Gold following rising Euro; silver looking stronger again

The New York gold price closed Monday at $1,078.20 from $1,065.90 up $12.30 on the day.  In Asia, prices held there with London holding slightly below that level with the dollar index falling slightly to 98.26 down from 98.70. The euro rose to $1.0938 up from $1.0869 on Monday against the dollar. The London a.m. LBMA gold price was set at $1,077.00 up from Monday’s $1,071.15 up $5.85.  The euro fixing was €984.64 down from Monday’s €985.96. Ahead of New York’s opening, the gold price was trading at $1,078.00 and in the euro at €985.42.  

The silver price in New York closed at $14.26 up 16 cents. Ahead of New York’s opening the silver price stood at $14.28.

Price Drivers

Monday saw a seller of 2.976 tonnes from the SPDR gold ETF and a sale of 1.55 tonnes from the Gold Trust amounts that did prevent the gold price from breaking up through $1,080 on the day. The holdings of the SPDR gold ETF are now at 645.939 tonnes and at 154.32 tonnes in the Gold Trust. COMEX remains massively short, but must be getting nervous.

The dollar index remains below 100 at 98.47 still not attacking the 100 level. Against the euro it has fallen to $1.0911 down from $1.086. We see these levels pleasing the U.S. Treasury and the Fed and confirm that the dollar will not be allowed to rise further than to somewhere around $1.05 – $1.07, despite the interest rate differentials. With the euro continuing to rise we expect this rise to feed through to the gold and silver prices again today.

Today and the rest of the week is important for gold and silver as the currency world struggles with the exchange rate ‘battles’ for competitive advantage. Now it appears that the dollar will join the battle as the U.S. holds the dollar down. Nothing could be more positive for gold and silver as it signifies the end of any global unity on how to value a currency. Whilst the U.S. has tolerated the massive decline of the Yen and the euro over the last two years, it is disturbed by the fall of the Yuan. We expect the Yuan to fall quite a bit further. The narrowing spread on the Yuan indicates growing liquidity for the Yuan in international markets.

Russia, China and Kazakhstan continue to add to their gold reserves each month totaling more than 40 tonnes a month. All three take the local gold production into their gold reserves paying their local currencies to the miners, based on the dollar price, which is the most sensible way to do this. However, it does reduce the amounts of gold available to the open market.

The silver price is, once again looking strong over $14.00.

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

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