Gold and Silver's Daily Review for 14th Sept 2010


New York closed at $1,244 and Asia took the gold price up $10 overnight.   London added little too this before New York opened Fixing at $1,253.25.   As New York's opening moved onto the horizon, gold moved up $3 more anticipating better demand in New York.

Why did it move up overnight in Asia?   All the economic data coming out of China is not only positive, but shows that the Chinese government has the ability to control their economy.   To the gold world this means that double-digit, controlled growth will continue.   We wrote a piece in the last issue of the Gold Forecaster that discussed the shape of Chinese demand now and as it develops in the future.   This helped us to see that the demand we now see as coming from Asia will not be stopped by any particular detail of the U.S. economy.   It will reflect the trend of the Chinese economy oblivious to factors that excite the developed world's demand for gold.   It is a major trend setter for gold.

Add developed world and institutional demand to Asian demand to get a synthesized picture on the gold price.

We are developing the theme of the last article [Subscribers can access our archives] on "Developed World Demand & Supply of Gold" in the current issue of the Gold Forecaster, and writing "Will the Chinese Yuan rise – what of Chinese Gold Investors?" and "Will the Silver price de-couple from Gold" These will not be issued in full as short articles, if at all, to gold sites in general.   To read these important pieces and to find out our preferences and for our full range of weekly forecasts please subscribe through: – or for our weekly newsletters.

Gold – Very Short-term

Gold had a strong start overnight without any short-term factor pushing it up.   The rise we believe was due to the persistently strong demand for gold overall.   But the U.S. investment market this week has been slow to buy gold.   We do expect New York today, to hold these levels or take them higher.

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Silver – Very Short-term

There's no stopping silver now as it Fixed in London at $20.31 a new multi year level.      We do expect the robustness of the silver price to continue, giving us a positive New York day.

Gold Price Drivers

The underlying trend in the gold market is robust.   When the tributaries of a river join the mainstream on their way to the sea, it becomes difficult to disentangle the different sources once in that mainstream.   But the strength of gold from Asia showed the force of that particular tributary.   It can't be ignored.   With many analysts asking has gold peaked, such performances call such conclusions into question. With the fundamentals of the gold price healthy the battle of $1,260 takes on a new significance.

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Julian D.W. Phillips