Gold and silver skyrocket

Gold and silver skyrocketed on Friday.  Gold added USD 21,70 and ended at 1397,80 after breaking through the 1400 level during the session.  Silver added 4 %% to close at 24,08 after trading as high as USD 24,24 an ounce try. These quotations represent the highest seen for precious metals in weeks. The technical charts point to further gains. It is therefore great likely the strength in prices would spill over into this week’s trading.

A weaker than expected July new sales home report which decreased 5 %% since June, created new bewilderment in the markets. The July minutes from the US Federal Reserve (FED) created new uncertainty regarding when FED eventually will start tapering its bond buying program of USD 85 Billion a month. This gave precious metals a strong  boost.  Gold broke out of the technical resistance in USD 1377 – 1380 helped by increased silver prices on its way up.

The disappointing housing numbers had also a negative impact on the dollar. The new housing data give rise to new speculations when tapering will start.  September seems now unlikely and currency analysts are point to December as more realistic. It is generally believed that tapering of central bank’s monetary easing would lead to an increase in interest rates and a stronger dollar. The dollar basket, DXY, weighed against six major currencies decreased. The dollar lost ground against bot yen and EURO. EURO/USD climbed above 1.34 on the housing numbers.

A second reading of German gross domestic product confirms that Europe’s biggest economy rose 0,7 %% in July. This augurs good for Angel Merkel’s re-election opportunities in September and for better perspective for growth in the Euro zone.  Despite of temporary decrease dollar is much favoured by investors over the yen for the rest of 2013. The Euro has also gained healthy against the yen over the recent week.

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