$1080 level pivotal to where gold is now headed

New York closed at $1,075.40 up from $1,068.70.  In Asia prices were lifted to $1,080 as the dollar slipped. The LBMA price setting fixed it at $1,072.20 down from $1,073.00. The dollar Index is just about to break through the 100 level and stands now at 99.96 this morning up from 99.42 yesterday morning. The dollar is at $1.0593 down from $1.0621 against the euro.  In the euro the fixing was €1,012.23 up from yesterday’s €1,007.13.  Ahead of New York’s opening gold was trading in the dollar at $1,074.55 and in the euro at €1,014.40.  

The silver price closed at $14.17 up 6 cents on yesterday. At New York’s opening, silver was trading at $14.12.

Once again the dollar exchange rate is the main issue in all markets. It is now attacking the 100 level at 99.95. As we said yesterday we expect the dollar to move sideways, if it fails to break through 100 but for gold in the dollar to fall, but in the euro to rise as you see above. The deciding factor is likely to be the jobs report on Friday, which markets are now interpreting as a decisive factor in whether the Fed will lift interest rates in December.

The remaining question is, “Have global markets factored that in?” We believe U.S. markets have but E.U. markets are doing so only now. We wait to see what the Treasury will do. The $: € exchange rate will reflect this. The euro is now in new territory as it falls.

While the gold price rallied to $1,180 this morning, it needed to break up through $1,180 before it could be said to have turned upwards.

The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust were unchanged yesterday and remain at 655.692 tonnes in the SPDR gold ETF and at 160.27 tonnes in the Gold Trust. We watch these ETFs because they are representative of U.S. investor attitude to gold. The day-to-day figures are not as important as the overall pattern. Apart from one week where we saw around 27 tonnes of gold sold, sales from these funds are very small compared to 2013 when these holdings plunged over 900 tonnes in the year.

U.S. physical sales of gold have diminished considerably indicating that overall profit-seeking investors are out of gold, leaving holders who are not concerned about the falling price, but concerned about the long term health of the global monetary system in the future. If these gold investors form the main holders then U.S. sales of physical gold from the ETFs will be limited and then the influence on the gold price in the U.S. will come exclusively from the non-physical COMEX traders. As of now they are very short of gold so any turn up is likely to see them change positions and accelerate any rises.  

Right now the +$1,080 level is pivotal to the direction of the gold price in the near term.

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

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