Gold and Silver's Daily Review for 9th August 2010


With gold strong at London's open at $1,209 it looks like gold has broken the back of resistance.   There is more to this battle to come still as it has still to gain the foothold needed to run forward, but Friday saw the decisive step in the battle completed.

The morning fix in London was at $1,206.   Gold has to hold that level at least to assure investors that it will hold above $1,200.  Just before New York opened it stood at $1,203 after $1,208.

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Gold – Very Short-term

Today should be a strong day without getting too excited.   The type of buyer is conservative with some exuberant buying coming from the far eastern retail market.   The restraining concept of buying above a new level of $1,200 is still there but not for long.   We want to be convinced that this level will hold, still.

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Silver – Very Short-term

Silver moved up another 10 cents as gold fought through resistance.   Standing now at $18.50+, we do expect a more vigorous upward performance today than we saw on Friday.   The silver price will remain riveted to the gold price.

Gold Price Drivers

The steady push of retail demand from the Far East is pushing institutions to up their limits in order to get good quantities of gold.   As this could be the last week of the 'summer doldrums', buyers will be quicker to move limits aware that new demand is about to enter the market.   Those hoping to dominate a quiet market are going to have to change their stance because of this.

From now on the concept of getting in at a good price has to be tempered with getting in at all.   The final quarter of the year finds the gold markets a crowded place and 2010 will be no exception.   The unemployment news on Friday has made the recovery uncertain.   QE looks pretty certain to come shortly.   Such uncertainty prompts prudence.   More and more institutions will decide that this uncertainty must be hedged with gold.   The only way to get the gold they want is to be prepared to pay more than the retail trade is prepared to.

The fundamentals for gold are strong now.   While the gold price is dependent on overall jewelry demand, the term jewelry is a very flexible and misunderstood term.   We will be producing an article on this which will be posted in its entirety in this week's issue of the Gold Forecaster.

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Julian D.W. Phillips