Daily Market Report 06/06/12

GOLD
Gold continues its upward breakout on Wednesday, rising in tandem with the euro and other risky assets. Awaiting a policy decision by the European Central Bank (ECB), investors watch for more action from policymakers to contain the euro zone debt crisis. At 11am PDT, Gold is trading at $1,633.40 per ounce, up $16.30 per ounce on excellent volume. GOLD’S BULL MARKET IS BACK!
 
The ECB is expected to indicate a readiness to cut interest rates as soon as next month but hold back from policy moves. The next focal point of the markets will be 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 with monetary easing. "If Bernanke gives some hint on a third round of quantitative easing (QE), we’ll be likely to see Gold march towards $1,650 or higher," said Ronald Leung, a dealer at Lee Cheong Gold Dealers in Hong Kong. On the chart, Gold appeared to have some resistance around $1,653, and then around $1,700 per ounce.

Heavy Selling of Gold in India
Gold in India climbed to a record high on June 2, after the rupee fell to an all-time low against the dollar, while global prices for Gold are down 16 per cent from a peak reached in September. The jump in the rupee value of Gold is resulting in heavy selling and slowing demand in India which may lose its spot as the world’s largest bullion market in 2012 to China.

SILVER
The serious discussion from the ECB on providing another long term refinancing operation (LTRO) for euro zone nations and banks is renewing analysts concerns over another round of QE. The price of Silver would be a major beneficiary of any QE program, and it’s showing that today. At 11am PDT, Silver is up $1.18 (4.1%), trading at $29.65 per ounce on excellent volume.