Wednesday, December 28, 2011

Outlook for Gold and Silver Prices 2012

Outlook for Gold and Silver Prices 2012 ; Gold prices were falling for a fifth day Wednesday as the dollar strengthened and concerns that demand is weakening in the world's two largest countries grew.

Gold for February delivery was dropping $20.60 to $1,574.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,595 and as low as $1,571.80 an ounce while the spot price was

Silver prices for March delivery were down $1.18 at $27.56 an ounce while the U.S. dollar index was gaining 0.4% to $80.18. down $20, according to Kitco's gold index.

Let’s also break this forecast into factors that could push up precious metals prices compared with factors that may pull bullion prices down.

Here are three reasons why I speculate gold and silver prices will remain high and even rise in 2012:

Quantitative Easing Plan #3: if the U.S. economy won’t start to recover, there is the possibility (even if it’s a small one) that the Fed will issue another stimulus plan (QE3);

Low interest rates: as long as the U.S. will keep its inertest rates low, gold and silver prices are likely to remain high;

Slowdown in the U.S. economy: since the U.S is entering an election year, the economic issues are likely to take the back seat; if the U.S. economy will enter a double dip rescission, precious metals are likely to thrive.

Here are four reasons to trade down gold and silver in 2012:

Recovery of U.S. Economy: If the U.S. economy will show signs of slow recovery as in the last few months of 2011, this may curb the rally of bullion prices and lower the chances of the Fed issuing another stimulus plan (QE3);

The European Debt Crisis: if the EU will continue to struggle in dealing with the debt crisis, this may also adversely affect gold and silver prices;

CME Margins: as seen in 2011, CME is likely to keep a vigilant eye on the development in the bullion market; if there will be a sharp gain, be sure there is the possibility that CME will intervene and raise margins again.

U.S. Dollar: If the U.S. dollar will continue to strengthen against other currencies including CAD and AUD, this may also negatively affect gold and silver prices.

Considering the statements mentioned above, I speculate there is a good chance gold and silver prices will perform poorer in 2012 than in 2011. If there will be another stimulus plan or an event that will stir up the markets then there is a small chance that gold and silver prices will perform better in 2012 than in 2011, but not by much. For the latest updates on the stock market, visit Stock Market Today
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