Gold price has broken down and looking for a bottom

New York closed at $1,088.00 down from $1,103.50 Friday. In Asia it rose to $1,095.00 before London opened. The LBMA price setting fixed it at $1,095.60 down from Friday’s $1,107.70.

The dollar Index was stronger today and rose to 99 up from 98.01 at the close of New York on Friday. The dollar was a cent stronger at $1.0768, up from $1.0879 against the euro. In the euro the fixing was €1,016.33 down from €1,018.29. Ahead of New York’s opening gold was trading in the dollar at $1,093.00 and in the euro at €1,013.91.

The silver price closed at $14.74 down 26 cents at Friday’s close. At New York’s opening, silver was trading at $14.75.

Price Drivers

The gold price has broken down and is looking for a bottom now, so we expect some panic selling today. Technically, we repeat what we said on Friday that the gold price is still pointing lower. The fact that we are in the ‘high’ season for gold in India and Chinese demand remains robust confirms how separate from the fundamentals the gold price is in New York where the pricing power remains. Friday saw sales from the SPDR gold ETF of another 2.679 tonnes making over 30 tonnes sold in the last full week. But nothing was sold from the Gold Trust leaving their respective holdings at 669.089 tonnes in the SPDR gold ETF and at 160.30 in the Gold Trust. We expected more sales in view of the Technical breakdown and will watch today if there is follow through selling. If these dry up then the picture becomes opaque once again. Our main focus today is the dollar index and exchange rate of the dollar against the euro as these may well demonstrate the U.S. Treasury and [by extension] the Fed’s attitude to a strong dollar. With the dollar index one point away from the 100 level, will the Treasury engineer a lower dollar as reports indicated in the last month? As we said on Friday, “A dollar index of over 100 is just not in the interests of the U.S. This impacts the U.S. & U.K. gold markets heavily as the gold price is being pushed down by those markets in expectations of a stronger dollar.” The excellent jobs report spurred the dollar higher as well as expectations of a December rate hike. Now let’s see official reactions to the rising dollar. –

Silver prices did exceptionally well on Friday and ended higher than the Friday’s close the week before. We may well see a test of the closeness of the silver price to the gold price pattern seen over the last few years.

Julian D.W. Phillips for the Gold and Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

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