-- Posted Friday, 25 February 2011 | | Source: GoldSeek.com
With the oil price running up to $120 at one point speculators closing short positions on the gold market, ensured the gold price hit $1,408 at one point. This morning saw Asia standing on the sidelines letting the gold price drift back which it did in London to be Fixed there at $1,405.00 in the morning. It then continued to drift back ahead of New York’s opening to $1,403. Because of the weakening dollar, the gold price in the euro fell further to Fix in London, this morning at €1,018.63 €8 down on yesterday.
All markets are under heightened tension because of the situation in Libya. Has Gaddafi been shot or not? Do the revolutionaries hold the Eastern side of Libya, etc, causing volatility to run amok. The big fear is that the revolution will spread to Algeria, which really will put the oil price in an upward spiral. We believe the bigger worry should be the falling dollar as it moved to the lowest level of its trading range.
Gold - Very Short-term
Speculative froth deters Asian buyers and they allowed it to slip back. Today will be an uncertain day subject to the unfolding news in the Middle East. We will see the froth taken off the gold price if there is no more dramatic news today. Today starts the Middle East’s weekend from Friday to Saturday, so we would be wise to stand back and watch. In New York, the gold price should hold or slip, but will be subject to rapid volatility on breaking news.
Silver – Very Short-term
Silver is trading at $32.86 down on gold’s downward reaction to $1,400. Silver, like gold should be quiet but vulnerable to trader’s ramping up volatility. While in this a high risk area for silver we expect silver to drift or become subject to high volatility on breaking news in the Middle East.
Gold Price Drivers
Traders are holding sway in the gold and silver markets with investors sidelined waiting for calm and for the fundamentals to reassert themselves. These are very positive for both gold and silver. Inscrutable Asian buyers have the wisdom not to chase volatile prices.
The bigger worry in the gold and silver markets should be the slipping dollar as it sags against the world’s leading currency. The change in financial market climates is, we believe, the prime cause for the dollar’s slide to the bottom end of its trading range as the world believes that U.S. interest rate hikes will follow not lead Eurozone interest rate rises.
But the day’s frothy events are capturing everybody’s attention. To us it is not surprise that the oil price is subsiding because O.P.E.C. will ensure any fall off in Production will be made up from other oil producers. We feel that oil producers would like to see an $80 oil price and will pump extra oil into the market until this is seen irrespective of Libya, et al.
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.
[The Gold Forecaster and Silver Forecaster are 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, 25 February 2011 | Digg This Article
| Source: GoldSeek.com
