Gold and Silver's Daily Review for 10th Sept 2010

goldforcaster2The battle of $1,260 is still on. Gold was pushed onto the back foot yesterday and forced back to the lower $1,240 area in New York, before Asia took it back to nearly $1,250.   London followed through to Fix at $1,248.75 in the morning and set the pace for New York.

Helping this rise was the announcement that the Bangladesh central bank bought 10 tonnes of gold from the I.M.F. on Tuesday at the market price [$1,260?].

U.S. investors in gold E.T.F.’s are still sidelined waiting for direction while Asia and London nibble away at gold offers.

We are developing the theme of the last article [Subscribers can access our archives] on “The new threat to the U.S. Dollar – A Global Yuan” in the current issue of the Gold Forecaster, and writing “Will the Chinese Yuan rise – what of Chinese Gold Investors?”   These will not be issued in full as short articles 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

Friday is usually a hectic day for gold. With Asia and London taking the gold price up and another central bank buying gold from the I.M.F. we expect a positive day for gold.

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Silver – Very Short-term

Silver seems to have been pushed back by the markets after such a good performance this week, but understandable so as Traders want to keep short-term profits. It stands at $19.91 ahead of New York’s opening. We expect the silver price to show a stronger bias again today.

Gold Price Drivers

After the sale of 10 tonnes to the central bank of Bangladesh the I.M.F. is left with 89.7 tonnes left to sell or roughly 6 months of sales at the rate of July’s sales. Of itself it would not have been a significant piece of news but it underpins the fact that more and more central banks want gold in their reserves in view of a dark monetary future. Gold gives central bank reserves resilience in that darkness. It is now evident that in currency crises, gold rises as currencies fall [Vietnam is the present day picture of that]. We are surprised that more central banks have not followed Asian central bankers. It is certainly an Asian trend that will not change in the face of the structural problems facing the developed world.

Yesterday, we mentioned that the gold market is asking if the gold price is peaking. The evidence of demand through Asia and London this morning tells us that they don’t think so. Is the central bank purchase of gold enough to tell the market that? It should be. Meanwhile it is interesting to see big buyers in the physical market paying up for the gold they want. Perhaps the supply fell away from the I.M.F. to accommodate Bangladesh?

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Julian D.W. Phillips