Asia took the gold price higher from New York’s close at $1,631, overnight to just ahead of London’s opening when it broke through the $1,640 level as the euro struggled to hold its exchange rate at over €1: $1.28. It failed to hold that level and sank back to €1: $1.2772 while all other currencies held steady against the dollar. London gold above $1,640 and Fixed it at $1,641 and in the euro at €1,286.252. The euro recovered to €1: $1.2758 at the time. Ahead of New York’s opening the gold price received slight downward pressure to take it to $1,636.75, with the euro at €1: $1.2784 leaving gold in the euro at €1,287.66.

Silver continued its robust tone as it pushed through the $30 level to open in London at $30,17. Ahead of New York’s opening silver it had slipped slightly to $29.80.

Gold (very short-term)

Again, the gold price should have a stronger bias, in New York today.

Silver (very short-term)

Again, the silver price should have a stronger bias, in New York today.

Price Drivers

The bad news just doesn’t stop. Today we heard that Germany’s economy will shrink by 0.5% in 2012 and by 1.5% in 2013. Of course the other, weaker members of the Eurozone will fare worse. It could not have come at a worse time. Austerity measures in themselves are shrinking each national country that applies them. This gives local economies the double whammy as government itself is a source of growth. Expectations are growing that the Eurozone will break up. We don’t see this as a break-up en masse, but individual weak members leaving. The remaining members will show far greater economic strength pushing the euro itself higher, despite the recession.

But today the euro continues its weak tone. Reasonably, the gold price has severed any perceived connection to the euro and continues to rise against it as you can see below. Today and the days ahead will demonstrate just how gold can act independently of currencies.

2012 is going to be a very different year than 2011 and we do expect fundamental changes in so many facets of the global economy. In the weeks to come, we will give our forecasts on what we feel are the pertinent facets to the gold price, such as oil, currencies and in depth aspects of the gold market.

Julian Phillips is the founder of and