Julian Phillips’ latest report on the activity in the global gold and silver markets
New York closed yesterday at $1,276 up $1.00 as the euro consolidated. In Asia and early London the gold price moved up to $1,284.40 with the euro at $1.1580. The Fix saw the gold price set at $1,292.25 up $16.75 and in the euro, at €1,113.625 up €13.772, while the euro was at $1.1604. Ahead of New York’s opening gold was trading in London at $1,286.60 and in the euro at €1,110.81.
The silver price closed at $17.74, 5 cents higher. Ahead of New York’s opening it was trading at $17.73.
There were purchases of 0.51 of a tonne of gold into the SPDR gold ETF but no change in the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 730.892 and at 163.62 tonnes in the Gold Trust. The gold mood in the U.S. remains positive.
The gold price jumped on physical demand both in Asia and in London so the price rise is solidly based. With a new ‘big figure’ [$1,300] now firmly in the sights of the gold price, we would expect it to consolidate before rising further. That is, unless there remain substantial short positions that need covering at that level, in which case the covering of these may cause a further price spurt.
We have been expecting these rises for more than a year now but, as we forecast, the price needed ‘an event’ before they could happen. We believe several more ‘events’ are on their way this year.
Tomorrow sees the E.C.B. make its announcement on quantitative easing. This appears to have been discounted already as the euro appears to have stabilized in preparation for the announcement. Only if the announcement brings surprises will the euro tumble further. The action of the Swiss National Bank appears to have implied ongoing falls in the euro.
The announcement is a big event for all financial markets as it affects the future and value of the euro. We have no doubt that the exchange rate prospects against the dollar have been discussed with the U.S. Treasury and that there are potentially actions planned to prevent further brutal falls in this exchange rate. But at what point will the U.S. say the dollar should not be allowed to go stronger?
For gold, the market induced relationship between the gold price and the euro has broken down and gold is travelling higher in all currencies.
The silver price is now lagging gold, but should catch up.