New York closed Friday at $1,666.10 and opened the same in Asia and lower in London at $1,662.25. The euro was steady at €1: $1.3268. Today, gold Fixed it at $1,661.25 and in the euro at €1,253.017, while the euro stood at €1: $1.3258. Ahead of New York’s opening it stood at $1,660.20 and in the euro €1,253.17 while the euro was at €1: $1.3248.

Silver was$31.02 at the close in New York but opened in London at $30.82. Ahead of New York’s opening it stood at $31.83.

Gold _{(very short-term)}

Gold’s trading range should narrow even more, and possibly with a slightly weaker bias, in New York.

Silver _{(very short-term)}

Silver’s trading range should narrow even more, and possibly with a slightly weaker bias, in New York.

Price Drivers

The attention of the financial world is on the auction of Spanish debt today to see if they will be favored by the markets or contagion bites further with a higher yield being paid by Spain. The Eurozone’s future direction should become clearer after the announcement of the winner of the French Presidential elections. The Socialist M. Hollande favors strong moves to growth, while President Sarkozy has made his position more than clear by his performance over the last few years.

However the gold and silver markets are dancing to another tune, as traders in New York tried to knock gold down yet again [down to $1,645] before having to drive it back up to $1,666, finishing stronger than the day before. The tussle between buyers and sellers is getting tighter and tighter. Readers must decide if this is just a short-term consolidation or whether it is the culmination of the many months long consolidation that we have seen over that time.

The Indian Rupee continues to weaken and gold demand from India remains muted as a result. May 5^th sees the government decide whether to raise duties on gold coming into India or to leave them alone. Indications from the termination of the jeweler’s strike are that the government won’t raise them, but we are talking about politicians here, so we wait to see. If duties are held at present levels there may well be a jump in demand. But we feel that the weak Rupee has more to do with Indian demand than this issue.

As we saw in March the demand from central banks comes in in a weak market, so investors banking on a fall in the gold and silver prices should be cautiously aware of this feature of the gold market. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.]

Regards,

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