Gold and Silver's Daily Review for 2nd September 2010


While the gold price was knocked back to $1,245 yesterday [in line with the London Fix of yesterday] today it climbed first in London, to be Fixed at $1,247.50] then early in New York.

It was Fixed in London's afternoon at $1,248.50.   Again it is attacking resistance at $1,250 to $1,265.   We expect quite a good volume of gold is changing hands at the Fixes in London, just what central banks and institutions want.   While this flow lasts and sellers provide the gold price will hold these levels.

We note that the I.M.F. has only 103 tonnes left to sell now, after July.   Beside a small measure of anonymity in the market, the only advantage to a central bank buying gold in London instead of offering to buy the I.M.F.'s gold is that they won't chase prices higher than they are currently.   What may be happening, of course, is that the I.M.F. may be limiting their monthly sales to a certain maximum tonnage.   However, if the I.M.F. continues selling gold at the pace seen in July, then they will have completed their sales by February of 2011, seven months away.

The shares of the gold Exchange Traded Fund SPDR in the States continues to see good levels of buying with another two tonnes bought yesterday and four tonnes the day before.  With slightly better news coming out on the U.S. employment front hopes rose slightly that Friday's news will not be so bad.   Certainly Friday is building up to be one of those precipitous days!

We are including an article [only for Subscribers] on "The Yuan goes Global" in the current issue of the Gold Forecaster, which will look at the ramifications of the internationalization of the Yuan and its impact on the gold price.

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Gold – Very Short-term

With another attack on resistance happening at the moment sellers are finding willing buyers.   This is the third attack on resistance this week.   Clearly, the gold price is moving to a point where the weight of buying or selling will tip the scale one way or another.   While we expect the day to remain positive in New York, the risks in the gold market are now rising.

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Silver – Very Short-term

Silver is showing a certain robustness that tells us that it is not simply moving with gold but has an extra element of demand that could well lead to it running ahead of gold, on the rise.   We expect another positive day for silver.

Gold Price Drivers

The gold market appears focused on whether the economic news affecting the U.S. will be positive or negative, but this is not the case.   Asian demand is set to rise by an accelerating amount in line with the economic growth of the East.  This, plus the economic and currency developments in the East will play a pivotal role in the gold price influences.

In addition the uncertainty that abounds today is not about economic growth but about the structures that the monetary system is built on.

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Julian D.W. Phillips