Chinese retail sector growth gold positive

New York closed with the gold price at $1,125.40 down $7.60 yesterday. Gold rose $1.60 in Asia and London held it there. The dollar strengthened to $1.1149 from $1.1171 and the dollar index continues to climb at 96.22 up from 95.96. In London’s morning the LBMA gold price was set at $1,124.60 down $4.70. In the euro this was €1,010.06 up from €1,009.57.  Ahead of New York’s opening gold was trading at $1,125.35 and in the euro at €1,008.60.  

The silver price closed at $14.81 down 38 cents on Tuesday in New York. Ahead of New York’s opening silver was trading at $14.80.

Price Drivers

There was a purchase of 1.193 tonnes of gold into the SPDR gold ETF but none into the Gold Trust on Tuesday. This leaves the holdings of the SPDR gold ETF at 675.799 tonnes and 159.30 tonnes in the Gold Trust. Gold continues to consolidate within the pennant formation. While the dollar is strengthening still, the gold price is edging up in both the dollar and the euro.

The recent turmoil in global markets has left a background of fear against which the slightest negative news about China sets markets down in a tailspin. For gold the story is different. Repeatedly the Chinese government tells us all that the transition away from a manufacturing/exporting nation to one of internal consumption will lead to slower growth. Growth in the retail sector remains at double digit levels, which for gold is positive. To this end we fully expect to see the year end with record annual imports of gold [totaling retail & institutional amounts together].

The difference between the record 2013 numbers and those expected this year is very important. In 2013 the demand was fuelled by the drop in price from $1,450 in April of that year then slowed later in the year. This year the demand has been high throughout the year on a weekly basis both as a result of spendable income on gold going further and the steady expansion of the Chinese middle classes in terms of numbers and wealth. Certainly higher gold prices will reduce demand as the spendable income on gold remains growing slowly and will buy less when prices are higher. Against a backdrop of fear and the gold price close to its lows, the mood for gold amongst institutions has improved.

Silver fell back yesterday, while gold rose removing its strength relative to the gold price. We expect silver prices to move closer to the moves in the gold price today.

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

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2 thoughts on “Chinese retail sector growth gold positive

  1. junkmogul September 23, 2015 / 10:59 pm

    —->Not really for publication – though if sufficiently engaging, might form basis of remarks in one of yr future articles(?)<—

    ——————————————————————————————————————–

    Oil/gas prices have not yet assuredly set a bottom. Slowdown in China, Iranian supplies on market in 6 months, GS professions of gloom, &c &c. Scope for more downward drift of exploration/supplier companies one might assume.

    XSES.L
    db x-trackers Stoxx® Europe 600 Oil & Gas Short Daily UCITS ETF reflecting the inverse of the STOXX® 600 Oil & Gas Index, leading companies in the Oil & Gas Sector in Western Europe.

    However…

    http://www.businesswire.com/news/home/20150821005188/en/db-x-trackers-UK-Regulatory-Announcement-Important-Notice

    XSES is compulsorily liquidated Sept 2015, Collateralized Swap (fully funded), swap counterparty: Deutsche Bank (per KII document).

    "The total net assets of each of the Terminating Sub-Funds are below the Minimum Net Asset Value provided in the
    relevant Product Annex of each of the Terminating Sub-Funds and the Board of Directors considers that it is unlikely
    that the assets under management for each of the Terminating Sub-Funds will increase sufficiently in the near future."

    DB's swap position commentary:

    http://www.goldcore.com/us/gold-blog/deutsche-bank-ceos-shown-door-worlds-largest-holder-of-derivatives-in-trouble/

    http://investmentresearchdynamics.com/the-brown-stuff-is-flying-closer-to-the-fan-blades-derivatives-problem-at-deutsche-bank/

    Overstating the netting risk, but there again…
    http://www.zerohedge.com/news/2015-02-20/are-two-big-problems-deutsche-bank-failing-feds-stress-test

    Financial institutions looking wobbly? XS7S.L might be of interest as a general banks short? Oh, it's another db x-Trackers ETF…

    Like

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