Not a great deal happened over the weekend in the Eurozone that affected the markets. Gold is recovering in the euro and the dollar today. We are expecting a plan to be put forward to resolve the Eurozone debt crisis, but national sovereignty will get in the way. Gold is not hovering just below the $1,400 level as gold builds its new ‘floor’ at $1,400, still. What was remarkable was the short distance gold fell again. The fall was from $1,426 to $1,374 a drop of 3.64%. This is hardly a correction. Should it hold at currency levels for much longer it is describing just how robust the market is. With the Indian marriage season in full swing and China buying steadily, physical demand is a driving force behind the price. It is unlikely to abate.
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Gold – Very Short-term
Gold continues to trade just above the gold Fix. We expect a dip in New York today but not a significant one. The ‘bounce’ factor in gold remains good. Will the consolidation be short-lived remains this week’s key question.
Silver – Very Short-term
Silver continues to trade just above the silver Fix which was $29.33 showing tremendous resilience. We expect a dip in New York today but not a significant one. The ‘bounce’ factor in silver is even better than in gold. Will the consolidation be short-lived remains this week’s key question.
Gold Price Drivers
Asian demand from India and from Chine underpins the gold price with the central bank ‘net’ waiting to catch any offers that come out on the dips. Such a practice stops the gold price from spinning down and turns traders around quickly.
Currency fears for both the euro and the dollar will continue to grow, adding to the numbers of investors that turn to gold and, in the developed world, silver.
We do expect some more Sovereign debt crises to appear this week. Faith in politicians to resolve these financial crises is waning. While we expect the Italian P.M. Silvio Berlusconi to keep his job as the top Italian politician, he is worried that he may have to call early elections. This could propel Italy onto the page that is reserved for debt-distressed nations in the Eurozone. To get a better analysis than this to these crises and to follow the main factors driving the gold price, subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Regards,
Julian D.W. Phillips