Gold & Silver Market Morning, January 10, 2012

The U.S. again tried to pull gold down closing at $1,609 before Asia later in their day pulled it back up to $1,620 just ahead of London’s opening. London continued the upward pressure taking it to set at $1,627.00 and in the euro at €1,271.491. The euro recovered to €1: $1.2796 at the time. Ahead of New York’s opening the gold price moved well rising to $1,632, with the euro at €1: $1.2784 leaving gold in the euro at €1,276.60.

Silver was more vigorous than gold today opening at just over $29 and rising to $29.77 ahead of New York’s opening.

Gold _{(very short-term)}

Again, the gold price should have a steady to better day, in New York today.

Silver _{(very short-term)}

Again, the silver price should have a steady to better day, in New York today.

Price Drivers

Where are we in the Eurozone crisis today? Investors and financial institutions snapped up €3.9 billion of German bunds at a yield of -0.122%. Hungary is paying double figures for money. Yes, investors and financial institutions were paying to lend money to Germany.  This well describes the strains in the financial markets.

In another expression of the fear to lend to the banks, the European Central Bank reported a record €463.6bn in cash deposited with it by European banks overnight. The situation continues to worsen. We are pretty sure that the E.U. leaders will do nothing effective until the situation suppurates. And yet we are seeing a slight rally in the euro! Gold has run well in the euro rising nearly €80 euros in the last few days. It has held well in the U.S. dollar too.

But a greater force is pushing up the gold prices and that is the re-emergence of demand from the emerging countries. China now is the largest buyer of gold jewelry in the world and the second largest importer of bullion. Merchants in emerging markets are increasing gold demand modestly. We expect this to have a somewhat disproportionate impact on the gold price as the gold ‘bears’ appreciate the risks of their actions are rising. Should resistance be punctured convincingly we expect the shorts in New York to turn long. In this week’s issue we will be looking at the financial markets heavy focus on short term moves and why the saying goes, “People don’t buy gold to make money, they buy it because they have money.” [More on this in our weekly newsletters and on our website [So subscribe through www.GoldForecaster.com or www.SilverForecaster.com]   

Regards,

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