West continues to see gold move east at low, low prices

New York closed at $1,070.60 down from $1075.40.  In Asia prices were lifted to $1,072. 45 as the dollar slipped slightly, still below 100 on the dollar index. The LBMA price setting fixed it at $1,072.50 up 30 cents on yesterday’s LBMA price setting. The dollar Index did not make it through the 100 level and now stands at 99.82 down from 99.96 yesterday. The dollar is at $1.0615 down from $1.0593 against the euro.  In the euro the fixing was €1,008.81 down from yesterday’s €1,012.23.  At London’s afternoon gold was trading in the dollar at $1,073.00 and in the euro at €1,010.74.  

The silver price closed at $14.19 up 2 cents on yesterday. New York will be closed for Thanksgiving today. However, as we wrote the silver price stood at $14.38.

Price Drivers

With New York closed we will see the importance of London’s pricing power on the gold price. With this morning showing Asia, yet again, lifting the gold price a few dollars, it is clear that New York dominates the gold price. Today, with New York closed the gold price has barely moved confirming that the gold price in London does follow New York, from in front.

Many may say why, with the huge demand in China and India, does the gold price not move up? Surely such demand must make the gold price rise? But we must ask ourselves what situation maximizes supply?

If Asia bought in New York, whatever small physical amounts are there, the gold price would rocket. By avoiding doing that, supplies are maximized to Asia. With professional wholesalers buying gold directly from producers, they price the deals on the London/New York prices, getting the metal at bargain basement prices. By doing this they don’t affect prices even when the deals being done are enormous. This is the only way they are able to get the volumes they do. Sellers are not in a position to do anything about this.

Falling prices have kept retail buyers out of the gold market in the U.S., effectively placing pricing power in the hands of Asia, by default. So while New York and London believe they dominate prices they are watching gold move eastward at low, low prices. The gold being shipped already is being converted into metric measurements in confirmation of the Asian influence. Such bars are becoming the dominant measures now being used in the gold market signifying the Asian influence.  The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust were 655.692 tonnes in the SPDR gold ETF and at 159.52 after a sale of 0.75 of a tonne from the Gold Trust.

But of late the gold price has been moved on the back of the dollar: euro exchange rate and should do so again today.

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

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