SILVER : Back on the front
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09/03/2012 | 05:41am
Opinion : Bullish above 32.2 USD
Target price : 35 USD Potential: 10.41%
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Silver has recorded its strongest growth in years last week. The price of an ounce rose nearly 12% to $ 31.50. Indeed, the Fed announced that it was ready to implement new measures to support the U.S. economy. Its chairman, Ben Bernanke has announced clearly that he remained dissatisfied with its evolution and, especially for the persistently high levels of unemployment.
These statements were reassured by their accommodative tone and the dollar resumed its decline, causing a significant appreciation in the price of precious metals. In addition, the deteriorating economic outlook in emerging countries such as India and China have led to renewed investor interest in precious metals. Some funds have also claimed to have increased their allocation to gold or silver.
Last week, the Fed announced that it was ready to launch a third round of quantitative easing to support the U.S. economy if needed. The details of this action plan has not been unveiled and the latest figures encouraging Americans could delay its implementation. Ben Bernanke said that the Fed would act as needed to strengthen the economic recovery but also had considered the costs and benefits of a new stimulus, but suggests that the benefits should prevail. Following these statements fairly reassuring, yields on U.S. Treasuries eased and the dollar hit session low against the euro to a continued rise in precious metals.
Each emerging countries warn on the deteriorating global economic conditions. New measures are expected in China in order to counter the slowdown in foreign trade. In Europe, investors expect an action of the ECB in September. Business volumes on precious metals and gradually increase as several large funds as PIMCO Pacific Investment Management recently decided to increase their exposure to these assets.
Technically, the dynamic price of silver is now bullish in daily data over the USD 29.5 threshold coincides with the 20-day moving average. We must be monitored a possible breakout of USD 32.2 which argue for a continuation of the upward trend in the direction of USD 35. Only a breakdown of the key level of USD 29.5 would undermine the momentum.
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Rodolphe Steffan
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