New York markets overwhelmed by physical gold demand

Gold Today –Asia took the gold price from New York’s close of $1,387 up to $1,394 in London’s morning. London and New York were closed and the price in Asia hardly moved from that level. On Tuesday the gold price slipped just below $1,390 ahead of London’s opening but then fell further to Fix at $1.379 and in the euro at €1,067.42 in London while the euro was €1: $1.2959 up 75 cents against the U.S. dollar. Ahead of New York’s opening gold stood at $1,378.75 and in the euro at €1,065.78.

Silver Today – Silver closed at $22.39 on Friday in New York. Ahead of New York’s opening silver stood at $22.31.

Gold _{(very short-term)}

The gold price is moving to a point just ahead of a strong move, in New York today.

Silver _{(very short-term)}

The silver price will follow gold, in New York today.

Price Drivers

Gold & Silver – Physical demand reached the point last week where it was overwhelming the New York markets slowly but surely. In summary, the gold market is seeing sales from the SPDR gold ETF which have persisted for nearly three months now. The total held in the SPDR fund is expected to fall below 1,000 tonnes this week if the sales continue as before. We do believe there is a core of holders keeping their gold for the very long term, such as Paulson’s funds. What proportion of the fund these comprise is not certain, but we must be getting close to the point where the selling stops. When it does the robust demand, particularly from China, will quickly absorb all available gold. The timing of that event is impossible to say.

But what is becoming more visible is the lack of certainty of equity markets the world over. In 2007 when global financial markets nearly collapsed, confidence fell like a stone, but was restored by the hopes that QE infused into the markets preventing them from collapsing. Since then, aided by a persistently positive media, we have all been waiting for the developed world economies to recover to former levels. But here we are six years on and still struggling to be convinced that the recovery has gained traction. More to the point in markets where QE has been a feature, rising volatility is becoming a feature. This confirms that confidence is falling and the fears that deflation is closer than makes us comfortable.  The falls we are seeing in Tokyo are symptomatic of this. Unless really convincing evidence comes soon, we can be sure that the fall in confidence will spread outwards from Japan.

Meanwhile gold has started the week with a positive tone as it sees record short positions in the U.S. and on COMEX. The big question is, “At what price will cover their short positions?” [Subscribe to our newsletters atwww.GoldForecaster.com and www.SilverForecaster.com]  The Technical picture is becoming well defined now pointing to a strong move one way or the other.

Silver – The silver price is still steady waiting for a clear direction from gold.

Source