Will Fed Statement Boost Gold & Silver prices?

Gold TodayGold closed in New York at $1,244.80 up from $1,239.40 on Tuesday. On Wednesday morning in Asia it rose to $1,246, before the LBMA price setting.

LBMA price setting:  $1,244.75 up from Tuesday’s $1,234.5.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  04  27

2016  04  26

SHAU

SHAU

260.06

259.23

259.90

258.53

Dollar equivalent @ $1: 6.5060

$1: 6.4945

$1,243.28

$1,237.63

$1,242.59

$1,239.44

At the start of the week the Shanghai Gold Fixings were higher than those in London, but today we see them very much in line with New York, transitioning into London’s opening. So we can say that at the start of the process it appears that there is indeed a ’24-hour market’ for gold.  Time will tell if this continues and how the pricing power changes.

The dollar index is lower today, at 94.39 down from Tuesday’s 94.80. The dollar is weaker against the euro at $1.1314 from Tuesday’s $1.1283.

The gold price in the euro was set at €1,100.19 down from Monday’s €1,094.12.

Ahead of New York’s opening, the gold price was trading at $1,245.60 and in the euro at €1,100.94.  

Silver Today –The silver price closed in New York higher at S17.21 on Tuesday up from Monday’s $17.053. Ahead of New York’s opening the silver price stood at $17.32.

Price Drivers

Today, we will hear the statement from the Fed, but no press conference. In view of the less vigorous data since the last meeting, we expect the Fed to remain dovish and to, again, mention the dangers to the U.S. economy from outside of the country. The dollar may well be mentioned, as it remains below its peak, but has barely dropped since the last meeting. We believe the Fed wants it lower!

While markets are myopic, if we stand back and look at the long term, the dollar’s use in the global economy is waning and is set to drop considerably more. This implies a structural change in the gold and, eventually, silver markets, within the monetary system, that cannot be ignored the same way it is being ignored now.

Needless to say, this is all positive for gold and silver prices.

Gold ETFs – Yesterday saw no sales or purchases of gold to or from the SPDR gold ETF and the Gold Trust. This leaves their holdings at 802.654 and 187.56 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price is showing robust behavior but following gold directionally. It promises to outperform gold in the future.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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