Julian Phillips’ analysis of matters driving gold and silver prices. The U.S. Fed is still non-committal on when it may start to raise rates while the possibility of Grexit looms ever closer
New York closed at $1,187.10 up $5.40. The dollar is weaker at $1.1387 down 1.2 cents with the dollar index down to 93.87 from 94.90. The LBMA Gold Price was set at $1,198.50 up $19.50 with the equivalent euro price at €1,051.22 up €5.62. This price was higher than pre-setting prices in the market! Ahead of New York’s opening, gold was trading in London at $1,197.60 and in the euro at €1,050.34.
The silver price fell to $16.17 up 15 cents in New York. Ahead of New York’s opening it was trading at $16.28.
In the E.U. the mood has changed markedly. Greece is blaming the E.U. and the E.U. is blaming Greece. After disastrous meetings of the Finance Ministers both sides are now behaving as if no deal is possible and acting accordingly. The euro is getting stronger, as we would expect on a Grexit. Greece is making clear it doesn’t have the money to pay the next installments. After all €6 or €7 billion on a debt of €320 billion only postpones more disaster and as the Greeks see it, with a chain around their necks. Suddenly this is not just about Greece. It’s about the future of the E.U. and the euro, which is why global financial markets are riveted to this story. But it is also about the geo-political balance of power, something of greater consequence to the world.
The other most talked about story in global financial markets focused on Janet Yellen, Chairwoman of the U.S. Fed. The statement issued by the Fed confirmed improvements in the U.S. economy, but Janet Yellen used the word ‘sustainable’ growth is needed before the Fed will lift rates in very small steps. She was concerned that wage growth also needed to improve more.
Between these two stories markets saw the dollar weakening and the gold price move higher today.
On the Technical side we continue to note that the picture continues to point downwards, but the reality is that the gold price has moved sideways. The two must meet and raise the question is overhead resistance likely to dominate the sideways movement and force the gold price down or will the sideways movement break overhead resistance and see the gold and silver prices rise? We are very close to that point now!
Before the conclusion of the Greek debt crisis came so close the euro price of gold fell far more than it did in the dollar. Today sees the euro price of gold dominate the gold price, which is steady in the euro while the dollar price of gold has jumped as the dollar weakened. Seen as currencies moving around the gold price, we get a better perspective.
There were no sales or purchases of gold from or into the SPDR gold ETF or the Gold Trust on Wednesday. The holdings of the SPDR gold ETF are at 701.897 tonnes and at 167.01 tonnes in the Gold Trust.