As we approach the end of the first trading week of the year we have seen the Gold and Silver virtually shadow the U.S Dollar. Since for the most part the U.S Dollar and Metals markets have an inverse relationship the greenbacks inability to maintain any momentum has helped to fuel this recent Gold and Silver rally. A weaker U.S currency makes the Dollar priced Gold more appealing for investors. India's Gold buying continued for the fourth Session as the Rupee rose to its highest level in fifteen months, making the U.S Dollar priced Gold cheaper. The strength of the Rupee is a direct result of the global U.S Dollars weakness. It has been reported that India imported 300-350 metric tons in 2009. So far this year the demand from India, Thailand, and Indonesia have been fueling the Gold demand. China also has been issued some very favorable retail Gold predictions. However, with the upcoming Chinese New Year or Spring Festival starting February 14th and lasting 15 days expect a buying spree from the citizens of China as it is the most important of the traditional Chinese holidays. During this Festival people are very generous and buy gifts. Gold and Silver have become the gifts of choice. I expect the buying demand to increase as we get closer to the Chinese New year. Silver has enjoyed riding the bullish Gold markets coat tails and is once again trading over $18.00 per ounce. The duo status of Silver as being a precious metal and an industrial metal will probably help it out perform Gold again. This week also revealed the NO bailout policy from the European Union in response to the lowering of Greece's credit rating due to Dubai's Inability to pay their Creditors.(Greece for one). This has been negative for Gold and helped strengthen the U.S Dollar versus the Euro. The Geo-political tension in Yemen has sent foreign investors into Gold as a flight to safe haven ...in case of terrorist escalation. Warring environment is bullish Gold. U.S. and European Embassies closed due terrorist threats. This week the U.S Labor Department reported that the number of Americans filing initial claims unemployment benefits rose slightly last week. The number rose to 434,000. Also pending home sales dropped 16% in November despite the extension of the first time buyers tax credit. The most important number of the week (Unemployment) will be released tomorrow (Friday 1/8 @ 7:30 am. CST.). As we Gold bugs know the last unemployment report 12/4 was better than expected and started the avalanche sell-off ($140.00 +) in the Gold market. Which might justify a lower closing today due to some profit taking.
UNEMPLOYMENT.................7:30 am CST.
Wholesale trade.....................7:30 am CST.
Consumer installment credit......2:00 pm CST.
Mike Daly / Gold Specialist