Gold and silver market morning: Currencies the key

The New York gold price closed at $1,050.70 down $22.60 from $1,073.30 on Thursday’s close.  In Asia prices rose  back to $1,057.00 before London held it around $1,056 and the dollar index rose to 98.99 up from 98.83 in the dollar Index. The euro fell back to $1.0821 down from yesterday’s $1.849 from Thursday’s level against the dollar. The London a.m. LBMA gold price was set at $1,055.25 down $10.60 from Thursday’s $1,065.85.  In the euro the fixing was €975.55 down from yesterday’s €982.26. Ahead of New York’s opening, the gold price was trading at $1,056.45 and in the euro at €976.52.  

The silver price in New York closed at $13.72 down 43 cents. Ahead of New York’s opening the silver price stood at $13.77.

Price Drivers

This is the second time gold has hit $1,050 and this after the euro weakened and the dollar strengthened, worldwide. Our focus is on the dollar and whether it will be allowed to get really strong, against the interests of the U.S. or whether it will be restrained to protect those interests. Gold’s way forward, at least in New York and London are contingent on this path.

We believe that gold and silver investors must understand and appreciate the importance of currency influences on gold and silver prices if they are to succeed in these markets.

After the Fed hiked rates and we saw the differential between Europe’s interest rates and those of the U.S. widen, it looked as though the bull market in the dollar had restarted and the further falls in the gold price appeared inevitable. But as we cautioned, it appeared that the moment the dollar index approached 100 it was turned back. Yesterday it did get to 99 but today we see it at 98.99 again. So the way forward of the dollar continues to be capped for now. We need to see the dollar Index over 100 before we believe the bull market in the dollar has resumed. This picture needs to clear before we see the way forward for gold and silver prices.

COMEX speculators appeared to have the day yesterday as gold fell heavily. There were sales of 4.464 tonnes of gold from the SPDR gold ETF yesterday but none from the Gold Trust. We think this amount of sales did support the heavy fall in the gold price, in the U.S. The holdings of the SPDR gold ETF remain at 630.166 tonnes and now at 155.87 tonnes in the Gold Trust. With COMEX still massively short the way forward still looks down.

We still need to see what follow through there will be in the week ahead, at least?

The silver price will follow gold and the euro again. Julian D.W. Phillips for the Gold & Silver Forecasters – www.silverforecaster.com and www.goldforecaster.com

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