Gold and silver prices – looking good to go 

Gold TodayGold closed in New York at $1,268.10 up from $1,247.30 on Thursday. On Friday morning in Asia it rose to $1,275, as the dollar continued to weaken and before the LBMA price setting.

LBMA price setting:  $1,274.50 up from Wednesday’s $1,256.60.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  04  29

2016  04  28

SHAU

SHAU

265.25

260.04

265.54

261.88

Dollar equivalent @ $1: 6.4923

$1: 6.4798

$1,270.77

$1,248.21

$1,272.11

$1,257.04

The Shanghai Gold Fixings today show a real rise in the price of physical gold as the number of the Yuan in dollars rose [weakened] so currency moves were not a factor today. The rise in the gold price has held in London ahead of the LBMA gold price setting.

With China ahead of most of the developed world in time, to see the Yuan gold Fixings ahead of London and New York, leaves China leading the way, not New York leading Shanghai. If this continues, we will see pricing power over gold fall into Shanghai hands, it being the first to respond both to physical demand and to currency moves.

The dollar index is lower today, at 93.88 down from Thursday’s 93.88. The dollar is weaker against the euro at $1.1400 from Thursday’s $1.1345.

The gold price in the euro was set at €1,118.18 up from Thursday’s €1,100.19.

Ahead of New York’s opening, the gold price was trading at $1,278.40 and in the euro at €1,121.40.  

Silver Today –The silver price closed in New York higher at $17.60 on Thursday up from Wednesday’s $17.28. Ahead of New York’s opening the silver price stood at $17.79.

Price Drivers

Today we are seeing gold rise in all currencies, reflecting the fundamental weakening of the dollar and demand for physical gold globally, as seen in rising New York, Shanghai and London prices. The Technical picture for both gold and silver looks positive. The gold price needs to confirm it has broken through $1,270 convincingly, which it appears to be doing right now.

The drop in U.S. GDP to 0.5% annual rate, in the first quarter, in the U.S., helped the dollar to continue falling and brought into question just how sustainable labor growth numbers are. This was a serious slowdown and should be noted as such. Business slashed investment by the steepest amount since the Great Recession. While the media hopes that these numbers can be adjusted to look better and that the rest of the year will see a better performance, hope is not reality.

For gold and silver investors, these numbers emphasize the reality of the falling dollar and the Fed and Treasury’s desire to see a weaker dollar. Make no mistake a weaker dollar will help the U.S. just as much as it will hurt those nations trying to weaken their currencies. This is very gold and silver positive.

We are entering a structural change in the currency world because the U.S. dollar is the pivot of the currency world. Other nations can’t afford to lose international competitiveness and soon will respond by even more action to weaken their currency. We expect the ‘race to the bottom’ to see a gear shift in velocity.

China has begun constructing its Yuan as an alternative pivot in the currency world.

Gold ETFs – Yesterday saw purchases of 1.486 tonnes of gold into the SPDR gold ETF but no change in the Gold Trust. This leaves their holdings at 804.14 and 187.56 tonnes in the SPDR & Gold Trust, respectively.  

Silver – The Technical picture of the silver price looks good and we expect it to outperform gold in the near future.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

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