-- Posted Tuesday, 6 December 2011 | | Disqus

New York closed at $1,721 and Asia took it down to $1,710 before a partial recovery to $1,716.5 ahead of London’s opening. It then rose through London’s morning ahead of the Fix, which was then set higher at $1,720.00 and in the euro at Fixed at €1,284.541 while the euro stood at€1: $1.3390. Ahead of New York’s opening gold held just below the Fix at $1,720.00 and in the euro at €1,282.82.

The silver price opened at $32.o7 in London. It remained steady at $32.03 ahead of New York’s opening.

Gold _{(very short-term)}

The gold price may well consolidate at lower levels in New York today.

Silver _{(very short-term)}

The silver price may well consolidate at lower levels in New York today,.

Price Drivers

With the announcement of The ratings firm put Germany, France and 13 other euro-area nations on review for a downgrade yesterday, saying “continuing disagreements among European policy makers on how to tackle” the region’s debt crisis risk damaging their financial stability. Grades may be lowered by one level for Austria, Belgium, Finland, Germany, Netherlands and Luxembourg, and as many as two steps for the other governments if the summit results don’t satisfy S&P’s criteria. More than $8.1 trillion of government debt would be affected if S&P does downgrade all the nations. The Dec 8 meetings in Europe ‘provides an opportunity for policy makers to break the pattern of what we consider to have been defensive and piecemeal measures to date, overcome individual national interests and preferences, and advance a credible response to the crisis that would go far towards restoring investor confidence.’ It is expected that every bank and many corporations in Europe will be downgraded alongside the sovereigns. This will bring enormous pressure on all currencies if this happens. We will discuss the fact that this crisis is not political, despite the hype, but financial and point the way forward for the euro and the gold price in our upcoming issues of the newsletters. [Subscribe through www.GoldForecaster.com or www.SilverForecaster.com to our newsletters on these subjects.]  The spin-off from this is that institutions continue to lend large amounts of gold as gold lease rates continue to slide, with one-month rates now at -0.55%. The selling is not coming exclusively from European banks. The need for institutions across the developed world to lend gold for dollars shows there is an ongoing liquidity squeeze. This is why gold has fallen of late. It has nothing to do with gold’s fundamentals, only with the financial state of gold investors.

A look back to 2008 shows us a similar scene and point the way forward for today’s gold prices.

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters

-- Posted Tuesday, 6 December 2011 | Digg This Article | Source: GoldSeek.com

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