Silver Market Morning

Gold Today –New York closed at $1,386.00 on Friday. Asia held the price at that level as did London, where it was Fixed at $1,386.00 and at up $6.25 and in the euro at €1,035.537 down €3.50 while the euro was slightly stronger against the dollar at €1: $1.3345. Ahead of New York’s opening gold stood at $1,381.00 and in the euro at €1,035.58.

Silver Today – Silver closed at $21.75, up 2 cents in New York on Friday. Ahead of New York’s opening silver stood higher at $21.75.

Gold _{(very short-term)}

We expect gold to consolidate around current levels again, in New York today.

Silver _{(very short-term)}

We expect silver to consolidate at current levels again, in New York today.

Price Drivers

Gold & Silver – Demand from China was only sufficient to hold the gold price at current levels. The move down in the gold price as the U.S. opened reflected the change in the $ exchange rate against the euro. What is happening is that the trading range of the gold price is narrowing to the point where a strong move in the gold price either way is close now.

We will again be watching the SPDR gold ETF to see if more sales hit the market. This remains a decisive factor in the movement of the gold price. But it is clear that any substantive fall in the gold price will be met by Chinese demand as price slide.

What is not gaugeable at this stage, with any accuracy, is the impact these lower prices are having either on newly mined production of gold or on scrap sales. In both cases the lower prices are a direct discouragement to production and sales.

- In gold production, most mines worldwide are having to move to higher grade ore to maintain profitability.

- Scrap sales are being discouraged by lower prices as scrap sellers feel that higher prices are on the way, so holding off remains a good policy. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

There are stories in the market that developed world central banks are selling gold. If this is correct then we feel that the U.S. is responsible. European central banks are unlikely to be sellers simply to hold the price of gold down, because of the European Sovereign Debt crisis and the dangers presented by the current recession there. European investors have been among the buyers of gold in recent weeks. Indeed, nearly all the sales have come from the U.S. U.S. hedge funds, banks and gold ETF’s have been the source of sales over the last four months and more. Outside the U.S. gold sales have been negligible.

Silver – Silver’s is still marking time waiting for a clear direction from the gold price.

Regards,

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