Silver Market Morning

Gold Today –New York closed on Friday at $1,221.70. This morning in Asia it began to slip again but as London opened the gold price lifted over $1,226.30.London came in to Fix it at $1,225.50 down $7.25 on yesterday’s Fix and in the euro at €954.216 down €3.20, reflecting the ongoing weakness of the euro. Ahead of New York’s opening gold was trading at $1,234.50 and in the euro at €961.04.

Silver Today – Silver traded at $18.86 down 33 cents in London. Ahead of New York’s opening it had fallen to $19.22.

Gold _{(very short-term)}

While the consolidation continues we see this week defining the next direction in New York.

Silver _{(very short-term)}

While the consolidation continues we see this week defining the next direction in New York.

Price Drivers

Gold & Silver – Have the gold sales from the SPDR gold ETF been completed? At this juncture, while this is a key question, the next question remains, “if they do continue, will they be enough to overwhelm demand. The gold price is trying to find a floor above $1,200, but will it need to go lower short term first.” This week could well see the answers to these questions. As those who have read our latest article on demand and supply you will see that demand is not the key factor now! [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Concerns over the direction of U.S. interest rates are being put in second place behind what impact these higher rates will have on European interest rates. Both the Bank of England and the European Central Bank have attempted to tell the market that their interest rates will not follow those of the U.S. This does mean a stronger dollar, but for the wrong reasons. We believe will that gold will soon walk independently to the euro and move with the dollar.

With India turning against gold imports and encouraging leading dealers not to sell gold [allowing cash purchases only, Indian demand has dropped heavily. We see silver now being the bridge to effective gold smuggling there. But despite this, the Rupee is tumbling. It is a sad story that the Indian government is looking for scapegoats instead of taking effective measure to resolve this. It is the stronger dollar that is causing the “carry trade” to move out of the Rupee, unwinding their positions. This will happen in many countries now increasing the demand for physical gold as a hedge against weaker local currencies. So the stronger dollar does translate into greater gold demand in this investment climate. The day is coming fast now when governments will want the support of their gold reserves to add confidence to their local currencies!

Meanwhile the Japanese have turned buyers as they too watch their currency weaken.

Silver – The silver price will follow gold in the current consolidation pattern. This week therefore may see further consolidation, volatility as it looks for a clear direction behind gold.

Regards,

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