Julian Phillips’ market commentary on gold and silver for Jan 6th.
New York closed yesterday at $1,205.50 up $18.00 as the gold price broke through key resistance in the dollar and in the euro. Gold continued to rise in Asia to $1,209.7 and in London to over $1,212 ahead of London’s Fix. The Fix saw the gold price set at $1,211 up $19.00 and in the euro, at €1,017.305 up €18.495 while the euro was another 0.3 of a cent weaker at $1.1904. Ahead of New York’s opening gold was trading in London at $1,211.80 and in the euro at €1,018.49.
The silver price closed at $16.20 in New York up 41 cents. Ahead of New York’s opening it was trading at $16.31.
There were purchases of 1.648 tonnes of gold into the SPDR gold ETF and sales of 0.03 tonnes from the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 710.808 and at 161.15 tonnes in the Gold Trust.
Yesterday was an important day for gold as resistance was broken in the euro and strength is now indicated in the dollar price of gold. This makes today just as important as yesterday, as any price rises in either currency reflects the changing mood of markets globally and a positive indicator for gold.
With the year ending on a positive note for global financial markets, yesterday saw the mood turn down, as markets fell across the world alongside the oil price. The oil price is hitting new lows making the prospect of $35 a barrel of oil a distinct prospect, as oil producers raise production to compensate for lost revenue, exacerbating the situation in the oil market.
The euro is currently standing at $1.1904 and looks like falling lower. Emerging markets are showing the greatest signs of stress as prices fall there. While the oil price falls are direct stimuli to the global economy, these are part of the computations for economic growth measurement. In this case such statistics distort what is happening as they treat lower oil prices as deflationary, not as they really are, growth factors.
What is becoming clear to investors is the reality that central bank and government’s ability to promote true growth is very limited as we have seen in the last 8 years. For precious metals what is important is the reality that any confidence in the future is tempered by the visibly high degree of uncertainty, volatility and a dash of prudence, that will prove positive for gold and silver.
The silver price is now back on track and moving up with gold. As on the fall it exaggerates the downside, so on the rise it will also exaggerate the upside.