GOLD
Gold keeps moving upward! After hitting $1,526.70 per ounce (a five month low) on Wednesday with 253,181 contracts being traded on the CME the buyers and volume have returned. At 11am PDT, Gold is up $15.40, trading at $1,588.20 per ounce on excellent volume. After all the negative news this week it appears that Gold will end the week higher.

The recent increase in the value of the U.S. Dollar versus the Euro and the decline in Gold was primarily caused by a run on banks in Greece and Spain. Let me explain, depositors in Greece and Spain are concerned about the solvency of their banks and the safety of their funds, combined with the possibility of their country leaving the euro-zone and defaulting on euro denominated debt. The respected sovereign credit rating company, Moody’s, Fitch, and Standard and Poor’s continue to downgrade the debt and credit ratings of Spanish and Greek government as well as many of the largest banks. Many of these banks have needed to sell their Gold reserves to meet the currency needs of their depositors.   

SILVER
On Wednesday, we saw Silver hit $26.73 per ounce (a five month low) on heavy volume of global trading. Silver is up $2.00 per ounce from this week’s low (7½%) virtually unchanged for the week. At 11am PDT, Silver is trading at $28.82 per ounce, up $0.80 on the day on average weekend volume

GOLD
Finally, some bullish Gold news today, which has driven up the value (see below.) Yesterday, the market action clearly showed that the Gold market was oversold, with a volume of 253,181 CME June Gold contracts traded and reaching a low $1,526 per ounce, closing at $1,536, holding above the $1,535 key support level. Yesterday’s big question was, are we going to see consolidation around the support level, or will it quickly retrace part of the decline? And today’s rally answered that question. At 11am PDT today, Gold is up $33.20, at $1,572.80 per ounce on very active trading.

QE3 On the Way!
The Philly Fed manufacturing index fell to a minus 5.8% from a positive 8.5% in April, well below expectations. Economists polled had expected the index to increase to 10.0. Reading below zero indicates that more companies are contracting instead of expanding. The new-orders index dropped to -1.2 from 2.7 in April and the employment index, a gauge of hiring expectations, also turned negative. This is one of those important indicators that the Federal Reserve monitors to make a decision on the next round of quantitative easing. QE3 will be unequivocally positive for Gold as it is an inflation hedge.

China Still Number One Gold Consumer
The World Gold Council just reported that China remained the world's top Gold consumer for the second quarter in a row, with its Gold consumer demand up 10 percent to 255.2 tonnes for the first three months of 2012.

Guess Who’s Buying Gold Again?
Prudent Money, with an understanding of Gold's long-term diversification benefits, continues to accumulate Gold as seen in the latest SEC filings. And, billionaire investor, George Soros, significantly increased his shares in the SPDR Gold Trust in the first quarter. Soros Fund Management nearly quadrupled its investment in the largest exchange-traded Gold fund (GLD) to 319,550 shares ($49 Million), compared with 85,450 shares ($13 Million) at the end of the fourth quarter.

SILVER
Silver trading pretty much mirrored what Gold was doing. After reaching an extraordinary low of $26.68 yesterday, the Silver price stabilized above $27 and today actually reached $28.98 before seeing any selling. Right now, at 11am PDT, Silver is up $0.80, trading $28.02 per ounce with excellent volume.

GOLD
Concerns about the ill-liquidity of Greek banks and the possibility of Greece leaving the Euro-Zone and going back to the Drachma is driving depositors to line up to withdraw their money in the form of Euro or U.S. Dollars. Many of the Greek banks are selling their Gold reserves to acquire needed U.S. Dollars and this is causing the price of Gold and the Euro to drop. The Wall Street Journal is reporting that Greek Depositors withdrew $898 Million from Banks Monday, and the situation is getting worse. We have major historical and physical support for the Gold price at $1,500 per ounce. I believe we are very near the end of this short term decline in Gold/Silver. Right now at 11am PDT, Gold is trading at $1,539.60, down $17.60 per ounce on active volume.


SILVER
Silver actually reached $26.68 per ounce early this morning before we saw heavy demand. At 11am PDT, Silver is down $0.90, at $27.22 per ounce on very active trading.

