Price Drivers
The gold price is following the euro at the moment with little action in the U.S. gold ETFs. When the physical action is small dealers will move prices in the opposite direction to the dollar. With today being Friday and gold now at the bottom of its latest trading range, sitting on support today may well be lively.
Mario Draghi and the E.C.B. did not raise rates, which was expected, but he did open the door to negative interest rates in the future. This sent the euro weaker, but as in the past we do not expect this to last. The determination of the U.S. market forces is for a lower dollar and we have no doubt that is what we are headed for. After all it’s one thing to talk and another to act. Germany’s wish to see the end of such stimulus was dismissed by Draghi, otherwise the euro would have been stronger today. In Japan the talk of deeper negative interest rates also weakened the Yen, to 111 against the dollar.
Dealer’s adjustment of gold prices was technical rather than demand/supply driven. But even on the Technical front the desire of Treasury/Fed to see the dollar hold or fall will rule, we believe.
Greece has reared its debt squashed head once more. With 25% of their economy gone in the midst of their debt crisis, the Creditors want to see more austerity in the form of higher taxes and less government spending. This will crush the economy even more and force a similar situation to appear, thereafter.
Hopefully, we are not too cynical when we say that Greece would have been better off to have left the E.U. and sought debt relief.
Gold ETFs – Yesterday saw no sales or purchases into or out of the SPDR gold ETF or the Gold Trust. This leaves their holdings at 805.032 and 187.56 tonnes in the SPDR & Gold Trust respectively.
Silver – The silver price is amazing all as it continues strong. Today it is moved up to $17.30 despite gold holding at the bottom of its trading range, but has since retreated along with a further fall in the gold price.
Julian D.W. Phillips
GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance