Gold and silver took a breather from their gains of last week and consolidated yesterday with marginal losses for both metals. The dollar recovered somewhat from its sharp falls of last week as did long term US interest rates (10-Year: 3.180% -0.113) but US stock markets came under pressure.

Gold threaded water in Asia but has risen sharply in early trading in Europe as the dollar has again come under pressure with the US Dollar Index falling to 82.40. The dollar looks set to fall again in the medium term due to the huge and unprecedented US budget deficits which are forecast to grow to $1.84 Trillion this year – a massive 12.9pc of gross domestic product.

Silver has again risen even more sharply (up 2.6%) and looks like it has the momentum to challenge resistance near $14.50/oz to $14.60/oz. While silver is only marginally below its February highs ($14.63), gold is still some 9% off the $997/oz reached then. Thus short term, you would expect gold to play a little catch up on this move.