What now for markets and gold?

On Monday New York closed at $1,153.10 down $6.30. The dollar was weaker at $1.1539 this morning down from $1.444 on Monday with the dollar Index weaker at 93.39 down from 94.94 yesterday. This morning the LBMA gold price was set at $1,154.25 up $0.75. The euro equivalent was €1,002.21 down €3.90 as the euro stabilized. Ahead of New York’s opening, gold was trading at $1,148.70 and in the euro at €997.70.  

The silver price closed at $14.78 down 50 cents over Monday’s close in New York. Ahead of New York’s opening today it was trading at $14.88.

The Shanghai equity markets continued to tumble today as the panic continued unabated taking the index below 3,000 and closing with a fall of 7.6%. The gold price in the Yuan was relatively unmoved. This would not have gone unnoticed by investors in China and will serve to promote gold as a safer investment there, in the future.

Meanwhile oil prices, the Yuan and the global financial instability will all combine to persuade the Fed to hold off on a September rate rise. While Lockhart of the Fed stated that he expected a rate rise in this year it is most likely to be at the end of the year or later.

The general feeling in financial circles today is that we are seeing a structural fracture across the globe that makes short-term numbers [such as the latest growth figures in Germany – annualized 1.6% growth] something of the past and not relevant to the future. Oil prices still have a way to fall and global growth looks uncertain as evidenced by panicky global investor sentiment. The 1,000 point fall of the DOW at Monday opening was due to Algorithm trading. Other equity markets across the world were quickly infected by panic, which is now stabilizing. But fear has replaced confidence in global equity markets. The S & P is 11% down from its May highs.

With global currencies stabilizing at lower levels one asks, “What next?” The speed of the declines is most alarming as such markets were thought to be immune to such precipitous falls. But it has happened. We expect such heavy volatility in global financial markets to continue. There were purchases of 3.278 tonnes into the SPDR gold ETF and o.45 of a tonne bought into the Gold Trust This leaves the holdings of the SPDR gold ETF at 681.105 tonnes and 162.07 tonnes in the Gold Trust.  -Silver is stabilizing waiting for gold to lead the way.   

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

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