-- Posted Wednesday, 30 March 2011 | | Source: GoldSeek.com
For the last two days the gold price has been hovering around $1,419 and $1,421. This is in line with the London Fixes. It is well to be reminded that 90% of the physical transactions are dealt in London at the gold Fixing. Despite this, we are sensitized to the fact that a very small, tight trading range such as this tells us we are entering a high risk period. Widows and orphans would do well to be on the sidelines unless in for the long haul. What often happens now is that the next move is a strong one either way. The volatility that one sees at these times may or may not go with the trend.
The dollar continues to do the same as gold and is hovering at around $1.41. It has little support at these levels except from central bankers trying to get it to hold these levels. We have to emphasize that the dollar’s moves should be separated from those of gold. The euro price of gold stands at €1,007, just slightly lower than seen in the last couple of days. But it too is hovering around these levels reinforcing our view that we are soon to see a strong move, either way.
The gold price just ahead of New York’s opening was trading a $1,419.65 and the dollar at $1.4098.
Gold - Very Short-term
Gold looks as though it will continue to consolidate around €1,010 and reflect the exchange rate of the $: € in the dollar price ahead of a strong move either way.
Silver – Very Short-term
Silver was Fixed at $36.62 on Tuesday in London and is following gold again. We expect it to hold current levels ahead of a strong move either way in New York today.
Silver & Gold Price Drivers
Gold continues to see strong emerging world demand, in particular from China. It is worth repeating that the potential demand from China is something that the gold market has never seen before. 1.4 billion people are coming out of poverty. Most of them are conservative savers of around 40% of disposable income. All are fully aware of the destruction that food and energy inflation can do to their savings. Each is fully aware of how well gold has performed against their other traditional investment, bank deposits. The developed world favors gold related assets over bullion itself. The Chinese Investor, fully aware of the pain of life, trusts gold bullion.
With the silver price performing as never before it is appropriate that we increase the spotlight on silver. At $37.35 silver is sitting in almost a new atmosphere, closer to the stratosphere than seen before.
On the industrial side of demand for silver the days when photographic demand was the key driver for the metal have gone, replaced by digital photography. New uses in electronics and from medical uses promise far greater demand. What’s more important than quantity is the type of demand silver is seeing. Electronics as such is now an indispensible part of our lives. It has moved from a want to a need in these applications. This demand is not what’s driving the silver price though. As you know its price has and is moving with gold. The gold price is not driven by the industrial demand for silver. When you read that gold moved because of Eurozone debt problems, you have a vision of someone or some institution phoning his or its dealer and turning cash into gold or silver holding so as to protect value. Industrial demand [if the media is correct] has little to do with the price of the precious metals.
It’s as though ‘normality’ is any day when some crisis is not gripping our attention. Gone are the days when crises were occasional. However, we have to raise an eyebrow on the prospect of the dollar falling faster than the euro when we consider Eurozone problems. It all remains ‘gold-positive’.
[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, 30 March 2011 | Digg This Article
| Source: GoldSeek.com
