Daily Market Update 5/3/11

GOLD
Gold closed at $1,542.60, down $14.90 in light trading as the Gold price stabilizes and shows excellent support at the $1,520 level. Sunday night’s Gold trading in Asia showed extraordinary demand and renewed buying under the $1,540 level. The volume of trading was less than a 2% drop from the previous close.

I still see Gold breaking above $1,600 by July 1^st on the way to much higher prices by year end. After a brief feel good bin Laden rally, the dollar reversed course and fell to its lowest level in 3 years against the euro at 1.49, and Crude Oil continues its higher price movement, adding additional support for the gold price.

SILVER
Silver closed down $1.92 today, ending the day at $43.98 per ounce. There appears to be sizeable support for silver at Sunday night’s low of $42.20 per ounce. The recent volatility in Silver pricing has increased demand for physical products. The CME exchange has gone back into backwardation on the futures contracts and the U.S. Mint is now six weeks backlogged on delivery of Silver Eagles. We are also seeing physical shortages in the popular .999 1oz Silver Trade units that trade at ½ the premium of the Silver Eagle and offer the lowest price for .999 silver investment products.

Silver CME futures opening interest in silver last week started at 152,000 contracts, and by Friday had dropped 23,000 contracts; a significant drop in four days. The ETF’s stockpile of silver lost 130 tons at the same time. It would be very healthy for the Silver price to stay in the $42 to $46 price range for a while.

Today’s Other Important News

Treasury Secretary Timothy Geithner said Monday that the US would hit its debt ceiling no later than May 16 unless Congress were to act.
The Greek Finance Minister stated today that the IMF and the EU should give his nation more time to pay back their debt bailout loan.
Factory orders rose in March for the fifth consecutive month, rising 3% to $462.9 billion, the Commerce Department said Tuesday.

For many of my clients and friends who are Gold & Silver addicts, I am now posting on Twitter multiple times during the day and night.