-- Posted Thursday, 8 December 2011 | | Disqus

New York closed at $1,741.30 and Asia took it up to $1,734 until London’s opening. It then moved to $1,74 where it held ahead of the morning Fix which was set at $1,739.00 and in the euro at Fixed at €1,297.277 while the euro stood at€1: $1.3405. Ahead of New York’s opening gold rose another few notches to $1,742 with the euro at 1€: $1.3412 leaving the gold price in the euro at €1,298.34.

The silver price opened at $32.62. It remained steady at $32.72 ahead of New York’s opening.

Gold _{(very short-term)}

The gold price will wait for the conclusion or announcements from the E.U. conference, in New York today.

Silver _{(very short-term)}

The silver price will wait for the conclusion or announcements from the E.U. conference, in New York today.

Price Drivers

As the clouds of smoke and multiple mirrors swirl around us, it is good to keep our eye on the ball as regards the gold price. Despite the dollar swap agreements of last week, dollar liquidity remains very tight. Gold leasing continues at high levels to facilitate liquidity and lower interest rates. This is where downward pressure on the gold price is coming from. We will not be made party to the information that tells us whether this emanates from central banks or the banks. But what is clear is that if the liquidity problems do abate, this pressure will cease. We do expect the E.C.B. will be permitted to ease lending restrictions and to increase liquidity. As a start they have dropped interest rates there to 1.00% from 1.25%. Gold does not need to see a resuscitation of growth before it responds, nor does it need a resolution of the Sovereign debt crisis.

What will continue to keep uncertainty heightened is the steadily crystallizing notion that the E.U.  will lose one or more members. At first this will be negative for the euro, if it happens, but the stronger Eurozone will be attractive. But the time to get there may be years away. [Subscribe through www.GoldForecaster.com or www.SilverForecaster.com to our newsletters on these subjects.]  What appears certain is that the cultures of the southern part of the E.U. and the northern part cannot be harnessed efficiently by the stronger members, so the stronger members must decide the continuing benefits to them of weaker members.  The way forward remains unpredictable! To add insult to injury, the S & P ratings agency has placed on negative review the entire Eurozone. Watch this space!

We are keeping our eye on the Indian Rupee to see if the Reserve Bank of India will intervene to strengthen it. Any strengthening will lead to lower gold prices and more gold buying.

Regards,

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

-- Posted Thursday, 8 December 2011 | Digg This Article | Source: GoldSeek.com

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