Silver Market Morning

Gold Today –The gold price in Asia held at the $1,245 level overnight but began to rise [to $1,248] ahead of the Fix where it was set at $1,250.75 exactly the same as yesterday. In the euro it Fixed at €919.804 down €4.077 as the dollar weakened. Ahead of New York’s opening the euro stood at $1.3601: €1 with gold at $1,253.00 and in the euro at €921.26.

Silver Today – Silver was virtually unchanged overnight at $19.98 up 14 cents on yesterday’s close in New York. Ahead of New York’s opening, it traded at $20.10.

Gold _{(very short-term)}

The gold price should consolidate in New York, today.

Silver _{(very short-term)}

The silver price should consolidate in New York, today.

Price Drivers

The dollar is weakening against both the euro and sterling and now stands at the lowest level seen for some months at $1.3601: €1, 50 cents weaker than yesterday. There were no sellers from the SPDR and Gold Trust gold ETFs, leaving their holdings at 848.908 tonnes and 169.97 tonnes, respectively. While the Technical picture continues to point down, yesterday saw strength in the gold price that was not expected. This shows us that on days where no sales are seen from gold ETFs the gold price holds up. A major sale, the day before that momentarily took gold down to $1,225, was absorbed quickly, which is why the gold price recovered to $1,253. Yesterday’s weakness, when we expected slight strength, was not sufficient to warrant an explanation except to say it was perhaps dealers were moving prices in expectation of sales due to the Technical picture. It is clear that the Technical picture is deterring buyers at the moment, who expect more falls in these prices after this current correction.

Over in China the only published figures on gold imports issued in Hong Kong show demand continuing to rise. Net imports were 129.9 metric tons in October, from 109.4 tons in September. Some see this demand as price related. We do not. China’s purchases in October were three times higher than the 47.5 tons a year earlier so we see it rising in line with the rising levels of wealth in the growing middle classes. Consequently, such demand will not abate with higher prices. But will gold prices fall further in the meantime? [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe to our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]

In India the pressure on government is mounting to lower gold import duties and to ease the rules blocking gold imports and there are signs that the government may accede to these requests. If they do we expect to see an immediate impact on the gold price. At the moment the balance of supply and demand favors consolidation at current prices, so the additional demand for gold from India would certainly tip this balance quickly in favour of higher prices.

Silver – The silver price continues to follow gold, almost as the long shadow of gold, rising faster and falling further than gold short-term. We cannot see this changing in the future because of the monetary aspect of silver and the nature of silver investors.

Regards,

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