Silver Market Morning

Gold Today – The New York gold price closed at $1,355.40 down $10.80 on Tuesday in New York. Asia held it slightly below that level ahead of London’s opening. The gold price was Fixed in London at $1,346.00 down $16.50. In the euro, it Fixed at €967.162 down €12.208 as the dollar continued to weaken to $1.3917: €1. Ahead of the opening in New York gold stood at $1,347.25 and in the euro at €967.23.

Silver Today – The silver price closed at $21.13 down 28 cents in New York. Ahead of New York’s opening, it was trading at $20.80.

Gold (very short-term)

We expect the gold price to react to the Fed statement, today in New York.

Silver (very short-term)

We expect the silver price to react to the Fed’s statement, today in New York.

Price Drivers

Yesterday, there were no sales or purchases from or into the SPDR gold ETF. The Gold Trust saw a purchase of 1 tonne which left their respective holdings at 812.776 tonnes and 166.14 tonnes. The purchase appeared to have happened after the gold price had dropped back to support around $1,350. This appears to be a good entry point for us. The U.S. dollar is only marginally changed at $1.3925: €1, as it continues to stand at the bottom end of its ‘unofficial’ trading range, just above $1.40: €1. [For more on this, subscribe to www.GoldForecaster.com and www.SilverForecaster.com and visit www.StockbridgeMgMt.com to hold gold out of reach of potential confiscation]

While media reports continue to put the Ukraine center stage, the markets have marginalized it in terms of its impact on them. We do not consider it to have an influence on the gold or silver prices, at the moment.

Today’s focus of attention is on the FOMC with all looking to see if tapering is continuing, as we have seen of late. We believe it will, but would emphasize the separation Janet Yellen, the Chairman of the Fed, has made that interest rates are not linked to ‘tapering’, which we expect to continue at $10 billion today. The market may well see it differently and try to raise rates independently. We concur with the view she stated when taking office, that the U.S. economy has a long way to go before the Fed can raise interest rates. Perhaps just the prospect of such a rise is causing foreign investors to flee the market, as we mentioned yesterday. Combine the prospect of Treasury prices falling with the dollar slipping as well, and we see adequate reason for closing foreigner’s positions. Rate rises cause capital outflows from the emerging world back to the U.S. and emerging world sales of Treasuries see capital flows leaving the U.S. [as they sell dollars]. But right now the outflow is far worse than the inflow as the dollar reaches the bottom of its trading range at $1.40: €1.

With such prospects the gold market is trying to discount the worst, but the worst may well not happen. It is not heavy physical selling that is making the gold or silver price, so we may see volatility in these prices today. Janet Yellen holds center stage!

Silver –

The silver price is proving as cautious as the gold price today.

Regards,