Silver Market Morning

Gold Today – Gold closed in New York at $1,598.50 before the long weekend. In Asia and London it traded over $1,600 ahead of the Fix in London which was set at $1,597.75 and in the euro at €1,244.64, while the euro was at €1: $1.2837. Ahead of New York’s opening it traded at $1,597.25 and in the euro at €1,244.35.

Silver Today – Silver closed at $28.01 down over 1% on Thursday of last week, in New York. Ahead of New York’s opening silver stood at $27.97.

Gold _{(very short-term)}

Gold will continue to consolidate around $1,600, in New York today.

Silver _{(very short-term)}

Silver will continue to consolidate, in New York today.

Price Drivers

Gold & Silver – While the U.S. economy has a much better tone to it Europe continues to look at deflation as it remains in recession and unemployment worsens to over 12%. We see deflation remaining the big danger in Europe leaving Spain particularly vulnerable in the aftermath of Cyprus. Contagion from Cyprus to Spain is by no means off the table. But the slow motion progress of the Eurozone debt crisis does not hit exchange rates as hard as expected and so the gold price is not reacting to these. We don’t see gold and silver prices reacting to these events, but rather to demand from China and Central banks. To this we can now add Indian demand as the ‘marriage season’ gets underway again there.

But we also expect traders and speculators try to knock the gold and silver prices down again. So this week could see this battle resolved. The elongated consolidation phase in the gold and silver markets is remarkable with buyers coming in under $1,600 now and pulling back when the price rises above that favors the long-term buyer, because speculators have to close such positions at some point in time, whereas long-term persistent buyers and holders of gold are not sellers, usually. The Joker in this pack is scrap sales. If sellers of gold because they feel that prices are going to fall, come in then as 40% of the current supply to the market they do have a big influence. If they feel prices have ‘floored’ then may not only hold off, but come in as buyers. Investors have to work out where a price of gold is that precipitates selling. At the moment there is huge evidence that a ‘floor’ has been established in the gold and silver price.

As evidence that specific events don’t influence precious metal prices unless a direct link between these events and buyers or sellers of physical gold are affected, the North Korean threat of nuclear war from a nation capable of waging it has not influenced world markets. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Silver remains sensitive to the downside.

Regards,

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