From the peak Fixing over $1,886.50 and in the euro, €1,279, we have seen a drop down to the Fixing of $$1,716.50 and in the euro €1,191.10 this morning.   The exchange rate of the $/€ stands at €1: $1.4445 just ahead of New York’s opening,   As we have been pointing out many times, the current buyers of gold are not price chasers.   

The Yen and the Swiss Franc are weaker this morning but not significantly.   The Yen is at Y77.13 and the Swiss Franc at 0.7940.

Thereafter it started to recover moving up to dropped back slightly to $1,724.45 ahead of New York’s opening.

Silver was Fixed in London yesterday at $39 down from yesterday’s $42.88 but traded up after to $39.35 ahead of New York’s opening.     

Gold _{(very short-term)}

The gold price should have a stronger bias, today in New York.

Silver _{(very short-term)}

The silver price should have a stronger bias, today in New York.

Price Drivers

Repeat: “In the past, in developed world markets, speculators and traders had a big influence on gold and silver prices over a longer period than is now the case.   As we have seen in the last few weeks traders and speculators have been wrong-footed as gold and silver prices were not chased by the long term investors.   Take yesterday for instance, the gold price hit over $1,900, but there was no follow through by long-term investors, who simply stood back and allowed the gold price to fall.   Buyers now need to see the offer of gold, not just the price.   So when the gold on offer is small, they stand back and wait.   At the London Fix, where the bulk of physical gold is moved, we see prices more reflective of the current supply and demand.   

Since the peak at over $1,900 yesterday, we have see fall of just under $200.   It is clear that the sale of 23 tonnes from the SPDR took place in a thin market where the heavyweight buyers continued to stand back.   The traders and speculators who had shoved the price up to those levels were caught out and found they had to offer what they had at levels the big buyers felt gave them value.   Current buyers won’t chase prices and with the ‘gold season’ starting next week, expect the froth to disappear as quickly as it came.

What does this do to the prospects of a major correction?   We may well have seen it?   We can expect a consolidation but only at levels where there is two-way trade.   To get a more complete perspective on gold and silver subscribe to the Gold Forecaster and the Silver Forecaster, now!

At the end of this week, developed world and Indian demand returns to the market as the ‘gold season begins.

Regards,

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