-- Posted Wednesday, 9 February 2011 | | Source: GoldSeek.com
Before London opened this morning gold stood at where it was at the close of business on Wall Street and roughly in line with the afternoon Fix at $1,363.50 and €999.71. This morning London took the price to $1,365 where it stood just ahead of New York’s opening.
While the Chinese New Year is still affecting business in Asia, the premiums on gold bars is still high, due to tightness in supply for immediate delivery. This is indicative of steadily rising demand from Asia, not as a result of any event, but as a result in long-term, rising, demand by people buying for financial security.
The dollar was again slightly weaker in London ahead of the Fix at $1.3648: €1.March and the announcement of the package of support for their debt distressed members is a key point for both the euro and the dollar. If the markets are convinced that it goes far enough to stave off any future crisis the euro will rise strongly. If the market remains unconvinced then we may see the dollar rise strongly. Either way we believe that the gold price will benefit. This is because the world’s main currencies have lost confidence and will continue to do so.
Gold - Very Short-term
Gold is looking robust so we expect the gold price to continue to attack overhead resistance with an upward bias in New York today.
Silver – Very Short-term
Silver is even more robust than gold and is standing at $30.45 ahead of New York’s opening. If we are right on gold, we would expect silver to continue to be strong in New York and stronger than gold.
Gold Price Drivers
When one cuts to the chase the immediate gold price is about the immediate supply and demand for physical gold at the moment. The day’s gold price is about the demand and supply for that day.
- Gold Futures and Options on COMEX result in, at the most, 5% of the transactions leading to an actual movement of physical gold. Those who want a physical delivery of gold in that market have to give notice to their counter-party of their intention to do so.
- Investment in gold mining shares does not directly affect the gold price.
- In a gold Exchange Traded Fund where each share is tied to a certain amount of gold, the buying and selling of those shares results in a physical movement of gold. Inn those funds where these shares do not result in a sale or purchase of gold they do not affect the gold price.
- All deals done at the London Fixings are deals in physical gold.
- The Asian gold markets are overwhelmingly physical gold markets.
We mention this above, because it is so easy to take one’s eye off the ball!
Currently, we are presenting in the Gold Forecaster, a series called “Financial Earthquakes”, covering the main crisis areas in the financial world and what they could lead to, as well as our gold forecast for 2011.
[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.]
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Regards,
Julian D.W. Phillips
-- Posted Wednesday, 9 February 2011 | Digg This Article
| Source: GoldSeek.com
