Julian Phillips’ market commentary for gold and silver notes ‘determined’ sales from GLD end of last week, but with little effect on the gold price.
New York closed Friday at $1,188.50 up $5.60, on Thursday’s level. Asia saw it hold at that level ahead of London’s opening with London then taking it down $4. The LBMA Gold price was set at $1,184.75 up only $1.75 on Friday’s level. The euro equivalent stood at €1,061.27 up €19.35 while the dollar was stronger at $1.1135 down from $1.1351 against the euro. Ahead of New York’s opening, gold was trading slightly higher in London at $1,186.45 and in the euro at €1,063.37.
The silver price closed at $16.48 up 17 cents on Friday’s level. Ahead of New York’s opening it was trading at $16.45.
You will note, once again, that the gold price is moving with the dollar not with the euro. And yet the exchange rate is now volatile between the world’s two main currencies. The dollar is stronger at $1.1157 to the euro and the dollar index now higher at 95.12 up from 94.66 on Friday.
There were determined sales of gold from the SPDR gold ETF on Thursday and Friday of 10.743 tonnes of gold from the SPDR gold E.T.F. but no movement in the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 728.322 tonnes and at 166.14 tonnes in the Gold Trust. These sales are the first significant sales we have seen in over a month, but they failed to dampen the gold price. Once again moves in the main currencies are dominating the action in the gold and silver markets.
The week starts with Greece, once again, as they say they can meet the $835 million repayment to the IMF tomorrow. The negotiations pant on and will do, we feel, until late June as the brinkmanship we have watched for some time continues. What is clear to all is that Greece had to scrape the barrel to make these payments. They will not be in a position to repay the heftier bills in June and July of well over $1 billion each. The debt burden of Greece is expected to rise to at least 175% of GDP, making the debt burden unsustainable. In practical terms the Greek people have a very tough future that they voted to reject. So we expect a referendum to give the government the space to leave the Eurozone and the euro. Only then will the situation affect the euro and gold in Europe.
QE in the U.S. and Eurozone directly impacted the banks and protected them, without having too much impact at ground level. In China this type of rescue is targeting the Municipalities from whom growth will flow, it is hoped. In China it will build the middle classes at local level and the Chinese will take their savings to gold. This will ensure the constant flow of Chinese savings into gold for the foreseeable future.