Gold Today –The gold price in New York rose to $1,240.60 up $11.60 on Monday then Asia took it higher to $1,247 ahead of London’s opening. London took it down to $1,229.30 ahead of the Fix, which was set at $1,245.75 up $17.25. In the euro it Fixed at €906.132 up €10.50. Ahead of New York’s opening the euro stood at $1.3750: €1 with gold at $1,247.40 and in the euro at €907.20.

Silver Today – Silver rose with gold to close at $19.87 up 37 cents in New York. Ahead of New York’s opening, it traded at $20.04.

Gold _{(very short-term)}

The gold price should continue to consolidate with a positive bias, in New York, today.

Silver _{(very short-term)}

The silver price should continue to consolidate with a positive bias in New York, today.

Price Drivers

While Chinese demand remains robust, London and New York had a relatively quiet trading session with gold prices turning higher out of its narrowing trading range. Despite this strength, there is a lot of resistance overhead but strong support closer to $1,200. We therefore expect volatility to rise both ways as the gold and silver prices continue to search for a clear direction to go in.

The dollar continues to weaken against the euro, sterling and other currencies and now stands at $1.3755 half a cent weaker. We see it continuing to fall at the moment.

There were no sales from either the SPDR gold ETF or the Gold Trust yesterday. The SPDR gold ETF holdings now stand at 835.705 tonnes and the Gold Trust holdings at 168.97 tonnes. [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe to our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]  

Many expect the Chinese Yuan to continue to rise as it sits at its highest level against the dollar. We are of the opinion that China does not want to see a strengthening Yuan at this stage or for the foreseeable future. It has encouraged the accumulation of gold in national and individual coffers in the country. To allow the Yuan price of gold to fall in gold, would go against that trend. In addition, it would damage its international trading competitiveness with a more expensive Yuan. While imports would be cheaper, exports would suffer. Looking ahead we find it difficult to see why it would want a strong Yuan for the foreseeable future. But it does need a stable, steady Yuan against the world’s leading currencies for the same reasons.

Serious talk of “tapering” has begun again with a strong possibility that it could begin next week. We assume that could happen if there is no downgrading of the U.S. credit rating at the end of this week. Will Congress again embark on the debt ceiling debacle? If so we expect tapering to only be on the table next March at the earliest.

Silver – The silver price is expected to continue to follow gold this week.

Regards,

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