over high risk assets, like stock. One of the positive factors was also higher than usual speculative interest.
Copper prices fell by 9.6%, mostly thanks to China’s GDP being the lowest of the last 15 years. Rupee appreciation also played a role here.
Brent and WTI oil prices fell 2.63% and 5.73% respectively, MCX oil also declined 5%. Saudi Arabia’s decision to cut oil prices for the EU buyers also caused problems for the market.
In the fortnight to come, silver and gold are expected to rise higher. The energy market is dominated by crude’s negative momentum, meaning that EXB’s announcement of the monetary stimulus has been the right step to take and will help the Euro Zone.
Base metals are expected to fall due to weak GDP data in the US, China and the EU.
The change, however, should only be small and the market trade value will be small as many of the investors are probably planning to sit the changes out and start trading again, once the markets are settled back to normal.