Gold Today –The New York gold price rose to $1,269.80 from $1,254.10 at the close on Wednesday. Asia took it back down to $1,259.00 ahead of the opening in London. London took it down to $1,258.20 ahead of the Fix. The dollar traded stronger at $1.3600 down 0.64 of a cent. It Fixed at $1,254.00 down $0.75 on Wednesday. In the euro, it Fixed at €922.194 up €4.308 reflecting a stronger dollar which stood at $1.3598. Ahead of the opening in New York gold stood at $1,254.40 and in the euro at €921.84.

Silver Today –The silver price rose to $19.78 up 20 cents in New York. Asia and London took it back up to $19.42. Ahead of New York’s opening, it was trading at $19.42.

Gold _{(very short-term)}

We expect gold to consolidate with a positive bias today, in New York.

Silver _{(very short-term)}

We expect silver to consolidate with a positive bias, in New York.

Price Drivers

Wednesday saw, for the second time in the last fortnight, purchases of gold into the SPDR gold ETF [GLD] of 2.099 tonnes with none sold from the Gold Trust gold ETF, leaving their respective holdings at 792.555 tonnes and 161.37 tonnes. This we see as a reaction to the sales of gold from them slowing and prospects for the equity markets weakening [as potential interest rate rises loom on the horizon in the market, if not from the Fed]. We need to see the changes in the SPDR gold ETF from sales to purchases for a while, before we confirm it as a trend change.

With Fed ‘tapering’ now setting a pattern, probably for the future too, of a cut of $10 billion a month, the dollar went stronger and dealers then cut back gold prices in line with its strength in London and Asia. But this was a currency move not a gold move. Silver is falling faster for the same reasons.

But gold and silver prices remain on support and strong support at that. The market will probably take a day to digest the Fed’s cut before we see a strong reaction in precious metal markets. Short covering and moving positions from January to February lifted demand.

The Chinese Lunar New Year is tomorrow so we expect a fall in demand from there for at least the next week. But unlike the developed world, gold buying in China is not seasonal, but simply rises somewhat ahead of this celebration. We expect that demand to rise again after people return from holiday and the daily grind resumes again.

The South Africa Rand saw a 50 point rise in interest rates yesterday that merely caused a small recovery in its fall against the dollar. Today it has resumed that fall. Since then it has fallen another 3.5% and may well keep falling further. [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]

Silver – The silver price is weaker than gold but may recover quicker.

Regards,

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