-- Posted Thursday, 5 May 2011 | | Source: GoldSeek.com
Gold fell heavily in New York yesterday down to $1,514 as one large seller of gold tried to exits the market a bit too quickly. It does look like a messy piece of dealing though. Placed at the Fix we do not believe that the price would have fallen so easily and that amount would have been taken off the market by the big buyers there.
This morning London saw the price fall from Asia’s close of $1,520 to Fix at $1,514.50 and in the euro at €1,018.08. Thereafter the price dropped suddenly after the Fix to $1,500 and €1,012.00. In the dollar the fall has been $29 and in the euro €15 as the dollar hovered around $1.4832.
This looks either like a sophisticated ‘bear’ raid on gold or a very messy piece of dealing. If the price fell 1% immediately after the Fix, the question is, why wasn’t that gold offered at the Fix to get a better price. After all the Fix is designed to balance demand and supply, whatever it is, at one price. Silver at $38.33 has fallen just over 1% as opposed to gold’s 2% on the day.
Ahead of New York’s opening gold bounced to $1,509 then fell back again to $1,507.35 and the dollar stood at $1.4702 and was getting stronger. This left gold in the euro at €1,025.20. Silver stood at $37.95 ahead of New York’s opening.
Gold - Very Short-term
The gold price should still continue to consolidate today in New York today. The dollar price is still dominated by the dollar’s exchange rate and should move accordingly. We continue to expect a weaker bias in gold today.
Silver – Very Short-term
Silver is still consolidating at lower levels and should have a weaker bias in in New York today.
Silver & Gold Price Drivers
Yesterday another 5 tonnes of gold was sold from the U.S. based gold Exchange Traded Fund SPDR. Some have speculated that this is from the George Soros Fund. We would wait to see if this is so. Nevertheless, this amount sold into the market [most likely from one owner] would be sufficient to cause the price to fall. It is an educated guess that the buyers held back to ensure the best entry price. Is this the end of the selling? It depends largely on whether the seller is just taking some profits on a trading part of his portfolio or exiting the market. We have no doubt that there are large buyers happy to take any sales on offer. In fact HSBC New York probably received the sell orders then offered them on the Fix in London. Certainly central bank and professional dealers will try to get the best price possible. We are surprised to see the gold price fall so much so quickly, because New York HSBC would have been well advised to tell the client he is going to sell the gold at the Fix, not let the price run down outside the Fix in a much thinner market. At the Fix lie the biggest buyers in the largest physical market.
Mexican news that the Mexican central bank bought 93 tonnes in the last two months is further proof that central banks are favoring a switch from dollars to gold. This policy would never be a short-term policy as it involves national reserves. Hence we do not believe this gold will return to the market. We do expect to see other South American surplus earning economies to diversify reserves into gold over time.
Portugal’s bailout of $115 billion did not stop the market from raising market interest rates on Portuguese debt, ahead of the release of details on what the package comprises. Is it any wonder that the markets are skeptical regarding bailouts in the Eurozone?
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 Thursday, 5 May 2011 | Digg This Article
| Source: GoldSeek.com
