Gold & Silver Market Morning

Gold Today -New York closed at $1,208.20 up $13.10 on Friday in NY. Asia pulled it back to $1,205 with London taking it just below $1,200 ahead of the LBMA Gold Price. The LBMA Gold price was set at $1,197.85 down $4.05 on Friday's level. The euro equivalent stood at ?1,136.53 up ?3.94 reflecting the rising dollar and the euro's slipping. Ahead of New York's opening, gold was trading higher in London at $1,199.30 and in the euro at ?1,138.77.

Silver Today - The silver price closed at $16.49 up 29 cents on Friday. Ahead of New York's opening it had fell faster than gold and was trading at $16.27.

Gold _{(very short-term)} The gold price will consolidate in New York, today.

Silver _{(very short-term)} The silver price will consolidate in New York, today.

Price Drivers

The euro fell in London again to $1.0533 and the dollar index rose to 99.91 at the start of the week.There is nothing new so far this week, simply a continuation of better value being offered by the dollar than other currencies. The fall in the gold price in the dollar should not be taken as investor's exiting, simply moving gold prices in both the dollar and the euro by dealers. This highlights a changing currency picture in the world as the gold price per se, is a reflection of a currency's value. It is not currencies measuring the value of gold but the other way around. With gold at a buying levels for Asia [who do not chase gold prices] we expect to see London and New York make the running today.

Overall there is now a positive tone in the gold market. There were purchases of 1.754 of gold on Friday showing two-way traffic in the SPDR gold E.T.F. last week. There was no change in the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 734.29 tonnes and at 165.28 tonnes in the Gold Trust.

Chinese demand for gold as reflected in the Shanghai Gold Exchange sits at 625 tonnes for the first quarter of 2015, a new record and even higher than the demand seen in 2013. But we must note that the big fall in the gold price in 2013 happened in late April 2013. It was this fall that attracted the heavy demand from China, etc. To get a better perspective on Chinese demand we believe it now reflects the slowly, but surely, rising wealth of the Chinese middle classes. These classes are growing both in number and in individual wealth. If we look ahead a few years we see Asian growth providing 80% of the world's economic growth and being the largest economy in the world. It takes no stretch of the imagination to see that the 500 million middle classes [of 1.3 billion people] will have a developed, new economy that will be bigger than either the U.S. [330 million] or the E.U. [400 million]. In line with this growth the propensity of the Chinese citizen for gold will outrun any newly mined supply of gold. We see such a high level of demand being a permanent feature of the gold world in the future.

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Regards,