GOLD
Gold is showing excellent support at the $1,550 per ounce price level. Although we have seen heavy selling coming out of the European banks to raise their currency reserves, the buying from Asia at the current low prices has provided the incentive to make sizeable purchases. With the IMF’s Gold purchases (see below) the pressure to sell Gold from insolvent European banks will lessen. Adding to the weakness in the Gold/Silver prices is the strength of the U.S. Dollar versus the Euro, now up for the twelfth day in the row. At 11am PDT, Gold is at $1,557.20 per ounce, down $8.80 per ounce on very heavy trading.  

IMF Buys $2.3 Billion Worth of Gold
After years of selling Gold to help finance developing countries projects, the IMF is now forced to purchase $2.3 billion worth of Gold $(1.5 million ounces) on account of rising global risks. The IMF currently holds around 2,800 tonnes of Gold, but facing increasing credit demand and risk from many Euro-Zone countries, it needs to increase the Fund’s Gold reserves. This announcement comes as no surprise, because many Greek, Spanish and Italian banks are badly in need of Euros and U.S. Dollars and have been selling Gold into the global commodity markets to raise funds.   

SILVER
Trading in Silver this morning has been active, with a low of $27.87 per ounce and a high of $28.56 on excellent volume.  At 11am PDT, Silver is down $0.40, trading at $28.12 per ounce on excellent volume.

PLATINUM & PALLADIUM
Both Platinum and Palladium made new 30-day lows this morning and turned up on excellent demand. Both are trading higher on the day with Platinum up $9.00 at $1,451 per ounce, and Palladium up $10 at $603 per ounce.

GOLD
Gold dropped $25 per ounce on the opening based on negative news from the Euro-zone and a very strong U.S. Dollar versus the Euro. After the initial price drop, Gold demand appeared and Gold rallied up $10 per ounce. Gold has been in a surprisingly narrow $12 trading range from $1554 to $1566 with active trading. At 11am PDT, Gold is down $17.30 per ounce, trading at $1,566 per ounce with excellent demand on volume of CME contracts traded.
 
On Saturday, the People's Bank of China delivered a 50 basis point cut in banks' reserve requirement ratio (RRR), effective from May 18, the third cut in six months and one that investors had called for after data on Friday showed the economy weakening, not recovering, from its slowest quarter of growth in three years.

Last week, it was the election in France that brought in a new socialist president, and this week it’s Germany, where the citizens gave Chancellor Angela Merke’s party a major defeat. In both countries the citizens are voting to reject harsh fiscal austerity policies as their countries are in the midst of a recession. The Euro-zone ministers are seeing major pressure to loosen monetary policies and provide more quantitative easing (print more money) to stimulate the economy, and ease up on the call for austerity.  

SILVER
Silver has followed Gold on the opening, downing to $28.15 per ounce before rallying back. At 11am PDT, Silver is trading at $28.52, down $0.38 per ounce on a normal volume of contracts.

GOLD
The value of the U.S. Dollar versus the Euro is up for the 11th day in a row, based on the Spanish bank reforms and other Euro-zone sovereign debt problems.  A stronger U.S. Dollar means a lower Gold price as measured in the U.S. currency.  Earlier this morning, we saw Gold reach $1,572 per ounce (a four month low) based on liquidations to cover European credit and financial market losses. At 11am PDT, Gold is trading at $1,583.30, down $13.70 per ounce.

With gold trading at under $1,600 per ounce this week, there is exceptionally heavy volume of buying during the week on the world’s Gold markets. In June, we will learn which central banks were the buyers. I believe we are seeing a weak hands shake out (margin call and stop loss selling) ahead of a major rally in Gold.

SILVER
The Silver price continues to decline as it takes its lead from Gold. At one point this morning in Asia, Silver traded down to $28.41. Buying appeared late in the Asian trading and rolled into the European and U.S. markets. At 11am PDT, Silver is down $0.34, trading at $28.90 per ounce on normal weekend type volume.

GOLD
In the past 24 hours, Gold has traded from $1,585 to $1,602 per ounce on normal volume. I am concerned that unless Gold can rally above the $1,600 price level by next Monday, that level will start to act as a resistance. Gold is finding more and more support on down days; I am not sure if its sovereign buying, but it is truly massive. I think about the Gold super fundamentals of lower supplies and increasing demand. Remember, the 50 metric tonnes of Gold purchased by the world’s central banks in March and the 79 metric tonnes of Gold purchased by Chinese buyers in the first two months of this year and think the buying must be increasing in April and May with Gold at current price levels. At 11am PDT, Gold is up $1.597 per ounce virtually unchanged from yesterday at the same time.

