Precious metals prices hold firm as ECB dents market confidence. ECB President Draghi spooked financial markets last week, sending the Euro into a sharp downward spiral against major currencies after noting the downside risks attached to the recent Euro strength. The negative correlation between gold and the USD reached the highest level since October 2011 last week. The lower correlation to USD saw gold and silver prices rebound, despite USD strength.

Key events to watch this week: The persistent divergence between the US and Eurozone economies should become more apparent this week with Q4 GDP expected to confirm the on-going recession in the Euro Area. This is likely to contrast with the US data which have been showing consistent improvement recently. US retail sales and industrial production could give an upside surprise going on recent trends in other activity indicators. Meanwhile, the Bank of Japan is likely to confirm is aggressive policy loosening, keeping pressure on the Yen in order to give a lift to the moribund Japanese economy.

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