-- Posted Friday, 22 July 2011 | | Disqus
New York gold closed at $1,587 yesterday, with Asia not changing the price by much. London opened at $1,585 with a much weaker euro price of €1,099. The moves are less that we had expected given that the moves will take the sting out of the Eurozone debt crisis, for now at least. The euro rose to €1: $1.45, but then retreated back to €1: $1.4405 just after London opened. In London’s morning the gold price had begun to recover ahead of the Fix to $1,588, the price at which it was later Fixed. In the euro it also recovered to be Fixed at €1,103.01.
The markets should have reacted more strongly, if they had felt that a solution to the Eurozone debt crisis had been found. Their reaction was not a vote of confidence in the plan.
Just ahead of New York’s opening, gold continued to rise to stand at $1,597.45 alongside a dollar standing at €1: $1.4383. Gold in the euro was at €1,110.65, up €11.
After Fixing at $39.67 after yesterday’s Fix of $39.78 in London’s morning, silver traded just below that at $39.68 ahead of New York’s opening. The silver price is ignoring the euro crisis completely!
Gold - Very Short-term
We expect gold show a stronger bias in New York today.
Silver – Very Short-term
We expect silver to show a stronger bias in New York today.
Silver & Gold Price Drivers
The markets were convinced that the deal put up by the E.U. was enough to calm the markets. 1) The E.U. can now intervene in secondary debt markets to buy distressed-debt, government bonds using the European Financial Stability Facility. This means that while the finances of that nation are in a terrible state, by buying debt in the market, the E.U. can carry the distress, instead of bond holders. The E.U. just has to hope that investors, including banks, don’t take the opportunity to unload their holdings onto the E.U. That would defeat the purpose of the intervention. 2) Greek-debt holding banks will have to take a haircut, ‘voluntarily’, meaning that the ratings agencies will have to declare a default on Greece. 3) Interest rates for Greece, Ireland and Portugal are lower and debt maturities have been extended to make the repayment more sustainable. 4) Greece received another $157 billion bailout [€109].
In short, the problem isn’t solved, but the creditors have been put on a leash, forced to take a voluntary loss and the markets had the fear taken out of them. Few bankers feel that they are seeing a solution, simply a postponement of the crisis.
The U.S. commentary has virtually ignored the Eurozone story attributing gold’s moves in the last day to the U.S. debt crisis. In the meantime the dollar index fell to 74.09, breaking down support as the U.S. debt crisis moves to center stage. We take the line that the U.S. will raise the debt-ceiling in time and that the ‘crisis’ will not affect the gold price overall.
For investors to really profit from the gold and silver markets more is needed than a short-term focus on the some of the symptoms of why the gold price is rising. Questions like, “Are currencies in a bear market” equip investors far better to maximize profits in these markets. The Gold Forecaster and Silver Forecaster discuss these sorts of points making them 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
Gold Prices in different currencies which highlight currency moves [We add the Swiss Franc today]:
Swiss Franc – Today: Sf1,308.31: 1 ounce of gold. Friday: Sf1,315.08: 1 ounce of gold.
U.S. $ - Today: $1,597.45: 1 ounce of gold. Friday: $1,601.00: 1 ounce of gold.
Euro - Today: €1,110.65: 1 ounce of gold. Friday: €1,128.01: 1 ounce of gold.
India –Today: Rs. 70,918.07: 1 ounce of gold. Friday: Rs.71,200.52: 1 ounce of gold.
Regards,
Julian D.W. Phillips for the Gold & Silver Forecasters
-- Posted Friday, 22 July 2011 | Digg This Article
| Source: GoldSeek.com
