Gold Today – Gold closed in New York at $1,583.80 down $21 on Friday as the euro tumbled. Asia left it unchanged ahead of London’s opening. The morning Fix today was set at $1,581.00and in the euro at €1,287.145, while the euro stood at €1: $1.2283 down one cent. The euro stood at €1: $1.2300 after the Fix. Ahead of New York’s opening gold stood at $1,585.45 in the middle and in the euro at €1,288.98.
Silver Today – Silver was higher in New York at $27.20. Ahead of New York’s opening at $27.25.
Silver (very short-term)
Silver should have a weaker bias today, in New York.
Price Drivers
Gold & Silver – We have watched the gold price move with the euro for a long time now. We have usually seen that it is not because the dollar is strong but it is the euro that is weak. Today, and for several days last week, since the E.C.B. cut its interest rates by 0.25% to 0.75% and deposit rates with the E.C.B. were dropped to zero, ‘carry’ trade funds and other funds have fled to the dollar for better returns, or to unwind the position ‘borrow in dollars and lend in euros’. The result is that the dollar became stronger and the euro weaker. Traders then imposed this change on gold and silver. In the distant and recent past this pressure on the gold and silver price has been short lived with gold breaking up in the euro and rising with the dollar. Can we expect this, this time around? [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.] This week will show the way.
One currency to watch that will affect the gold price is the Indian Rupee. After stabilizing at just above Rs.55, it has weakened slightly, again. If the Reserve Bank of India can achieve its target of a stronger Rupee, we will see Indian demand come to life again. Now more than half way through the quiet season for gold, we do not expect to see substantive demand for gold from there.
When gold prices rose to new highs in past years it was during the ‘quiet season around now, in the year, but due to structural fractures in the monetary system, such as the bounce after the ‘credit crunch’ in 2009. These factors are not seasonal though, so unpredictable. Today, we see a build up in pressures that may see a similar event.
Silver – The silver price is following gold still but much slower when the two are falling. This week may see both gold and silver break expected patterns.
Regards,
Julian D.W. Phillips for the Gold & Silver Forecasters
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