European shares opened lower on Tuesday as investors concerned about the progress of the European bank union and intensified tensions between China and Japan over territory dispute. Fitch Ratings warned that it might downgrade ratings of Japan's auto and tech companies if tensions prolonged. This is expected to affect the outlook of the world's third largest economy which heavily depends of exports of auto and technological products. In the commodity sector, crude oil prices eased a tad with front-month WTI and Brent contracts trading at 96 and 113 respectively. Gold is expected to drop for a second consecutive day on profit-taking and recovery in the US dollar. We remain bullish in gold's outlook, expecting it to reach 2000 by the middle of next year and then higher in 2014. These forecasts were based on the expectations that the Fed's mortgage program would continue until the end of 2014 and the operation twist would be extended further.
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