The global economy keeps facing major challenges as multiple economic problems worldwide are undermining it recovery.
Will Spain eventually ask for external financial support? Will the ECB purchase Spanish and Italian bonds? Will the eurozone break up? When will the Chinese economic growth accelerate? Has the US housing market finally found the bottom? Will the USA eventually fall of a fiscal cliff? It is difficult to answer these questions at this point. Anyway, these questions raise a lot of concerns among traders and investors worldwide.
Moreover, politicians have been trying to solve these problems for years. Yet, there has been no major progress so far.
How will all this influence commodity markets in the near future? Let’s ask Masterforex-V Academy.
Further Monetary Easing Ahead?
It looks like central banks around the globe are going to continue their monetary stimulation over the next few months, after another round of what seems to be unlimited quantitative easing started by the Fed in late 2012.
Still, the scale of this policy seems to start seeing some minor changes. The FOMC is expected to approve extra direct purchases of T-bonds later this year. This means that the US Dollar will probably stay weak.
At the same time, the ECB may finally activate its OMT plan, especially if Spain finally asks for external financial support. Still it is not quantitative easing because the extra liquidity formed by the program won’t go into the European financial system. Therefore, it will have a minor impact on commodities.
Finally, other central banks (including the Bank of Japan the People’s Bank of China and the RBA) may introduce other stimuli.
Precious Metals: Near-Term Outlook
In Q4 2012, both gold and silver were weakening. The decline was around 2-3%, thereby reflecting some concerns present at that time, including the infamous “fiscal cliff” issue along with tax hikes and double-dip recession.
Historically, stronger precious metals provoke the Fed to intensify its accommodative policy. Still, the current QE plan is virtually unlimited while the Fed promised to keep interest rates around zero till 2015. Having said that, the Fed seems to have no weapon left.
Therefore, Masterforex-V Academy expects precious metal to deepen their retracements from the previous major rallies within the next few weeks. In the long run, we may see higher demand for gold as U.S. politicians are very likely to compromise over the fiscal cliff issue.
Ultimately, after another short period of weakness, gold may recover up to the price highs seen in 2012 - $1780/oz. This may well happen till the end of May, Masterforex-V Academy assumes.
As for silver, they expect a return to $30-32/oz. The range is around 100-day and 200-day MAs along with major lows set in November 2012. If this is the case, eventually traders may see silver trading within the 35-37 range.
Oil Market: Near-Term Outlook
The contemporary civilization cannot exist without oil. Therefore, this commodity (often referred to as the black gold) has a major impact on other markets, and even entire economic sectors.
In order to evaluate the near-term prospects of crude oil, let’s have a look at the chart below, courtesy of Masterforex-V Academy. It is based on the Dynamic Fractal-Wave Analysis (DFWA).
