Daily Market Report 7/12/12

GOLD

Today could be a short term reversal day for Gold and let me explain why. Early this morning, Gold dropped to $1,553 per ounce on Asian news (see below), then held in the $1,560 area for a short term on excellent demand. Then, in late trading the market volume increased and Gold rallied to close at $1,568 at the high of the day. This is what traders call an inner-day reversal, very bullish for the short term direction of the commodity. At 11am PDT, Gold is trading at $1,569.40, down $0.60 on active trading volume. Right now is an excellent time to add to your Gold holdings.

SILVER

Silver dropped very close to the yearly low $26.35 per ounce this morning then rallied with Gold as New York opened. At 11am PDT, Silver is up to $27.20 per ounce, up $0.18 per ounce on excellent volume.

ASIAN CENTRAL BANKS ARE CONSIDERED ABOUT THEIR SLOWING ECONOMIES

The Bank of Japan expanded its asset-purchase program to 45 trillion yen ($564 billion) from 40 trillion yen, according to a policy statement released in Tokyo today. 

Bank of Korea (BOK), South Korea’s central bank, unexpectedly cut its benchmark interest rate by 25 basis points (bps) to 3 percent on Thursday, lowering the 7-day repo rate for the first time in 13 months.

MERRILL LYNCH IS BULLISH ON GOLD

Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at Merrill Lynch, says he expects the Federal Reserve to initiate an asset-purchasing program of as much as $500 billion in the second half of the year, which will drive spot Gold much higher by the end of the year. "We think that $2,000 an ounce is sort of the right number,” Blanch said on CNBC Asia’s Squawk Box on Thursday. “We believe that ultimately the Fed will be forced to do quantitative easing. If it happens in September, as our economists expect, we will get a rally sooner in Gold. If it happens after the election (in November), we will get the rally a little bit later; probably we will touch $2,000 an ounce sometime next year.”