Gold & Silver Market Morning, March 2 2012

New York held the gold price above $1700 in New York, at $1,715, where it held in Asia and through London’s morning to Fix at $1,714.50 and in the euro at €1,292.986, while the euro held at €1: $1.3260, another one cent down on yesterday’s level.

Ahead of New York’s opening gold was sitting above the Fix level at $1,715 and at €1,295.07 at that time.

Silver opened at over $35 and climbed through to $35.18 in London’s morning again showing more hormones that the gold price. Ahead of New York’s opening it stood at $34.17.

Gold _{(very short-term)}

Gold is consolidating today both in London and in New York today.

Silver _{(very short-term)}

Silver will recover to some extent, in New York today.

Price Drivers

Much has been written on why and how the gold price fell $100 late in New York. We now look at why it is holding at current levels and not bouncing right back.

The selling was akin to panic selling much the same as when one is forcing the price down. The quiet time of gold day was chosen to unload around 31 tonnes, or a million ounces. It wasn’t Iran, because they are not allowed to trade gold in New York, nor receive dollars for their sales. It is unlikely that any other central bank would have dumped so much at one shot on the market. They would have achieved better prices if they had dealt professionally. Any U.S. institutional dealer who dumped gold in this way is probably looking for another job this morning. Only an institution with a major, urgent liquidity problem would have done this, or someone who wanted the price much lower [probably to make his shorts profitable].

But of more importance is the fact that the gold price is so steady at these lower levels, so far. There is no running in to get a bargain reflecting buyers with the competence and patience to buy what becomes available at the price, without bidding higher. This pattern is more institutional and is an opportunity for other emerging world central banks. As the price has stopped falling we assume that the gold sold has now moved into firm hands and out of the market.

What is absent is the madding crowd rushing in and out driven by the technical picture alone. This buying pattern smacks of emerging world and central bank demand. [To get more of the right perspectives on the gold and silver markets and where gold and silver prices are going, subscribe through www.GoldForecaster.com or www.SilverForecaster.com]. Investors do well to ask themselves, “Has anything fundamental changed in the gold market in the last day? We find it difficult to believe that the statements from Chairman Ben Bernanke would have triggered the sell-off. Both the selling and the buying look professional. If shorts were responsible we expect them to close them soon.

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters