Silver Market Morning

Gold Today –New York closed at $1,398.20 down $13.80, yesterday, after which Asia took it up to $1,407, before London held let it slip below $1,400. It then Fixed lower at $1,396.50 down $8.75 and in the euro at €1,068.89 down €5.80 while the euro was stronger at €1: $1.3065. Ahead of New York’s opening gold stood at $1,398.75 and in the euro at €1,070.72.

Silver Today – Silver closed at $22.54 in New York yesterday. Ahead of New York’s opening silver stood higher at $22.50.

Gold _{(very short-term)}

The gold price will see more consolidation with a slightly stronger bias, in New York today.

Silver _{(very short-term)}

The silver price will see a more consolidation with a slightly stronger bias, in New York today.

Price Drivers

Gold & Silver – Despite the ban on any import of gold on consignment basis [where the buyer has yet to pay for the gold] except to meet the needs of exporters of gold jewelry India recorded a trade deficit worth $17.8 billion in March, equal to 11% of economic output. Some 40% of March's deficit was because of gold bullion imports. India imported around 162 tonnes of gold in May which is a huge number [if this were the monthly number over a year it would equate to 56 tonnes short of 2,000 tonnes]. At its historic best, Indian imports reach 1,000 tonnes, but usually 850 tonnes or less. To get a proper perspective on this number newly mined gold is around 2,850 tonnes a year. April's imports were 142.5 tonnes.

It is believed the Indian government is considering new measure to curb gold imports, such as banning all purchases by jewellers on a deposit basis with full payment on delivery. On May 13, the central bank banned such purchases from banks. We believe they will have to be more draconian to have a real impact on gold imports, particularly as gold price there are 25% down from their peak levels.

From June through to the end of August, the ‘marriage and festival seasons’ are over, planting begins, followed by a forecast ‘normal’ monsoon, then harvesting. September and October then see Indian buying start up in earnest, again. The amount of disposable income Indian farmers then have is as a result of the level of the monsoon. In the past the farming community was responsible for 70% of India’s demand, but this figure has dropped in line with the growth of the urban middle classes there.

Yesterday saw another 1.975 tonnes of gold sold from the SPDR gold ETF and Gold Trust in the U.S. The market remains sensitive to these sales even though it was not a large amount. It did pull the gold price below $1,400. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver price is showing a steady, solid performance with far less volatility than the gold price is.

Regards,

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