Julian Phillips’ market commentary for gold and silver.
New York closed yesterday at $1,207.30 down $5.00 as the euro stabilized. In Asia the gold price rose to $1,212 with the euro at $1.1814 ahead of London’s opening. The Fix saw the gold price set at $1,211.25 up $4.75 and in the euro, at €1,025.093 64 up €0.029 while the euro was stronger by 0.46 of a cent than yesterday at $1.1816. Ahead of New York’s opening gold was trading in London at $1,211.50 and in the euro at €1,025.35.
The silver price closed at $16.31 down 23 cents. Ahead of New York’s opening it was trading at $16.27.
There were no sales or purchases to or from the SPDR gold ETF or the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 704.833 and at 162.29 tonnes in the Gold Trust.
Today the world is waiting for the employment numbers out of the U.S. which are expected at around 240,000, which is discounted in the market. Will this affect the gold price? With Asian demand getting used to these prices and paying them we may well see a dip briefly in the gold price as speculators and traders try their luck and eyes turn back to the euro to see if it falls further, but we expect gold to hold above, or return to, over $1,200 thereafter.
The Technical picture is now positive for gold and this will pull silver up too.
The U.S. economy is recovering so, will interest rates start rising after the Fed’s second meeting this year? We expect that they will err on the side of delay rather than on moving them up too early. The U.S. economy needs to be so robust that economic growth will ignore rate rises.
We are not there yet. But U.S. gold investors will not use this as a basis for avoiding gold. When they return to gold it will be based on the Technical picture and when they see equities and bonds fall as a result of rate hikes. We consider them absent from the gold market at present, leaving Asia and the Middle East to drive the gold price higher. Timing will be everything!
The euro is now marking time but should recommence its fall shortly. The break away from the gold price that now seems to have been established has shaken many investors’ perceptions of gold’s behavior. Investors should understand the reasons why, if they are to understand the way forward for gold and silver
There is a positive calm in global markets right now that can be shaken at any moments by a market or event driven shock. There are many potential shocks out there that will disturb this calm. Again, the timing will be critical and unforeseeable.
The silver price is trying to follow gold but as gold is showing such strength appears poised to perform stronger than gold. The days ahead may show this.