Gold technical picture not yet turned negative

Julian Phillips’ report on the gold and silver markets and SPDR ETF movement notes that the drop in Chinese demand for the New Year holiday will likely keep gold trade thin for the next week and put further pressure on the gold price.

New York closed yesterday at $1,208.50 down $14.00. In Asia the gold price was lifted to $1,210.45. London Fixed the gold price at $1,206.50 down $15.25 and in the euro, at €1,059.356 down €13.201, while the euro was almost unchanged at $1.1389. Ahead of New York’s opening gold was trading in London at $1,206.10 and in the euro at €1,059.56.

The silver price closed at $16.51 down 44 cents. Ahead of New York’s opening it was trading at $16.45.

There were no sales or purchases into or from the SPDR gold ETF and none from the Gold Trust on Tuesday as gold prices slipped back as Chinese demand wound down as the Chinese Lunar New Year began. It last from now until the 24th February. As Chinese demand has been such a support for the gold price, its absence will leave the gold price vulnerable to further falls. The holdings of the SPDR gold ETF are at 768.263 and at 167.03 tonnes in the Gold Trust.  We expect support to be really tested for the next week and a half. Indeed, from now until the end of the month, the gold market may well see thin trade and give speculators and traders free rein to move the gold price wherever it wants to. Below current levels in the gold price lies very well tested support so the extent of gold’s vulnerability should not be over estimated.

It seems to us that the new Greek government is ensuring every effort is made to get some accommodation from the E.U. but it seems to have zero expectations. Hindsight will then confirm they tried every option before having to choose the inevitable. We also get the impression that the E.U.’s intransigence is immovable and that both sides expect an inevitable conclusion. To us our main question will be, “Will action be taken to leave the Eurozone this weekend or next weekend.” The flow of capital and the massively falling tax revenues to the government well may force the decision earlier rather than later.

Yesterday we said, “But we do not believe it will end up a Greek tragedy. We see that within one year Greece will start to thrive.” We explain this, in detail, in our next issue of the Gold Forecaster, as Capital/Exchange Controls are implemented in Greece.

We note that the Technical picture for gold has not turned negative so we look forward to an indecisive week in terms of the direction of both gold and silver. However, the news out of the U.S. is that Paulson’s fund, the largest shareholder of the SPDR gold EZTF continues to leave its huge holdings unchanged.

The silver price took another knock yesterday and may well find the next week will see it fall further. The decision investors much make in the next week is, “Are they being presented with a wonderful buying opportunity or have they waited too long to sell?”

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


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