Silver Market Morning

Gold Today –The New York gold price closed almost unchanged at $1,244.90 at the close on Friday. Asia lifted it through to $1,247 before London fixed it at $1,246.50 the same as Friday. In the euro, it Fixed at €922.582 up €2.044 reflecting a slightly stronger dollar which stood at $1.3504 up 0.29 cents. Ahead of the opening in New York gold stood at $1,246.15 and in the euro at €922.80.

Silver Today –The silver price closed almost unchanged at $19.16 down 4 cents in New York. Ahead of New York’s opening, it was trading at $19.23.

Gold _{(very short-term)}

We expect gold to consolidate with a positive bias today, in New York.

Silver _{(very short-term)}

We expect silver to consolidate with a positive bias today, in New York.

Price Drivers

Friday saw a sale of gold of O.4 of a tonne of gold into the SPDR gold ETF [GLD] but a purchase into the Gold Trust gold ETF of 0.49 of a tonne of gold, leaving their respective holdings at 793.155 tonnes and 161.86 tonnes. This had no impact on the gold price. With these funds entering a third week where U.S. based gold ETFs are either seeing purchases or no effective sales, the 2013 additional supply of around 1,300 tonnes is looking more and more like it is drying up. Just the absence of these sales in 2014 is structurally changing the gold market’s fundamental picture. Even in the absence of full demand from India, this change alone is tipping the balance in the gold market. We cannot stress this enough!

What is also of note in the U.S., where gold was sold down in the face of dollar strength is the sight of the dollar getting stronger by 3 cents, or over 2%, as the gold price holds its ground on strong support. The market is currently thin.

And all this while the Chinese are on holiday! From the middle of last week through to the end of the Chinese holidays sees Asian demand at the lowest we have seen for years. This is because the continued choking off of demand from India by using strangulating import restrictions on both gold and silver [but more so on gold] when added to the drop in demand at the start of the Chinese Lunar New Year holiday is effectively making that demand evaporate. It will return as the holiday in China ends and at the end of March, in India. How certain are we of this? With Asian demand at such a low point, the gold price should be tumbling, as the negative U.S. attitude towards gold persists, but it isn’t. Once that Asian demand comes back and finds a ‘balanced’ market’ what will happen then?

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The fall in emerging market currencies appears to have ceased being so brutal, as markets take a breather. But the crisis remains!

Silver – The silver price will continue to wait for a clear direction from the gold price before showing a stronger performance than gold.

Regards,

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