Gold Silver Prices have been moving in a narrow range since Monday, ahead of a European Central Bank meeting Wednesday and congressional testimony from Federal Reserve Chairman Ben Bernanke on Thursday. A rate cut by the ECB could revive the safe haven appeal of Gold. The investment community is wondering and speculating about further easing both in the U.S and the European Union, in the wake of their recent weaker economic data. In fact, if there is more global quantitative easing, it should prove bullish for Gold Silver Prices. The market early this week is consolidating on the charts following last Friday’s Huge Gold Silver Price gains. There were no major, market-moving developments or Economic Data announcements to significantly move Bullion markets.
There was a Group of Seven teleconference Tuesday to discuss the European Union debt and financial crisis. However, there was nothing significant coming out of the call, as the U.S. urged the EU to be more aggressive in dealing with its crisis & so the ECB is expected to only indicate a readiness to cut interest rates as soon as next month but hold back from policy moves. The testimony by Fed Chairman Ben Bernanke before a congressional committee on Thursday, which is expected to shed light on the Fed’s view of the economy and possible policy moves which could give some hint on a third round of quantitative easing. If that is seen, then Sharp upside movements in Gold Silver prices can be expected.
Moody’s cut the credit ratings of several banks in Germany, the European Union’s strongest economy, citing a greater risk of further shocks from the region’s debt crisis. But the euro shook off the downgrade and edged higher against the dollar ahead of the ECB meeting.
Gold consumers in India, the world’s biggest importer, are aggressively selling the metal after prices surged to a record, an industry group said. Gold in India climbed to Rs.30,200, a record on June 2 after the rupee fell to an all-time low against the US Dollar, while global Gold Silver Prices are down 16% from a peak reached in September. The jump in scrap sales adds to evidence of slowing demand in India that may lose its spot as the world’s largest bullion market in 2012 to China, according to the World Gold Council (WGC). Physical buying is not there, because prices are very high. Even the retail investors, who had invested at lower levels, have turned sellers right now. Scrap sales in India may more than double to about 300 metric tons in 2012 from 130 tonnes a year ago. Demand in June and July is always very poor every year. Imports are always down as there are no festivals, no marriage season and everything depends on the monsoon and lots of farmers are selling their gold in the market to purchase their new crop requirements.
More accommodative monetary policies in China and India can have positive implications for gold silver prices. Recent Chinese manufacturing data in China support the case for more decisive easing actions. The HSBC China manufacturing Purchasing Managers Index has been below the key 50 level, which is seen as the breaking point between economic contraction and expansion, for seven straight months. China may cut the reserve requirement ratio for large banks by 200 basis points to 18% and interest rates by 25 basis points to 6.31%. Meanwhile, (RBI) Reserve Bank of India Deputy Governor Subir Gokarn indicated at the start of the week that a slowing economy and lower oil prices leaves room for a rate cut. Easy monetary policies have historically been positive for Gold Silver prices.