Gold and Silver's Daily Review for 23rd July 2010
Despite the 'stress test' trepidation in Europe, the currency markets have let the U.S. Dollar fall and the Euro hold steady against main currencies.
It is the Dollar that is being pressed back against $1.30 against the Euro once more.
The oil price has also broken up through its trading range of the last few weeks to top $80. It seems the markets are seeing through the smoke and mirrors from the media and have their eyes fastened on the future of the U.S. and its currency.
So far we have seen no tumbling of the gold and silver prices, despite the expectation that we would. Today, we have seen Asia and London keeping gold at its highs just under $1,200 most of the time with $1,201 being seen on the offered side for a brief period. The morning Fix in London was at $1,198.75 and €926.82 again, a lot firmer than expected. Bear in mind that it was New York that took it to just below $1,200 yesterday, so will we see more of the same today?
Gold – Very Short-term
We saw gold perform well yesterday, holding at just below $1,200. If New York does take it over the top and holds it there we will see a far better tone in the market. If not then resistance held. The very short-term view points to lower gold prices. Stand back and we see so many reasons for it not to fall far. Today is crucial for the direction of the gold price.
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Silver – Very Short-term
Silver too is performing well, holding above $18.00. Irrespective of its short-term technical picture, the market mood is firm. If this mood holds, we could see the technical picture change for the better.
The silver Fix was only 35 cents up today at $18.17 and is now trading at $18.14 before New York opened.
Gold Price Drivers
Markets are peopled by very intelligent people, who make every effort to foresee what is shortly to happen. In so doing they discount future events as far as they can. For instance, Britain's growth has bee forecast at 0.6%, so any deviation from that figure will cause a market reaction. The European bank Stress Test results are schedule to be released at midday in the States, after market hours in the U.K. and Europe, allowing banks the weekend to rectify any funding shortfalls. The markets have been reading these events very carefully and have discounted them ignoring them, holding the Euro steady and taking the U.S. Dollar down against most currencies. This is not what the media expects to happen.
Bearing in mind this foresight and the present performance of gold, de-leveraging in the event of a recession may have already taken place to the extent it will. This makes gold's future much brighter if this is correct?
Julian D.W. Phillips