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BookmarkGold Today – The New York gold price closed at $1,332.90 up $5.90 on Friday in New York. Asia and London took it down to $1,324. The gold price was Fixed in London at $1,322.00 down $16.50. In the euro, it Fixed at €960.337 down €9.872 as the dollar stood at $1.3766 from $1.3760: €1. Ahead of the opening in New York gold stood at $1,323.10 and in the euro at €960.96.
Silver Today – The silver price closed at $20.29 the same as on Thursday in New York. Ahead of New York’s opening, it was trading at $20.15.
Price Drivers
The E.U. made an alarming statement over the weekend. In stating its objective on imposing sanctions on Russia, was “to uphold international law”, it stated that “It is of secondary importance whether there is an economic or financial cost.” Trade between Russia and the E.U. is substantial and critical to both Russia and the E.U. If the E.U. imposes trade sanctions it will hurt itself in the process, if Russia responds in kind it will damage its own economy. We doubt whether this is the start of an economic or financial war, but we have no doubt that cautious investors remember back to the catastrophic damage that was seen in the two wars in the twentieth century and turn back to gold once more. Initially this battle will be economic and financial! This is very gold positive.
The increase in uncertainty over the weekend is palpable. Because of the damage that could be inflicted, we would be surprised if the implied threats were carried out. Having said that, we look at the scene in Europe, against a backdrop of an E.U. in a very fragile recovery. This is not the time to exacerbate the situation. If more actions follow the threats it is bad news for the entire area. The E.U. and Russia could fall back into recession. Yes, it will become gold positive as the future darkens too.
On Friday, we saw a purchase of 4.196 tonnes into the SPDR gold ETF but none into the Gold Trust. Their respective holdings are now at 816.972 tonnes and 166.14 tonnes. The, now small, but steady, demand from the U.S. is surprising, but had to follow in 2014 because of the loss of gold stock within the U.S. in 2013. The fundamentals for gold are strong to the upside and this is without the potential boost from the Ukraine. We cannot say where it will bottom out, but we continue to say that we feel gold has resumed the uptrend.
Traders and speculators will adjust gold and silver prices in line with currency moves [currently down] but we expect physical demand to turn speculators and traders around to the upside.
U.S. physical demand is price supportive now. We are at support levels in the low $1,300. This support extends right down to $1,260.
Silver – The silver price is expected to rise faster than gold in the next few weeks.
