Price Drivers
"...The gold price now stands in the heart of overhead resistance and is narrowing its trading range to zero. It is clear that we are on the brink of a strong move either way.
While the Chinese are very happy with the gold prices at these levels, it does not have the power to suppress them. China is a long-term, persistent buyer, trying to access as much gold as it can over the long-term.
But there are supply and demand tides that are maturing, as we write, that will dictate the direction of both the gold and silver prices. These have the potential to change the game completely. When they become visible, the gold and silver price will move strongly and suddenly.
There were no sales from the U.S. based SPDR gold ETF holdings or Gold Trust yesterday, whose holdings remain at 794.621 tonnes and 161.83 tonnes respectively.
The government of India is waiting for confirmation of economic and Balance of Payments data before making an announcement on lowering import duties on gold and silver and easing restrictions on their import. The Ministry of Commerce informed the public that that it will be “soon”. No details have been issued to guide us on this, so we must wait to see. Investors should factor in such an announcement.
The Japanese Yen has fallen to 104 against the U.S. dollar. This is against its peak of 78 in the last two years. It is capable of falling to 120 yen to $1, simply by repeating history. It is in Japan’s interest to do this as the debt levels in that country continue to rise to over 220% of GDP. It is very clear that “Abenomics” may not achieve its aims. There is a great danger that if they do fail we will see a loss of confidence in the Yen. The Yen is one of the four main global reserve currencies. We expect 2014 to show a remarkable performance in the Yen gold price."
