-- Posted Thursday, 12 May 2011 | | Source: GoldSeek.com
The dollar continues to strengthen, not the euro to weaken, because the dollar is rising against all currencies. This is distorting the picture of virtually all markets. Even the oil price is acting like a currency, with it falling as the dollar strengthens. The implications of the dollar’s moves are huge. In Asia the dollar gold price fell $15 and the silver price $2 just ahead of London’s opening. The bulk of this was adjustments to the dollar’s moves with the gold price off less than ½% in the euro at €1,050. The gold price Fixed this morning in London at $1,488.25 and in the euro at €1.050.50.
Ahead of New York’s opening the gold price in the dollar stood at $1,483.40 and in the euro at €1,047.45 and the dollar stood at $1.4162.
Silver continued to fall faster than gold until it touched $32.74 down from $39 in London. This is a 20% drop in one day. The fall is considerably more than the dollar’s fall but on little trade. The potential for greater volatility is there. Silver is no place for the shy at the moment.
Gold - Very Short-term
The dollar continues to dominate the dollar gold price. Euro gold prices will be positive today, but the strength of the dollar may well give a negative bias to the gold price today, in New York.
Silver – Very Short-term
The dollar continues to dominate the dollar silver price plus some. We believe that the silver price will have a negative bias in New York today, because of the moves in the dollar.
Silver & Gold Price Drivers
Precious metal investors alongside investors in all global markets are finding that they are not now investing in the markets they think they are but are making dollar deals They have to ask why is the dollar rising, when it is in the interests of the U.S. to see a weaker dollar. The ball is in the court of foreign investors keen to maintain the value of dollar investments. However, the true picture of the gold price is seen in the euro price. Arbitrageurs [dealers who smooth out disparities found in prices in markets in different parts of the world] are having a field day with the remarkable volatility we are seeing at present.
What a stronger dollar is doing to all prices is effectively lowering them, for the bulk of prices in the world are dollar denominated. The upside of this situation is that inflation is being lowered, albeit temporarily, by dollar prices lowering. This applies particularly to U.S. and Chinese prices and in any other currencies tied to the dollar through trade. Euro related nations are seeing very little change in their prices, simply because the stocks, commodities and precious metals are barely moving in the euro and other key global currencies.
Silver prices are doing their usual thing of moving in a more extreme manner than the gold price. However, this is not on physical sales of silver as shown in the Silver Trusts holdings of physical silver, which is up by nearly 300 tonnes since last Friday.
With demand for precious metals very robust and growing in the Asian nations, such almost cosmetic price falls will see buyers rush in to gain bargain basement prices. The strength of the dollar is not based on fundamentals, only on market management by possibly China. Because of this potential pullbacks in the real prices of precious metals may well be short-lived.
We are issuing the full versions of the articles “If China overtakes the U.S. in 2016 then what will the global Gold market look like in 2020?” and “Positive structural changes in Gold supply are happening” in the next issue of the Gold Forecaster and the Silver Forecaster.
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, 12 May 2011 | Digg This Article
| Source: GoldSeek.com
