Gold and Silver's Daily ReviewPosted Friday, 6 May 2011
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch -GoldForecaster.com
Gold fell heavily in New York yesterday down to $1,462 down nearly $53 before rebounding in Asia. These sales were a repeat of yesterday’s pattern and executed outside the main market times as we explained yesterday. We repeat: “Placed at the London Fix we do not believe that the price would have fallen so easily and that amount would have been taken off the market by the big buyers there.” As we have forecast for some months now, corrections in these markets will be short and sharp. This was the case as the gold price rebounded in Asia to $1,487 before slipping back to $1,480 in London.
The rebound of the dollar to $1.4535 from over $1.48 has been attributed to the failure of the E.C.B. to raise interest rates until at the earliest June. In the euro the gold price moved from yesterday’s €1,025.20 before New York opened to open in London at €1,019.67 only €6 down. Gold was Fixed at $1,487.75 and in the euro, €1,023.85, still well above the bottom of its trading range.
Silver fell back to $34.66 from $38.33 in a continuation of the short-term speculators actions.
Ahead of New York’s opening gold stood lower at $1,477.40 and in the euro at €1,018.33 and the dollar at $1.4508 stronger than earlier. Silver stood at $33.25 ahead of New York’s opening.
Gold - Very Short-term
The gold price should continue to be very volatile in New York today. The dollar price is still dominated by the dollar’s exchange rate and by gold Exchange Traded Fund selling. We continue to expect a weaker bias in gold today after the completion of the rebound.
Silver – Very Short-termSilver is still consolidating at lower levels and should have a weaker bias in in New York today.
Silver & Gold Price Drivers
Another 10 tonnes of gold was sold from the SPDR gold Exchange Traded Fund yesterday in what, in our opinion, was a ‘bear’ raid, as we explain above. But this time the recovery in the dollar helped a great deal. The fall was not nearly so precipitous in the euro as a result. In Asia and we expect from the large buyers at the London Fix there is more than enough buying power to pick up any stock coming onto the market, but have no doubt that it is in their interests to let the price fall as we saw yesterday. This triggers more sales and increases the quantity they can buy. The ‘bear’ raid and its consequences may not be over.
Standing back and looking across the markets we can see that the sell-off hit all markets, whether oil, precious metals or other commodities. The very poor data coming out of the States and likely to be followed by the Eurozone [except Germany] is sending a signal that the recovery may be turning down. If correct this signifies the arrival of ‘stagflation’ and at worst a ‘double dip’ recession, with inflation. Most developed world governments are too weakened by excessive debt to cope with such an economic downturn, so the markets signaled that it’s time to run for cover, much as we saw in 2007. While precious metals fell back then, it must be remembered that they had risen in the boom times then saw investor deleveraging before slowly rising back again to current levels during the bad times.
Confidence levels in the developed world economies will sag if this is correct, but more seriously, falling confidence will permeate most economic matters, reaching into the value of currencies quite deeply. No wonder central banks in South America are snapping up what gold they can to weather this coming storm.
We cover the implications for gold in macro-economic and currency events in all the issues of the Gold Forecaster and the Silver Forecaster for subscribers. [The Gold Forecaster and Silver Forecaster are a “must-read” for all who want to understand why the gold and silver prices are moving as they are and why.] Subscribe at www.GoldForecaster.com or for silver atwww.SilverForecaster.com].
Regards,
Julian D.W. Phillips for the Gold & Silver Forecasters
-- Posted Friday, 6 May 2011
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