-- Posted Tuesday, 10 August 2010 | | Source: GoldSeek.com
New York closed with gold struggling to hold above $1,200 an ounce. This morning saw that struggle continue in Asia with the gold Fix at $1,196.50, which set the tone for the market ahead of New York.
We said that the battle for $1,200 was not over yet. That’s still true. Gold must get a strong foothold above $1,205 for the battle to be won. The market remains a high-risk place right now, with potentially strong moves either way. Just as New York was opening the gold price pitched down to $1,192.
All eyes are on the spotlighted Mr. Ben Bernanke as we all wait to see if he is going to renew Quantitative Easing in the States. The Eurozone is pulling away from QE and Japan is considering more stimuli in its deflated state. The U.S. Dollar is therefore a sitting duck at the moment.
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Gold - Very Short-term
Today is an uncertain day despite the fact that four of the five bullion banks were buyers at the Fix. We do expect a vigorous day for gold, but will not say which direction, because Mr. Ben S. Bernanke holds all the cards. We would prefer to be a spectator until he plays his cards, then be ready to follow the direction given!
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Silver – Very Short-term
The silver price was fixed at $18.05 in a very defensive position. It too is waiting with its engine idling, waiting for direction from the Fed. As we said yesterday, the silver price will remain riveted to the gold price.
Gold Price Drivers
It’s time for us all to stand back and look at the ‘big picture’.
· China is growing at a rapid, but controlled rate, due to the firm grip that government has on all aspects of Chinese life and its economy. India is following but not quite so vigorously.
· Japan remains lackluster and its government is considering more stimuli to get away from deflation.
· The Eurozone, with its essentially Socialist structure and viewpoints, is in a rush to remove QE and restrain Europe’s economy through cutting back on so many deficits in that zone.
· Britain looks as though it is dipping back into recession.
What will happen to exchange rates and growth in such an environment with such an increase in uncertainty? The global picture is more important than the national one, irrespective of which country we talk about. Gold will react to the global picture over time. The U.S. Dollar may lead the way, but we believe gold investors are not going to be re-riveted to the Dollar’s movements against the Euro and why should they be? Even investors in the Eurozone are going to favor gold over the Euro in uncertainty. However, a dip into deflation is frightening many at the moment. Gold could dip, but only at first if this happens.
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Regards,
Julian D.W. Phillips
-- Posted Tuesday, 10 August 2010 | Digg This Article
| Source: GoldSeek.com
