Silver Market Morning

Gold Today – The gold price slipped back to $1,580.40 in New York, yesterday. In Asia and London it slipped further then Fixed at $1,570.00 and in the euro at €1,203.998, while the euro was $1.3057 in the middle of a 7 point spread, which is usually 1 or two points only. Ahead of New York’s opening, gold was $1,579.60 and in the euro at €1,209.73.

Silver Today – Silver dropped back to $28.49 in New York yesterday. Ahead of New York’s opening silver stood at $28.53 with a very wide spread of 10 points.

Gold _{(very short-term)}

We expect gold to continue to consolidate with high volatility today, in New York.

Silver _{(very short-term)}

We expect silver to continue to consolidate with high volatility today, in New York.

Price Drivers

Gold & Silver – No deal in the U.S. in government yet. The spending cuts become automatic today with another dose on the 27^th March. Can they reach a deal in the final moments before midnight? That is probably why the spreads on currencies and in gold and silver are much wider than usual. The dealers are widening the distance between buying and selling prices to protect themselves from the volatility they expect to see today.

Why the volatility? They are reading a last minute resolution to halt the automatic spending cuts and a failure to reach agreement at the same time. Leaving the decision until the last moment is some game of chicken!

What is also clear is that not only the U.S. public but the entire developed world is taking a dim view of the political antics at the expense of the U.S. economy. On both sides of the Atlantic politicians are failing, or is it Democracy itself?

Gold and silver may have been pressed down hard in recent days, but the fundamentals don’t warrant it. Or are we seeing shades of 2008 here in the behaviour of precious metal prices. If so, the current volatility may be due to a fear that a change of direction in precious metal prices may come with very large moves either way. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] It is clear that central banks are enjoying the volumes of gold that have come to the market from the SPDR gold Exchange Traded Funds and the like. If the next direction is up, buyers may well have to bid well up to get their gold back or to buy in!

Silver –The distance between the buying and selling price on silver today is unusually wide telling us that dealers don’t know which way the silver prices are going to go. Whichever way it goes, will be dramatic. This is no place for widows and orphans to be!

Regards,

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