-- Posted Friday, 29 April 2011 | | Source: GoldSeek.com
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It seems the Royal Wedding cancelled the London Fix today, but that did not stop the gold price from performing remarkably in the dollar again. Sorry, let’s re-phrase that and say that the continuing fall in the dollar was well reflected in the gold and silver prices as the dollar fell to close to $1.49 before recovering to $1,4850 ahead of New York’s opening. Again, today’s moves are all about the dollar. It’s moves are not simply the ebbing and flowing of minor factors and daily influences show a downward trend as powerful as a tide in the sea. There is no froth in either the gold or the silver markets, so investors should not see any heavy fall due to speculators getting burnt. Likewise, until something convincing is done to strengthen the dollar there is little reason why it should recover.
Silver prices rose to $48.74 looking robust going into New York’s day.
After the Fix, but ahead of New York’s opening gold held at $1,536 and the dollar weakened to lower than Friday at $1.4850. This left gold in the euro at €1,034 still a gentle rise only.
Gold - Very Short-term
The gold price continues on its upward path, so we expect New York to continue to show a positive bias today.
Silver – Very Short-term
Silver continues on its upward path, albeit at a slower pace, closer to that of gold, so we expect silver to continue to show an upward bias in New York today.
Silver & Gold Price Drivers
It seems that the sobering press conference Mr. Bernanke gave, has drummed home that the current state of the U.S. economy, interest rates and by extension the dollar, looks far less encouraging than was thought. Like person suffering from anemia the U.S. is vulnerable to more sicknesses that could strike the body far more severely than if the patient were healthy. So the dollar continues on its downward path giving the appearance that gold and silver are rising. In fact everything is rising in dollar terms, because the dollar is seriously stumbling on foreign exchanges.
Perhaps the surging Chinese Yuan is a signal from the Chinese monetary authorities that their relationship to the dollar is changing. This could spread into their policy on dollar reserves too? Certainly one of the ways to control imported inflation and particularly energy inflation is to lower its imported cost by raising the Yuan. This is what we believe is behind the rising Yuan. There is no way that China will allow itself to be hurt by a falling dollar if that pain can be avoided by their appropriate actions. Without the support of Chinese surpluses being pumped into the U.S. the prospects for the dollar are dire. It’s also clear that China will be poorly served by allowing the Yuan to fall any further with the dollar. It’s competitiveness with the rest of the world is so good that it does not need to fall further. It can let the dollar plummet by itself.
All imports to that the U.S. are rising in price. The amount they would have to rise against home produced good in the U.S. for local products to be cheaper is far in excess of the amount the Yuan will rise now. Also, look at the gold price in the Yuan [with a rising Yuan against the dollar] shows a stable picture and one that will not affect Chinese demand for gold.
We cover the implications for gold in macro-economic and currency events in all the issues of the Gold Forecaster and the Silver Forecaster for subscribers. [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 for the Gold & Silver Forecasters
-- Posted Friday, 29 April 2011 | Digg This Article
| Source: GoldSeek.com
