With the Fed minutes coming out today markets once again are waiting to gauge just when a rate rise in the U.S. is going to happen. Meanwhile, across the world in China the equity markets have dived again adding another 2% fall to the 6% we saw yesterday taking it back to where it was when the Chinese government first intervened. The Chinese equity market is still up 50% over this time last year, but it is getting a reputation as a casino more than a home of market wealth. Chinese gold investors are seeing a far greater stability in the gold market and continue to favor gold. We reiterate that the Shanghai withdrawal levels are a better expression of Chinese gold demand than Hong Kong import figures. HK figures do express consumption but overall gold demand there should include all sectors not just consumer demand.

There were no sales or purchases in either the SPDR gold ETF or the Gold Trust on Monday or Tuesday leaving the holdings of the SPDR gold ETF at 671.867 tonnes and 161.02 tonnes in the Gold Trust. The gold price is hovering just above $1,120 and the trading range is tightening. We could be on the brink of a strong move.

With the gold market around two weeks away from the start of the gold season, we would be surprised to see the gold price tumble. But there is a caveat; the season does not always start with a bang and may take a couple of weeks to get into gear. So we remain at a high risk point in the market, both ways.

The Markets

Silver took a heavy hit yesterday as what seemed a U.S. based bear raid attacked the price. Having failed to break the back of the gold price, silver looked as though it was an easier target. This breaks a pattern that has persisted for several years now, so we watch to see if the attackers continue with their raid or have shot their bolt, yesterday. If gold holds firm we would expect silver to recover.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com