Gold Today – Gold closed in New York at $1,576.60 up $8. Asia and London took it down $10 to $1,566 as the euro continued to fall and ahead of London’s morning Fix today was set at $1,565.50 down $11 and in the euro at €1,281.097 down €3, while the euro stood at €1: $1.2220 down another 50 cents. Ahead of New York’s opening gold stood at $1,564.10 in the middle and in the euro at €1,284.84 almost unchanged on yesterday.
Silver Today – Silver was lower in New York at $26.79 almost unchanged on London yesterday. New York had lifted it slightly to $27.098 yesterday. Ahead of New York’s opening at $26.70.
Gold (very short-term)
Gold should have a stronger bias today, in New York.
Silver (very short-term)
Silver should have a stronger bias today, in New York.
Price Drivers
Gold & Silver – The dollar is continuing to attract buyers and against all currencies. With Eurozone interests having fallen 0.25% last week, and more falls expected, the ‘carry trade’ is turning to the dollar away from the euro. Interest rate arbitrage dealing is expected to favor borrowing in the euro and lending in the dollar, in the not too distant future. With as much, if not more profit made on exchange rate moves ahead of lower interest rates in Europe, now is the time to switch out of Europe and into the dollar?
Just how low will the euro fall this time round? If confidence in the future of the Eurozone has truly waned [and one understands why this is happening], then it will take a falling dollar [as confidence in the dollar wanes too] to give the appearance of a stronger euro and for it to recover against the dollar. What is worrisome is that market uncertainty is now starting to feed on itself.
We expect Indian demand to jump in as gold prices fall below Rs.87,000 soon. This should have the effect, again, of the gold and silver price breaking up against the euro and all other currencies and reflecting both its fundamentals and its role as a ‘counter’ to all currencies and not just the dollar. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.] We give a Rupee price for an ounce of gold to reflect the developed world’s pricing, but the reality is that gold is bought in 10 gram units not 32 gram [one ounce]. Prices below Rs.27,000 for 10-grams will, we believe, bring Indian investors back into buying mode.
Silver – Silver is stronger than gold now but remains in a tightening trading pattern with gold. Repeat: - This signals a large move shortly, either way!
Regards,
Julian D.W. Phillips for the Gold & Silver Forecasters
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