-- Posted Friday, 28 May 2010 | | Source: GoldSeek.com
This morning the Gold Fix was set at $1,214 and the gold price 2 ½ hours after it, is $1,214. The gold price has moved away from the influence of currencies for now at least and is walking its own road. The gold price didn’t fall on the signing of the Spanish austerity measures. [Our newsletter covers how we expect the gold price to react now]
Gold - Very Short-term
In the face of what many deem to be bad news for gold, the gold price continued to build on the base it has formed above $1,205. On most Fridays the gold market is at its most active, occasionally frantic. So be ready! However, with London dominating the gold price, this afternoon’s Fix and physical demand flowing through it will dictate the prices for the rest of the day. Unless some breaking news disturbs the market, expect this above-$1,210 level to persist.
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Silver – Very Short-term
With silver slowly rising back to $18.50 [currently $18.46] it’s still tracking gold, but more erratically than we have seen before. The GFMS report on silver will affect institutional demand, for sure. This was extremely positive for the metal, agreeing with a position we have held for a long, long time. But as with gold, should there be more bad news coming from the Eurozone or any other worrying area, things could change and quickly.
Gold Price Drivers
The fundamentals for gold and silver are excellent, from the straightforward supply and demand point of view, according to the very competent GFMS. However, the gold price is not simply about the gold industry, but about factors outside gold. It is important for your understanding of the gold market to appreciate this. With investment demand flooding the supply side, other demand factors are sitting in a distant second place.
What is extremely relevant to the price is an extension of what we say in the newsletter, more fully, that when the current, immediately available supply from traditional and weak investors dries up, much higher prices will have to be paid to resuscitate scrap sales in quantity. GFMS states this too.
While the Spanish Parliament passed its austerity measures yesterday and the € rose to $1.24 at the start of New York’s day, the change did not affected the gold price. Few are convinced that what should have been done, has been done, to rectify Europe’s deficit problems and most are expecting a small period of calm before the next crisis. Please note that should any of these several governments fail in keeping to these plans, there is no other borrower of last resort. The resulting crisis of confidence will pull down even Europe’s strongest economies, unless the € gives way first.
We’re sure that bets are now being taken as to which will be the first government [s] to revert back to its old currency in the Eurozone.
Regards,
Julian D.W. Phillips – www.GoldForecaster.com
-- Posted Friday, 28 May 2010 | Digg This Article
| Source: GoldSeek.com
