Gold and Silver Market morning, September 05 2012

Gold Today –London gold closed at $1,695.30 after Fixing in London at the p.m. Fix at $1,697. The euro slipped back in London’s morning to €1: $1.2512 down 0.88 of a cent. London then pulled the gold price back with the euro to $1,689 before the morning Fix. The morning Fix in London was set at $1,689.50 down two dollars and in the euro at €1,349.225 almost the same as yesterday’s p.m. Fix. Ahead of New York’s opening gold stood at $1,691.40 and in the euro at €1,348.37.

Silver Today – Silver did not follow gold but held its price at only 3 cents lower in London’s morning at $32.04. Ahead of New York’s opening it stood at $32.08 in London.

Gold _{(very short-term)}

Gold should again be stronger, today in New York but cautious ahead of $1,700.

Silver _{(very short-term)}

Silver should again be stronger, today in New York.

Price Drivers

Gold & Silver –The market is marking time on the precious metal fronts as it waits for the 12/13^th September’s action. There may be news on Greece [bad, as more austerity measures lead to a further contraction of that economy] and some from the E.C.B. as it tries to do more to stimulate the Eurozone through bond buying at the short end of the market and lower interest rates to 0.5% from 0.75%. Either of these moves is positive for gold.

Meanwhile we are seeing the Rupee price of gold hit record highs on a daily basis. As pressures from family and from tradition and religion overwhelm price considerations, we expect to see Indian investors continue to pay record prices, so long as the rise in price is not perceived as a ‘spike’ from which it will fall back. Add to that underlying central bank demand and we expect precious metals overall demand to remain healthy. This has already caused traders to increase the net long speculative position on COMEX substantially. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com].

Silver – We mentioned yesterday that silver supply was down in 2012. This has been substantial to date. Investors should note that silver is not a metal that will reflect the state of the economy, but has become a ‘needed’ metal, whose demand remains high even in a downturn. With silver a by-product of other metal production, in the main, supply is vulnerable to a downturn in an economy. Hence, the very different demand /supply structure to other commodities. Add its monetary aspects and we have a very different metal to any other!

Regards,

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