-- Posted Wednesday, 23 March 2011 | | Source: GoldSeek.com
The gold price rose overnight and was Fixed at $1,433.00 and in the euro at €1,008.59. The euro fell slightly from yesterday and now stands at $1,4203. The rise in gold is best seen in the euro price rather than the dollar.
Every day brings a new drama. Today’s is Portugal [again?] who are facing a critical vote in their Parliament on whether to accept the austerity measures put forward by their government or not. To reject them would be to inject a little more poison into the Eurozone crisis. But this time we are talking about a bigger boy than Greece or Ireland. The trouble is politicians are involved in resolving a financial crisis, which doesn’t seem to be a good idea these days. The euro has stopped falling slower than the U.S. dollar for the moment and stands at $1.4206. The main reason for this is not a stronger fundamental picture, but the fact that the E.C.B. will raise interest ahead of the Fed. Both have a poor fundamental foundation, so it’s what you are paid to hold it that makes the difference.
The gold price just ahead of New York’s opening had moved up firmly in the euro and stood at €1.012.63 but in the dollar [which firmed to $1.4136 against the euro] the gold price stood slightly lower at $1,431.65.
Gold - Very Short-term
Gold looks as though it will either hold these levels or tend stronger in New York today.
Silver – Very Short-term
Silver was Fixed at $35.95 yesterday and is now trading at $36.55. Silver is continuing to trade stronger than gold and is rising today too. We expect it to hold current levels or show a stronger bias in New York today.
Gold Price Drivers
The Eurozone crisis is back on the table today, with the Portuguese politicians putting in their penny’s worth. If they reject the austerity measures put forward for Portugal, they will bring the Eurozone crisis to a new level of crisis. There is still the talk on the ‘rescue fund’ due out before the end of the month, but banks and bondholders are looking at this with a jaundiced eye at the moment. The efforts seen to date don’t inspire confidence, so far. It seems they are having trouble in constructing the ‘bailout fund’ to be placed in position by 2013. If it were me looking for a bank loan and I performed as they are my bank would refuse me. But then banks need clients and the range of options he has improves my chances.
Have you noticed today that gold is up in the euro? It’s at €1,008 ahead of the morning Fix. It moved to €1,012 before New York opened. If gold is really to perform it must perform in the euro. The recent peak of gold in the euro was around €1,065. At today’s exchange rates, were it to go back to €1,065 in the dollar it would have to rise to [€1,065 x $1.4206] $1,513. Is that asking a lot now? If you are U.S. based you may be gasping now. If you are European, you may just be shrugging your shoulders? That’s what exchange rates are all about. So again we ask what it the price of gold? Or should we ask, what is the price of the dollar, or the euro?
The real question you should ask is, what should the euro be in gold? Then you ask what should the dollar be against the euro? To do this will make one face the real reasons why gold and to a large extent silver are at the prices they are. It’s about currency values not about the value of precious metals. We must confess we feel that we are a voice in the wilderness when we say these things.
[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 Wednesday, 23 March 2011 | Digg This Article
| Source: GoldSeek.com
