Silver Market Morning

Gold Today – The gold price closed at $1,291.10 down $4.80 on Wednesday’s level in New York. In Asia and early London, gold prices pulled back to reflect a strong dollar. The gold price was Fixed at $1,280.50 down $14 and in the euro at €965.031 down €8.717, while the euro was weaker at $1.3269. Ahead of New York’s opening, gold was trading at $1,281.50 and in the euro at €966.40.

Silver Today – The silver price closed in New York at $19.50 up 1 cent. Ahead of New York’s opening it was trading at $19.36.

Gold _{(very short-term)} We expect gold to search for a bottom, in New York today.

Silver _{(very short-term)} We expect silver to search for a bottom, in New York today.

Price Drivers

There were purchases of 0.898 of a tonne into the SPDR gold ETF and a purchase of 0.48 of a tonne into the Gold Trust on Wednesday. The holdings of the gold ETFs stand at 800.085 tonnes in the SPDR gold ETF and at 166.41 tonnes, in the Gold Trust. This was in the face of lower gold prices. The question is, will this persist?

Dollar strength is against all currencies, but at the moment, physical demand for gold is not coming in sufficiently to push dollar prices higher, so prices are being pushed down in line with dollar strength. The Fed indicated that interest rates may be raised earlier than expected. Interest rate rises will not be on the back of solid growth and may extinguish the growth we have in the U.S. But that prospect is why the dollar is strengthening [as carry trade funds return home].

We do expect the euro to continue falling and the dollar to strengthen further. However, because the fall is not due to physical sales we expect volatile markets. Once seasonal physical demand comes in, then upward pressure on the price will turn prices around, in this type of market.

We forecast at one point that there would be four gold Fixings globally with two in Shanghai. This week, China added three banks to the list of gold importers as they broadened the market base in Shanghai. It is certain that China is developing its own market hub, one that may well eclipse London eventually. This makes it imperative to have some sort of Fixing there. [Subscribe www.GoldForecaster.com – ensure your gold will not be confiscated and you not penalized -see www.Stockbridgemgmt.com ].

A factor that investors in mining shares need to take into account is that in countries like Russia and South Africa, mining companies are not paid in dollars, but in the local currency [Ruble & Rand]. These fall as the dollar rises cushioning these company’s profits to some extent. We believe both these currencies will continue to weaken.

Silver– The silver price rose slightly and may hold its ground. www.SilverForecaster.com]

Regards,

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