Silver Market Morning

Gold Today – The gold price closed at $1,290.4 down $5.70 on yesterday, in New York. In Asia it was being pulled back to $1,283. London is closed today. The dollar weakened to $1.3880 nearly half a cent lower. Ahead of the opening of New York, gold stood at $1,286.10 and in the euro at €926.65.

Silver Today – The silver price closed at $19.19 down 30 cents on yesterday, in New York. Ahead of New York’s opening, it was trading higher at $19.13

Gold _{(very short-term)}

We expect the gold price to consolidate with a weaker bias, today in New York.

Silver _{(very short-term)}

We expect the silver price to consolidate with a weaker bias, today in New York.

Price Drivers

With May 1^st being a holiday across most countries on the globe, today could see weakness in precious metal prices, as New York has the market to itself.

There were sales of 4.194 tonnes from the SPDR gold ETF but none from the Gold Trust. Their respective holdings still stand at 787.945 tonnes and 164.41 tonnes. We believe that this was the main factor behind the fall in the gold price yesterday in New York into a relatively balanced market. As we have said before it takes physical sales to lower the gold price properly. This is what happened, so we watch this fund to see where it is going.

Many postulate theories that the gold price reacts inversely to the state of the U.S. economy and the U.S. dollar. Yesterday the dollar weakened heavily after the Fed announcement which also confirmed that the U.S. economy was extremely weak at a growth rate of 0.1% in the first quarter of 2014. But the gold price fell!

It is now still above support, with the Technical picture indicating lower prices, but still seeing good demand from China. As we said at the beginning of the week, there is a danger of reading too much into too little. After all the gold sold from the SPDR gold ETF is sent via Switzerland straight into China.

The Fed reiterated that it would be a long time before interest rates rise in the U.S. While the economy is likely to rebound after the cold winter growth rates are extremely low, so caution must be exercised before we blame the slowdown on the weather, entirely.

The respected U.K. ‘Economist’ magazine has now evidenced and forecast that China’s economy will become the largest in the world by the end of this year. This changes the prospect of it happening only by 2019. [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]

Silver – The silver price dropped far more than gold yesterday reverting to past price behavior.

Regards,

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