-- Posted Thursday, 29 December 2011 | | Disqus

After the 2.5% fall in the gold price yesterday as most markets fell, all in thin holiday trade, Asian markets did not lift the price higher. Ahead of London’s opening the gold price stood at $1,550 while the euro hit new lows at €1: $1.2915. Yesterday’s Fixings reflected the falling euro and gold price at a.m. $1,584 and €1,211.472 then p.m. $1,571 and €1,208.647. Today saw the fall continuing to see the Fix in the morning set at $1,537 and €1,192.323. Ahead of New York’s opening the gold price fell to $1,529.50 and the euro stood at €1: $1.2870 leaving gold in the euro at €1,188.42.

Silver has taken a hammering at $27.02 down nearly 7% when London opened.  Ahead of New York the silver price was still falling at $26.41 down 10%.

Gold _{(very short-term)}

Again, the gold price should have a quiet to weaker day on low volumes, in New York today.

Silver _{(very short-term)}

Again, the silver price should have a quiet to weaker day, in New York today.

Price Drivers

Despite the huge, back-door, quantitative easing provided through dollar swaps at cheap rates, few people were convinced that Europe’s problems were on the wane. Nevertheless, the provision of this liquidity reassured the banks, who invested in Spanish and Italian bonds, amongst others cutting their interest rate costs in half. But this money remains held in the central banks as the European Central Bank said banks had parked $590.72 billion with it overnight, surpassing the record set only Monday. That means European banks were less willing to take the risk of making short-term loans to each other, opting instead to earn low interest rates from the ECB. The money is not reaching the non-bank economic body of the Eurozone which we believe remains in recession. These facts point to further falls for the euro.

With gold continuing to move in the same direction as the euro for unreasonable reasons, expectations are for further falls, particularly when we see these falls heavily triggered when the 24-hour gold market sees its thinnest daily trade in New York’s afternoon. Bear in mind that the Chinese and Indian market rely on wholesalers importing periodic tonnages of gold to replenish stocks and not moment to moment purchases in line with price moves, giving volatility a wide scope. Until Asia has its on gold “Fixing” this is unlikely to change, making price moves dominated by the developed world. [More on this in our newsletters and on our website [So subscribe through www.GoldForecaster.com or www.SilverForecaster.com]   

Heavy falls in thin trade carry a warning for investors, for one the holidays give way to full business, markets can turn in a heartbeat and return easily to where they came from. We can be certain that current levels of volatility will continue for the next few days.

Regards,

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

-- Posted Thursday, 29 December 2011 | Digg This Article | Source: GoldSeek.com

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