Silver Market Morning

Gold Today – In New York the gold price fell back to $1,664.80 continuing to consolidate, yesterday. In Asia it slipped a little to $1,663 and traded around that level in London’s morning where it Fixed at $1,665.00 and in the euro at €1,217.996 down €17, while the euro was $1.3670. Ahead of New York’s opening, gold was $1,666.40 and in the euro at €1,220.71.

Silver Today – Silver closed at $31.45 down 53 cents in New York. Ahead of New York’s opening silver stood at $31.42.

Gold _{(very short-term)}

We expect gold to continue consolidating, in New York today.

Silver _{(very short-term)}

We expect silver to continue consolidating range, in New York today.

Price Drivers

Gold & Silver – The gold price continues to consolidate today within the band $1,650 and $1,690. We saw a jump from $1,660 to $1,674 in the last two days and now we watch the range tightening as the gold price pulled back to $1,663. Once it stabilizes we would expect it to settle in the mid-range in the high $1,660 area. Then we expect to see a strong move one way or the other. Please note these short-term strong moves do not reflect the fundamental picture of gold’s supply and demand factors, just the trading moves of the day. Today the surprising feature for traders is that the gold price is not rising in the dollar but is falling in the euro as the euro strengthens. It is down €10 today alone, solely on the rise of the euro. Traders usually link the moves in the euro directly to the gold price. Today, gold is moving with the dollar and falling against the euro.

A glance at the supply and demand numbers for gold points to a change in the nature of the gold price. Newly mined gold has only risen from 2,610 tonnes in 2009, when the gold price averaged $972 an ounce, to +2810 tonnes last year, when the gold price averaged around $1,650. But so called, ‘recycled’ gold [gold sold to be bought back lower down or jewelry re-worked for dowries and for it to be replaced at lower price] should have moved far more, if it was keenly price-sensitive. In 2009 this supply source stood at 1,735 tonnes and last year around 1,646 tonnes with a variance of less than 100 tonnes in the four years. If demand is to rise anymore, supply is unlikely to react significantly unless prices are much higher. Any more demand than we see at present will have to push other demand factors out of the way to get gold. Investment demand from both the private and official sectors is growing so it will take higher prices to scare off other current demand to get gold. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com].

Silver – We are seeing silver hesitate to go lower as the consolidation pattern continues to tighten. Next week could bring some surprises to the gold & silver markets.

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters