Gold and Silver waiting for Yellen!  

Gold TodayGold closed in New York at $1,219.70 on Thursday, down from Wednesday’s $1,224.20, a fall of $4.50. On Friday morning in Asia it rose to $1,223 while the U.S. dollar was almost unchanged against the euro.

LBMA price setting:  $1,221.25 down from Thursday’s $1,226.65.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  27

2016  05  26

SHAU

SHAU

257.00

260.35

258.36

259.60

Dollar equivalent @ $1: 6.5669

$1: 6.5610

$1,217.26

$1,234.23

$1,223.70

$1,230.68

China saw more volatility yesterday as the Yuan weakened again. London then took it down to be set lower by the LBMA. We have no doubt that a great deal of weight will be added to Janet Yellen’s comments today as the market are now pricing in a rate rise, next month. Should this happen, we have no doubt that the Yuan will be allowed to weaken much further than we see at present. This will lead to higher Yuan prices for gold, but we doubt whether we will see much lower dollar or euro gold prices.

The gold price in the euro was set at €1,092.84 down from Thursday’s €1,098.36.

Ahead of New York’s opening, the gold price was trading at $1,219.35 and in the euro at €1,090.95.  

Silver Today –The silver price closed in New York on Thursday at $16.32, up from Wednesday’s $16.30. The silver price rose yesterday while gold fell slightly, but we could see it fall more if gold turns down again, which it still could do. At the moment it is consolidating at lower levels.

Ahead of New York’s opening the silver price stood at $16.30.

Price Drivers

Today sees Janet Yellen feature as she speaks in public on the Fed’s view on the economy and interest rates. The data coming out of the U.S. is now positive on the economy and jobs front, so the likelihood of a rate rise at the next, June, FOMC meeting looks like seeing the Fed rates rise a 0.25%. We expect her comments today may well indicate that a rate rise is close, placing speculative pressure on gold and silver.

As we said yesterday, before that meeting we expect all markets to factor is the expected rise.

This may well place downward pressure on the gold price again. However, we will be listening to see if she mentions the dollar or the global economy.

G-7 inconclusion – The G-7 is rarely the place where one gets a statement that is put into action, but it is alarming to see such diverse opinions amongst the nations. This adds to our belief that the world will move away from ‘globalization’ adding to the potential for severe, global financial crises, particularly among the emerging nations. The focal point of these crises will be seen in exchange rates in currency markets.

Mr Abe of Japan has come out openly and warned of a potential “Lehman” moment in the global economy, if nations do not do something to stimulate growth. Other nations did not subscribe to this thinking.  Overall, it is clear that there was no unity on where to go, except to state the vague intention of doing more to stimulate growth. What does come out of this inconclusive meeting is a far greater degree of disunity than we have seen from this group before. This will prove to be gold and silver positive, longer term!

 

Gold ETFs – Thursday saw no buying or selling into the SPDR gold ETF of the Gold Trust yesterday. This leaves their holdings at 868.662 and 198.89 tonnes in the SPDR & Gold Trust, respectively.  

Silver –The silver price is fighting further falls and rose slightly while gold fell slightly yesterday. But we do see it falling if gold falls heavily today.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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