Daily Market Update 4/12/11

GOLD
Gold was down $14.20 an ounce on the day, closing at $1,452.40.  Trading was active with excellent support at the $1,450 area. I believe the upward trend in both gold and silver prices remain firm in light of the current macroeconomic and geopolitical environment.

Today’s Gold trading took direction from a $3 drop in Crude oil prices, as a result of four news items:

• Goldman Sach’s trading department is recommending taking profits in crude oil contracts
• Iraq has increased oil production to levels not seen for 10 years.
• The impact of the Japanese earthquake on energy demand in Japan.
• The IMF warning of a slowdown in the global economy should crude remain at these lofty prices. 

Standard Charter Bank, with a branch in Hong Kong, sees no end to Chinese and Indian demand for gold. They are looking for gold to reach $2,100 an ounce within three years and almost $5,000 per ounce by the end of the decade, according to their latest report. The bank said there was a "powerful relationship" between income per head in Asian emerging markets and the gold price. The bank expects an extended period of high gold prices.

SILVER
Silver  ended the day’s trading at $40.02 up $.10 on the day. Today was an important day for Silver, trading ranged from $39.70 to $40.25 on very heavy volume. If Silver can continue to stay above $40 for the balance of the week, it would be very bullish.  However, if $40 Silver doesn’t hold, we could easily see a correction back to the $37 area.  I’m also carefully watching the trading and closes for the major Silver equities, which could provide guidance on the direction on Silver.

Today’s Important News

Yesterday, Federal Reserve members Yellen and Dudley said the central bank should stick to its super-easy monetary policy, as inflation is not a threat and unemployment is too high. Market sentiment remains unclear over potential interest rate hikes and the timing of the withdrawal of quantitative easing measures.

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