Silver Market Morning

Gold Today –New York was closed yesterday after a quiet day in London. Asian demand added nothing to the price. Then London came in to pull the price down to Fix it at $1,232.75 down $16.75 on yesterday’s Fix and in the euro at €957.401 down €3.7, reflecting the weakness of the euro. Ahead of New York’s opening gold was trading at $1,234.40 and in the euro at €958.53.

Silver Today – Silver traded at $19.19 down 61 cents in London. Ahead of New York’s opening it had fallen to $19.15.

Gold _{(very short-term)}

We expect the gold price to continue to consolidate with a weaker bias in New York today.

Silver _{(very short-term)}

We expect the silver price to continue to consolidate with a weaker bias in New York today.

Price Drivers

Gold & Silver – While on the surface the Bank of England and the European Central Bank appeared to be following the Fed in keeping interest rates low, both have made it clear that they will keep interest rates low “for an extended period”. The Fed has indicated the possibility of a reduction in the $85 billion Treasury buying program in the future. Mario Draghi added “It’s not six months it’s not 12 months. It’s an extended period of time.” [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] Mr. Draghi said that monetary policy would be guided by changes in the rate of inflation, the state of the euro zone economy and indicators of the money supply. Previously, the central bank emphasized inflation above all else. So what effect is this having relative to gold? The first market reaction was to see a fall in yields of the debt distressed members of the E.U. bonds. It is clear that with inflation well below 2% his fears are focused on deflation. If this worsens, and it is the most likely global trading bloc to see it do so, then the structural faults of the E.U. could well threaten either a partial break-up of the E.U. and/or the euro will weaken substantially in the weeks and months to come. The crisis has not gone away.

We do not see the extension of low interest rates as positive for the E.U. but simply an additional ‘emergency measure’ in an attempt to stave off worse financial problems for the E.U. The E.U. is in crisis mode, as we see now in Portugal, Italy, Greece and Spain. A continuation of low interest rates from the E.C.B. does not help them more than superficially.

So, overall, the E.U. situation is gold positive even though the dollar will be rising against the euro. We are at a time when the dollar will be strong going forward and the gold price will continue to consolidate for the short-term at least.

Silver – The silver price is being driven lower by traders and dealers expecting lower prices in New York today.

Regards,

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