Gold technically positive on more GLD purchases; Silver Fix breakdown comment

The New York gold price closed Tuesday at $1,129.60 up from $1,129.20 up $0.60. In Asia on Wednesday, it slipped to $1,128.10 ahead of London’s opening and then the LBMA set it at $1,130.00 up from $1,123.60 up $6.40 with the dollar index down at 98.64 down from 98.91 on Tuesday. The euro was virtually unchanged at $1.0919 against the dollar. The gold price in the euro was set at €1,034.89 up from €1,029.13. Ahead of New York’s opening, the gold price was trading at $1,128.05 and in the euro at €1,033.20.  

The silver price in New York closed at $14.31 down 4 cents at Tuesday’s close.  Ahead of New York’s opening, the silver price stood at $14.40.

Price Drivers

Tuesday saw another large purchase of 4.165 tonnes after Monday’s huge 12.196 tonnes into the SPDR gold ETF and a 0.41 of a tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 685.590 tonnes and at 166.86 tonnes in the Gold Trust. The large purchase was responsible for gold’s rise again yesterday and battled resistance at $1,130. The gold price picture remains technically positive.

The LBMA silver Fix setters have decided to respond to the outcry against last Thursday’s silver fixing. They are investigating.

What seems to have gone by the board in the reformation of the Fixing processes is the intent behind the fixing of both gold and silver. With the outcry in the past against “leakage” from the Fixings allowing traders to deal outside the Fix, as it was being set, the intent of the Fix was entirely missed. The Fix is to bring together as many buyers and sellers in one place, at one time, to agree a mutual price at which the trading reflected the true demand and supply balance. As it was, the clients of the “Fixers” had links into the Fixing by phone, so that they could adjust their orders at the prices being proposed. So ‘leakage’ was intended to maximize volumes. This way sellers and buyers were convinced they had dealt at the best price they could, at that time. For there to be a 55 cent disparity on $14, between trading prices outside the Fix and the Fixing price demonstrates a breakdown of the process. As it is both the silver and gold markets are failing to reflect global demand and supply levels. The Chinese are developing structures that hopefully will bring these metal’s prices to levels that do reflect global demand and supply, or are we hoping for too much?

China is on the move home for the holidays for the Lunar New Year on the 8th Feb a time when more people are travelling than will be seen at any other time of the year anywhere in the world. And many are bringing home presents of gold.

Silver should soon outperform gold within its usual trading patterns.

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

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