Gold & Silver Market Morning, June 29 2012

Gold Today – Gold closed in New York at $1,557 and the picture looked glum. Ahead of London’s opening gold had jumped ton $1,570, while the euro jumped strongly to €1: $1.2589 from $1.2450, 140 cents higher. The gold Fix was set at $1,569.50 the same as yesterday and in the euro €1,258.50. Ahead of New York’s opening, gold jumped to $1,584.00 and in the euro, €1,257.64 while the euro was at €1: $1.2595.

Silver Today – Silver closed in the States at $26.44 then jumped to fixed at $27.08 at the London Fix. Ahead of New York’s opening at $27.33.

Gold _{(very short-term)}

Gold will follow the euro, today in New York.

Silver _{(very short-term)}

Silver will follow the euro, today in New York.

Price Drivers

Gold & Silver – Traders were caught reading the technical too closely in New York and managed to paint that picture as weak, going weaker. The amazingly the E.U. leaders came out with a plan to use the bailout fund to bailout the banks directly [plus other more cosmetic moves]. Spain’s 10-year yields exceeded 7% yesterday and Italy auctioned 10-year notes at 6.19%. Germany borrows at 1.5% for the same time periods. These moves should see these costs drop heavily and boost the prospects for the continuation of the E.U., until real banking Union in the E.U. is achieved, improve.

This positive step caught a jaundiced market off guard and they all reacted positively including gold and silver. The euro rallied a full one percent immediately taking the precious metals with it. Why, because the markets read this as a weakening dollar and have built in a knee jerk reaction that gold goes the opposite way to the dollar. That’s why the gold price jumped $23 before London even opened.

The question is, does the market see this as halting the banking crisis in Europe? If so the euro will get stronger and take gold with it. If not, then expect more consolidation.

Of note was the speed gold turned around from what appeared to be a break in support. Traders are becoming hesitant to push gold and silver down further. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.].

Silver – Silver jumped higher outpacing gold right through $27 as it continued to react to monetary news and follow the euro. This reaffirmation of its close ties to the gold price and the euro implies that it will as strong as the E.U. leaders resolve to bolster the Eurozone.

Regards,

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