Silver Market Morning

Gold Today –New York closed at $1,378 down $34 on Friday. China was closed well before then and will be so until Thursday. London opened slightly weaker, probably a carry-over from the close in New York on Friday. It then Fixed lower at $1,376.75 down $33.25 and in the euro at €1,041.887 down €24 while the euro was weaker at €1: $1.3214. Ahead of New York’s opening gold stood at $1,379.40 and in the euro at €1,043.14.

Silver Today – Silver closed at $21.57 down $1.11 in New York on Friday. Ahead of New York’s opening silver stood higher at $21.60.

Gold _{(very short-term)}

We expect a consolidation at lower levels in the gold price, in New York today.

Silver _{(very short-term)}

We expect a consolidation at lower levels in the silver price, in New York today.

Price Drivers

Gold & Silver – With Chinese markets now closed until Thursday and Indian demand dwindling in the face of the monsoon planting season, physical demand is at very low levels. Central banks remain in the market, waiting to pick up gold offered as the price falls. But the week will once again this prove to be an irresistible opportunity for the ‘short’ side. So when New York was hit hard on Friday, it tumbled $34 quite easily.

With the U.S. based gold ETFs Gold Trust seeing small sales but the SPDR seeing none on Friday, their combined level of 1,538.421 tonnes meant that 0.621 of a tonnes was sold on Friday. This was not enough to support a ‘bear raid’. It appears that the fall in the gold price was an entirely speculative venture by traders who are relying on the absence of Asian demand over the next three days to force the price lower. This is a far more risky set of trades than the previous ‘bear raid’ and needed to be supported by physical sales by the traders [banks/hedge funds] again. The expectation that Chinese demand will return later in the week implies this current bout of ‘shorting’ of the gold price may well be reversed very quickly.

The fall in the gold price this week does not reflect the fundamentals of the gold market. Through both the restrictions in supplies [due to the lower price] from mines and scrap sales as well as bargain hunting reappearing as buyers will make this week an extraordinarily volatile one, both ways. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver price fell nearly 5% but with no sales on Friday from the Silver Trust. As with gold, the price fall, we believe, was the result of trader’s shorting the market. This implies, as with gold, that again, the week should be volatile both ways this week. We expect silver to be more volatile than gold this week, after its very steady performance of last week.

Regards,

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