-- Posted Friday, 28 January 2011 | | Source: GoldSeek.com
Gold fell again to $1,312 before recovering slightly to $1,315 before the Fix which was set at $1,316.00 and €957.59. Ahead of New York’s opening gold was trading at the same level as the Fix.
Another 3 tonnes worth of shares in the U.S. based SPDR gold ETF were sold yesterday. The market just stands back and absorbs what is offered without chasing prices. The gold price dropped in the euro €17 yesterday too. The euro is steady at $1.3722. The Japanese Yen was barely changed in the face of its Sovereign debt writedown.
Gold - Very Short-term
While Gold is in a consolidation mode still we expect it to tend slightly weaker today in New York.
Silver – Very Short-term
While Silver is in a consolidation mode still we expect it to tend slightly weaker today in New York.
Gold Price Drivers
Japan’s sovereign debt was downgraded today by the rating agency S&P from 'AA' to 'AA-. Japan is approaching a debt to GDP ratio of nearly 200%. The U.S. received a warning from them that they must do something about their deficit or be downgraded too. The I.M.F. added their voice to the scolding of the two nations. With these two countries the concept of ‘too big to fail’ seems to be the popular view particularly inside the U.S.A. That may be true, but it won’t stop borrowing costs for the two nations from rising and taking interest rates up there.
What this downgrading also tells us is that debt has to be cut at a time when there are few resources with which to cut that debt. The developed world is in a weakened state and needs surplus income to cut debt. If austerity measures are applied when the economy is weak, then it usually weakens a nation further. All the talk across the world that things will get better may well be hiding further weakness?
So why are the investors in the SPDR gold ETF selling their share in such large amounts at the moment? It could be that they believe interest rates have bottomed and that they believe they are going to rise sooner rather than later.
It could be that they are selling in the U.S. and buying physical bullion overseas to take it out of reach of confiscation.
It could be a single large shareholder unwinding his position too.
It could be that they believe that a U.S. recovery could still dip into deflation and a host of other reasons. We would ask you to note that the selling is coming out at the Fix where the custodians of that gold would sell the gold they hold against the shares. The selling is almost entirely from the U.S., whereas buying is still coming out of the rest of the world.
[Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors, from oil to currencies, covering the pertinent global gold and silver market influences that directly affect the gold and silver prices. It is a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.]
Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Regards,
Julian D.W. Phillips
-- Posted Friday, 28 January 2011 | Digg This Article
| Source: GoldSeek.com
