New York took the gold price down slightly to $1,651.70.The euro continued to fall to €1: $1.3008 before rebounding to €: $1.3163, but the gold price has not yet reflected this ahead of London’s opening. Today, gold Fixed it at $1,652.00 and in the euro at €1,255.510 while the euro stood at €1: $1.3158. Ahead of New York’s opening it stood at $1,650.75 and in the euro €1,266.40 while the euro was at €1: $1.3035.

Silver held at $31.48 in New York before London lifted it slightly to $31.58. Ahead of New York’s opening it stood at $31.50.

Gold _{(very short-term)}

Gold should consolidate around current levels, in New York.

Silver _{(very short-term)}

Silver should consolidate around current levels, in New York.

Price Drivers

The Indian Rupee continues to weaken today, after the half percentage drop in the Reserve Bank of India’s interest rates. A two percentage drop does give the appearance of a rising gold price in Rupee terms in India. Indian investors are always cautious about entering a rising market. The conditions that trigger their purchases are a market that has stabilized after a fall or when they are convinced that no further falls are likely soon. The falling Rupee has very little to do with the stabilization of the gold price, but everything to do with one of the two largest gold markets attitudes to buying. However, please note that the buying doesn’t go away if the conditions are not right. It is simply postponed. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.] The conditions in India that prompted the interest rate cut in the face of high inflation were declining growth. High inflation and slow growth is a toxic mixture. Growth in this world right now sits on top of the agenda for the entire globe. The fact that it is being prioritized in this way in a country with the world’s second highest level of growth tells us the fear of slowing growth is a considerable distance above that of inflation. After all, inflation’s effect on the mindset of the consumer is far less than the uncertainty, anger and loss of hope that deflation brings.

It also happens to support the right conditions for the gold & silver price to remain in an uptrend. What is becoming increasingly clear from the technical picture is that the gold and silver prices are moving to a point where they will move strongly one way or the other in the relatively near future. It is important for investors to decide for themselves which way the moves are going to be. To make life even more difficult the gold price will be driven by factors found on a global picture, but focused on Asia, not the developed world. Traders dominate developed world markets, but by far the largest quantity of demand comes from the emerging world retail and central bank demand.

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters