Gold and Silver's Daily

"Monday saw a p.m. Fix at $1,261 then the gold price dropped to Fix in the afternoon at $1,236.   This confirmed more consolidation is required for now.

The price dropped back to the area where large governmental buyers have their limits and await offers.   Large non-governmental buyers were not buyers yesterday after the a.m. Fix [as the $ strengthened] so traders shorting gold moved in for a hit on the gold price."

Gold – Very Short-term

Gold is likely to hold in the $1,230 area as part of the ongoing consolidation.   It is at the bottom end of its trading range now and the trend is still up today.   No surprising and urgent news has broken over the market today, but if it does gold is in a mood to respond quickly to it.

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Silver – Very Short-term

Silver could not hold the high ground at $19.00+ but fall with gold to $18.50 and sits there watching gold.   It is following gold and will continue to do so.   As we said yesterday, "Some more work may well be needed in this market.   It still needs to taste long-term investment into the Silver Trust first, though."

We will be addressing the issue of "Is Silver de-coupling from gold" shortly, in the Silver Forecaster newsletter.

Gold Price Drivers

Attention was turned to Greece again as the news that they are venturing back into the Bond market was spread.   This may well be unwise at the moment.   Should Greece fail to sell bonds or even sell bonds, but at a high Yield, it will be treated as bad news for the rescue efforts.   The news that another banking crisis in Britain would 'sink' Britain was equally disturbing.

With the U.S. Fed fearing that growth is falling leading to us believing that a double-dip recession could be on the way, financial markets are attracting high risks in a very risk-shy market.   The fact that the banking system is so intertwined with each other and so exposed to government bonds suggests that further bad news is on the way.   Unfortunately, these markets and the banking system have lost a good deal of its resilience and may not be able to handle such potential shocks as well as it did past ones.   This picture remains extremely 'gold-positive'!

Institutions of all levels continue to favor gold buying.   The fundamentals are getting stronger as gold consolidates.


Julian D.W. Phillips