On pessimistic expectations from the EU Summit starting today, Gold prices have already declined to around $1560 from the rises to $1640 seen in the last week triggered then by the Greece elections win by the Pro-Bailout party.
Gold and gold receivables held by euro zone central banks fell by 1 million euros to 432.701 billion euros in the week ending June 22, the European Central Bank said on Tuesday. Gold holdings fell because of sales by three euro zone central banks, consistent with the latest Central Bank Gold Agreement, the ECB said. Cash positions in Global investment portfolios again over 7%, back to levels not seen since the aftermath of the Lehman Brothers collapse.
The Equity Markets, Gold along with other Industrial Commodities are looking toward the EU Summit, slated to occur Thursday and Friday, for price direction clarity. Hopes for some sort of genuine efforts & results to handle the Euro-zone debt crisis are fading. Gold prices may lose further ground in the days ahead, as investors will likely conclude that there is more fiscal austerity in the cards as opposed to imminent easing.
Much has been said & only more to be said in the coming days but almost nothing has been done with almost no future hope for any constructive developments. As alerted for the week: Huge surprises, Shock waves & highly unexpected & un-predictable turn of events expected this week. Be prepared.
There might be positive surprises contrary to the pessimistic & “No Result” expectations & markets along with Gold & Euro may shoot strongly upside. But if in the case that the currently floating negative market expectations prove right, then there will be sharp meltdowns, especially in Euro, Gold, Silver & Equity markets of the emerging nations & the US. Europe has nothing much to lose as most of the big European players are already at rock bottoms & things couldn’t get worse for the already suffering.
If the downside is seen immediately after the EU summit outcome is announced as IS Expected , there could be a sharp upside in the waiting as barely within 4-5 working days later on the 5th of July, the ECB, is surely expected to cut its Benchmark lending rates by at least 25 Bps & that may then provide the much expected boost.
Whatever the out come, there is bound to be a lot of volatility, large movements & choppiness in the markets on 29 June & then from 1 July till the 5th of July.
Gold Price movement: Current Movement range is $1540 to $1639. The level of $1540 has repeatedly been tested & may not hold onto its strength this time.
Downside Risk: Gold Prices will remain Range bound till above $1540 & till below $1652.50. A sustained breakthrough below $1540 on a closing basis may open grounds for Gold to further fall freely to 1441, $1315 –A Strong Support & a Potential Bounce up level. When below this level accompanied with strong momentum, Gold may decline possibly to $1243 & $1180 also & also then enters a strong Bearish Zone.
Upside Potential: Only a break in Gold Prices with sustained momentum above $1652.50 will trigger Bullishness & then rises to $1686.25, $1747, $1783 & $1819 may also be seen. The level of $1652.50 is now crucial in Gold for further yearly Bullishness. Our final long term Target of close to $2200 may soon be seen then.
Silver Price movement: Current Movement range is $26.20 to $31.60. The level of $26.20 has been tested earlier & may not hold onto its strength this time.
Downside Risk: Silver Prices will remain Range bound till above $26.20 & below $31.60. A sustained breakthrough below $26.20 on a closing basis may open grounds for Silver to further dip to $24 – 22.60 strong support ranges & a Potential Bounce up level. Any strong momentum below this would make Silver fall freely to $19 & also enter a strong Bearish Zone then.
Upside Potential: Only a break in Silver Prices with sustained momentum above $32.05 will trigger Bullishness & then rises to $34.30, $36.10 & $37.54 may also be seen. The level of $34.30 is now crucial in Silver for further yearly Bullishness & to cruise swiftly to New Highs above the $50 mark.
Central banks may have purchased about 150 tons of gold till now in 2012. Gold prices at lower level seems to attract official sector buyers and it’s very likely that further gold declines could be met with greater official sector purchases which could provide Gold with a strong flooring to bounce upside from. Russia’s gold reserves advanced by 15.5 tons to 911.3 tons in May this year and Turkey’s yellow metal holdings raised by 5.692 tons to 244.986 tons, as per latest International Monetary Fund’s (IMF) international finance statistics report. According to the IMF data, Ukraine and Kazakhstan also increased their holdings of the gold in May when the metal averaged $1,587.68 per ounce. Ukraine’s gold reserves rose by 2.1 tons to 32.7 tons and Kazakhstan boosted their yellow metal reserves by 1.8 tons to 100 tons. Mexico, Philippines and South Korea are among the other countries to have added to their gold holdings in recent months. Kazakhstan’s central bank, said it plans to raise the amount of gold it holds as part of its reserves to 20%.