Goldman Sachs is bullish on Gold
With the Gold price trading at $1,598 per ounce, Goldman Sachs (major Wall Street bank) stated today that its six-month and 12-month forecast for the Gold price is $1,840 per ounce and $1,940 per ounce, respectively, citing weak US growth and renewed euro zone risks, coupled with resilient physical demand.

SILVER
Within the past 48 hours, the Silver price dropped to as low as $28.54 per ounce, but quickly rallied back above $29 per ounce on heavy buying. Today, Silver is showing excellent demand above $29 per ounce. At 11am PDT, Silver is down $0.29 per ounce, trading at $29.24 per ounce.   

GOLD
What a day yesterday and today was in the Gold pit. Volume today is almost double what a normal day would be and the excitement when Gold dropped below $1,600 was off the charts. Considering the strength of the U.S. Dollar and the problems in Europe, it isn’t surprising to see Gold make a new yearly low of $1,577.40, but that is when the rally began. If the trading in the aftermarket continues, this could be an inter-day reversal, which is very bullish. When a commodity market makes new lows and closes the day on the highs it’s called an inter-day reversal. At 11am PDT, Gold is trading at $1,597, which is the high for the day and down only $7.60 from yesterday. If you are looking for a good entry point to buy or add to your holdings of Gold, today is an excellent day.


SILVER
Silver, Platinum and Palladium followed the Gold trading today. Silver made a new low of $28.54 per ounce, then we saw sizeable demand and the Silver market quickly rallied back to $29.30 as the volume picked up. At 11am PDT, Silver is trading at $29.44, down only $0.09 per ounce from yesterday and closing at the high of the day. The Silver/Gold ratio today is 54 to 1, which makes it an excellent time to pick up some Silver.

GOLD
In Greece, New Democracy, the country's mainstream center-right party, has declared that it will not be able to form a government. This has caused instability within the Euro-zone nations and the euro has fallen versus the U.S. Dollar. As the U.S. Dollar moves higher in value against other currencies, it drives down the value of Gold and Silver. Therefore we have Gold down today, and at 11am PDT, Gold is trading at $1604.60, down $35 on heavy volume.

The shine is back on gold jewelry in India with the government scrapping the 1% excise duty imposed on gold jewelry, raising expectations of an immediate pickup in demand.

China imported 62.9 tonnes of Gold from Hong Kong in March, 59 percent higher than February, and up sixfold on the same month of last year. Commerzbank AG stated, “Rising prosperity levels among the Chinese population coupled with tighter laws governing property speculation are likely to contribute to sustained high demand for gold in China.”

SILVER
Silver has bottomed below the important $30 support level on heavy trading. If it can’t rally above $30 within the next few days, look for the market to test the $28 level. At 11am PDT, Silver is down $0.86, trading at $29.53 per ounce.

GOLD
Gold declined on Monday based on political upheaval in France and Greece leading to a weaker euro (stronger U.S. Dollar) and softer commodity markets. At 11am PDT, Gold is trading at $1,639.60, down $4.90 per ounce on very active volume.  

Why is the new French President bullish for Gold and Silver prices?
The new French President, Francois Hollande (a socialist) has campaigned on a promise to promote government stimulus programs rather than focus on the harsh austerity measures Sarkozy favored. Hollande has said that his first task as president will be to call for a renegotiation of the European budget-trimming treaty, spearheaded by Sarkozy and German Chancellor Angela Merkel. Hollande wants to see more government-funded stimulus programs instead of drastic cuts across the board.

SILVER
When Silver hit $29.60 per ounce this morning, the war between the bulls and bears started. As the Silver price increased on excellent volume the price rallied back to $30.39. At 11am PDT, Silver is down $0.23, trading at $30.12 per ounce. It is important for the short term Silver price that $30 per ounce holds as major support.
 
The Shanghai Futures Exchange (SHFE) is all set to launch Silver futures trading on May 10, 2012. China is one of the biggest producers and consumers of Silver in the world. The contract size is set at 15 Kg (500 troy ounces) with a minimum margin requirement of 7%. The daily price range has been fixed at 5%.