Gold, Silver and dollar calmed by Yellen.

Gold Today –Gold closed in New York at $1,245.20 on Monday, and held there in Shanghai and London’s opening on Tuesday morning, but then moved lower to $1,236 later in London’s morning.

The $: € moved from $1.1353 to $1.1346 overnight. The dollar index is standing at 93.90.

LBMA price setting: $1,241.10 up from Monday 6th June’ $1,240.55.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  07

2016  06  06

SHAU

SHAU

263.35

262.48

263.17

262.51

Dollar equivalent @ $1: 6.5742

$1: 6.5671

  $1,245.95

$1,243.17

$1,245.09

$1,243.32

It was London that made the gold price ahead of New York’s opening, not Shanghai. The Yuan continues to weaken against the U.S. dollar but Shanghai prices reflect this, keeping in line with exchange rates. We get the impression that the SGE is focused on the Yuan’s value against the dollar more than on any particular level of the gold price. Shanghai is allowing other exchanges to set the price of gold against their currencies. The U.S. dollar price of gold dominates the gold price internationally, despite little to no reason why it should.

Janet Yellen’s comments yesterday reassured the financial world that the U.S. economy is growing and the Fed’s targets are moving closer. But this simply stalled the dollar’s exchange rate and gold and silver prices. We see the dollar’s exchange rate as the key to gold and silver prices, not the Fed rate hike or its date, in themselves. It is how such subjects affect the dollar’s exchange rate that counts.

The gold price in the euro was set at €1,093.19 up from yesterday’s €1,092.714

Ahead of New York’s opening, the gold price was trading at $1,239.11 and in the euro at €1,090.86.

Silver Today –The silver price closed in New York on a week last Friday at $16.47, up from yesterday’s $15.99 a rise of 48 cents. Ahead of New York’s opening the silver price stood at $16.32.

Price Drivers

As we expected Mrs. Yellen comforted markets by reassuring them that the jobs report did not mean that the U.S. economy was turning down. She did remind us all that the Fed is dependent on data and that data could change. The Fed remains worried about the global influence on the U.S. and mentioned the U.K. referendum on leaving the E.U. or not. This implied that June would not be the month we see a rate hike.

Many now don’t see that until December. But all of us are turning from a specific date for a rate hike to a concern over the global economy and its future. We remain concerned over the U.S. economy. Certainly, if we see more such jobs reports, doubts about the U.S. economy will rise and impact all global financial markets, but be beneficial to gold and silver prices.

Gold ETFs – On Monday the holdings of the SPDR & gold Trust dropped by 0.291 of a tonne to 881.145 from 881.436 tonnes. In the Gold Trust Monday saw no change to its holdings, leaving the Trust’s holdings at 196.90 tonnes. This reflected the calming tones of Mrs Yellen.

Silver –The silver price still has not moved much for well over a week as it waits for gold to rise. It is resisting running ahead when gold jumped on Friday but it is also resisting falling much. We expect it to continue this tight consolidation in the days to come.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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