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Silver Market Morning

Gold Today – Gold closed in New York at $1,572. London opened at the same level, but as the euro slipped slightly it slipped marginally too, but then recovered ahead of the Fixing in London to Fix at $1,569.00 and in the euro at €1,256.406 almost the same as Friday’s level. Ahead of New York’s opening gold stood at $1,570.30and in the euro, €1,257.25 while the euro was at €1: $1.2490.

Silver Today – Silver held at lower levels in line with gold to trade in London at $26.77. Ahead of New York’s opening at $26.82.

Gold (very short-term)

Gold will continue an important phase of its consolidation, today in New York.

Silver (very short-term)

Silver will continue an important phase of its consolidation, today in New York.

Price Drivers

Gold & Silver – The most important news for the gold and silver markets came from India. The government there has announced measures to strengthen the Rupee, which is standing at Rs.56.98 against Friday’s level of Rs.57.3 against the U.S. Dollar. They have raised the ownership ceiling on government bonds by $5 billion to $20 billion.

The combined limit on sovereign and corporate debt was last increased to $60 billion from $50 billion in November. The yield on India’s benchmark 10-year bonds has dropped 49 basis points to 8.08% this year, still 6.44% points higher than comparable U.S. Treasuries. They believe that this will stem outflows from India.

Fitch Ratings signaled that the nation’s rating is at risk of demotion to junk status. Fitch lowered its outlook on India’s BBB- ranking, its lowest investment grade, to negative from stable, citing a deteriorating growth outlook and limited progress on paring the budget deficit. S&P and Moody’s Investors Service also assign India their lowest investment-grade levels.

With the Rupee having fallen almost 35% over the last year we expect more measures to follow as the problem appears broader than will be handled by just this measure.

Gold imports could come under their gaze as this absorbs $30 billion a year of their reserves. However this will prove deeply unpopular if it happens. For sure, if it is, smuggling gold into the country will be resurrected again.

If not and the Rupee strengthens materially, it will be almost certain to re-ignite demand for gold as Rupee prices fall in line with the strengthening Rupee. It will also slow the re-cycling of gold and trigger demand. This will necessitate demand for imports of gold.[To follow our weekly commentary, please subscribe to our newsletters at and at].


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

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