The “Agreement” on the permanent bailout facility in the EU has not convinced the markets. No agreement has actually been reached. The expectation that more would happen led to a €15 fall in the gold price and slightly more of a fall in the U.S. dollar. It is clear that the pivot point of the gold price is Europe and at the gold Fixings, not in the U.S. This is not to say that U.S. gold buying and selling in the States does not influence the price, it does, for the U.S. is open when the p.m. Fix happens at 3p.m. each business day. However they are using the London markets for their buying and selling. If you watch the euro price of gold at the Fix you will see what we mean.
Meanwhile, the European politicians appear not to understand that they have to walk the walk, not just talk the talk. The more they attempt to reassure the public that they will agree, when the fundamental flaws are visible to all, the more the markets will push them to act. And more than that, their electorates must support them. Spain and Portugal, meanwhile edge closer to a bailout [the Irish said they did not need a bailout three weeks before they got it]. We now see that the Irish opposition party says that it will re-negotiate the interest rate on the bailout package they received. That means trouble! Meanwhile the euro slips again!
Gold fell in New York yesterday afternoon down to $1,363 before recovering to the current levels at which the gold price was Fixed [$1,374.75 €1,030.70]. Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors from oil to currencies covering the pertinent global gold markets that directly affect the gold price and some that simply influence it. It is a “must-read” for all who want to understand why the gold price is moving as it is and why. It also aims to help you understand why currencies and today’s national economic problems are influencing the global economy and the precious metal prices [we cover platinum in the Silver Forecaster too]. Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].
Gold – Very Short-term
Gold has moved to around $13 above support, so we expect a quiet day today in New York.
Silver – Very Short-term
Silver is expected to stay just below $29, unless some alarming news enters the market to move it higher. On balance we expect a quiet day in New York today.
Gold Price Drivers
The passing of the Tax ‘stimulus’ package in the U.S. was expected, so had only a comforting impact on the gold price, taking it down 1%. But we don’t read much into this move. It is simply part of the consolidation process underway at the moment. The fundamentals continue to reflect a positive drive behind the gold price. One can be misdirected by the feeling that if there’s no drama today, all must be OK. The threat of more crises is real and remains a positive undertone in the gold price.
In the developed world the focus of the gold market is that the holidays are nearly here, so the market will quieten down. In China, February is the focal point of their year and in India the marriage festival is on through the developed world festivities. Each of these cultures affects the gold price, so it is difficult right now to say which one will dominate. Hence we are wary of telling you that the holiday period will see a quieter market!
Regards,
Julian D.W. Phillips