-- Posted Wednesday, 12 January 2011 | | Source: GoldSeek.com
Gold was stronger than expected in New York yesterday and rose through the night in Asia back to the mid-$1,385 by the time London opened. In London it drifted back to $1,383 before being Fixed at $1,383.50 and €1,061.29.
Today is a day when Portuguese government creditworthiness is put to the test. We believe the auction will succeed just, at a premium to German debt, because we are seeing Japan and China offer to support these issues as a helping hand to keep the credibility in these bonds. No doubt the E.C.B. will be buying too. If that does happen, then it will be a helping hand, not a solution to the problem, but the markets will sigh a breath of relief and this may calm fears as well as the gold price for a short time. Spain comes to the market tomorrow and should see the same sort of support. If we are wrong and the auctions do not succeed very well gold will run and the euro fall, even in the short-term.
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Gold - Very Short-term
The gold price this morning is steady at the top of its trading range, but may struggle to keep that strength in New York, today.
Silver – Very Short-term
The silver price this morning is steady at the top of its trading range, but may struggle to keep that strength in New York today.
Gold Price Drivers
“Official” intervention in currency or bond markets is a desperate sign, telling us that public confidence is so low that currencies or bonds will fall without such support. This is gold positive, but in the short-term does calm markets. Often it attracts speculators who attempt to use up such support by selling heavily. If support fails then the subsequent fall is far greater than it would have been without “Official” support. What’s more, “Official” support is rarely enough to change a trend. That trend for the euro is down until there is real action that convinces the public that the underlying national problem has been rectified. This has not happened yet.
In the past this may have been enough to damage the gold price in the short-term, but in these days of global demand and particularly growing Asian demand any falls in the gold price brings out Asian buyers on the fall, limiting it. Let’s see!
We are issuing a series on “The Financial Earthquake” that lies ahead in the years to come, in our newsletters. We suggest you subscribe to the Gold Forecaster and Silver Forecaster where you can read these. It is there that we will we will detail all the factors that will join to jeopardize the global economic landscape in 2011, keep you in touch with their progress and give you our forecasts for 2011.
Regards,
Julian D.W. Phillips
-- Posted Wednesday, 12 January 2011 | Digg This Article
| Source: GoldSeek.com
