Gold & Silver Market Morning, May 30 2012

Gold Today – Gold closed well down in New York at $1,558.80 and in London’s early morning fell further to $1,550. The euro was the cause as it fell to €1: $1.2472 another 50 cents lower. It continued to fall in London. Gold Fixed at $1,548.75 down $25 and in the euro at €1,244.976 down €11. Ahead of New York’s opening gold stood at $1,549 and in the euro, €1,244.27 while the euro was at €1: $1.2449. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.].

Silver Today - Silver in London fell a dollar to $27.63. Ahead of New York’s opening at $27.68.

Gold _{(very short-term)}

Gold should attempt to consolidate at current levels, today in New York.

Silver _{(very short-term)}

Silver should attempt to consolidate at current levels, today in New York.

Price Drivers

Gold – The euro sagged yet again in New York into the mid-€1: $1.24 area. Let’s face it if the euro is falling like this, the markets are fearful of an E.U. crisis, not just those of Greece and Spain. The trigger for the fall was the Egan-Jones Ratings agency’s cut in Spain's credit score for the third time in less than a month to B with a negative outlook, from BB- previously. The on-going capital flight from the euro is on many fronts, foreign holders, E.U. institutions, the wealthy and others. The big fear is a repeat of the Argentinian switch from the dollar to the Peso that we saw last decade. This is prompting a shift of capital to other parts of Europe and out of the euro into other ‘hard’ currencies. We expect this to continue and for the euro to continue to fall. Gold again fell with the euro, but with short positions high and long positions small, in a small volume market.

This will promote volatility, but as we have said before, gold sellers are fearful of an oversold market, particularly as it is not dollar strength that is pushing gold down but euro weakness. There are no common denominators between gold and the euro per se.

The Indian Rupee keeps weakening and now stands at Rs.56.095 from Rs.55.84 yesterday. This is a fall of 6% in the last fortnight. This continues to raise gold and silver prices in India.

Silver – Silver dropped a dollar alongside gold but again is back to where we see oversold positions not relating to silver’s fundamentals. The developed world’s markets such as COMEX are fairly oversold and long positions at low levels. The may well limit the downside and hasten the separation of the euro’s behavior from that of gold and silver.

Regards,

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