SPDR gold ETF takes gold price to overhead resistance

Gold Today –Gold closed in New York at $1,274.40 on Friday, rising in Shanghai, as you see below and in London at the opening on Monday morning to over $1,280.

The $: € moved from $1.1268 to $1.1299 over the weekend. The dollar index is standing at 94.50 up from 94.20.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  13

2016  06  08

SHAU

SHAU

270.31

263.94

271.99

264.66

Dollar equivalent @ $1: 6.5860

$1: 6.5756

  $1,276.58

$1,248.47

$1,284.52

$1,251.88

Shanghai has set the pace for London and New York at the start of the week, rising a full $10 over New York’s close. London is holding it there.

The Yuan continues to weaken, as expected, while the Japanese Yen is being sought as a place to escape the dollar, the pound sterling and the euro.

LBMA price setting:  $1,284.10 up from Friday 10th June’s $1,266.60.

The gold price in the euro was set at €1,139.60 up from Friday’s €1,120.98

Ahead of New York’s opening, the gold price was trading at $1,285.80 and in the euro at €1,141.82.

Silver Today –The silver price closed in New York on Friday at $17.30, up from Thursday’s $17.05 a rise of 25 cents. Ahead of New York’s opening the silver price stood at $17.37.

Price Drivers

The Yen appears to be the currency haven of choice for money escaping a weakening euro, a slightly stronger dollar, a falling Yuan and a much weaker pound. Gold is attracting ongoing attention from U.S. investors rising to above overhead resistance this morning. We are waiting to see if it can hold above $1,280.

While we are sure you have been overwhelmed by the endless discussion on “Brexit” the next fortnight is going to see it increase heavily. While we have been fed polls that indicated a close result between the ‘in’ side and the ‘out’ side, current polls point to an exit. It seems that, as in the U.S. the politicians have misunderstood the electorate, focusing on the financial aspects of the issue and not on the immigration policies that have affected the electorate the most.

The financial aspects of the issue are extremely important and could prove devastating, in the short-term, for the U.K. We can remember the time when the U.K. underestimated the moves by the U.S. to cut the link between gold and the dollar. It was 1971 and the ‘Dollar Premium’ was ushered in. The author of this report was appointed a currency dealer to handle the ‘new currency’ at the time. Maybe his skills will be needed again? We believe the capital that has already left the U.K. is close to, if not above, 100 billion pounds.

The markets are currently being positioned for either eventualities, but with the greatest downside coming from the exit result. The influence on financial markets of the polls is strong, but we still expect to see major moves in them, if the U.K. votes for the exit.

We do expect all financial markets to be volatile ahead of the vote and more so when the situation is set against a global scene that had already produced disaster warnings from bodies like the IMF and the World Bank as well as from names such as Greenspan and Mervyn King, ex-head of the Bank of England. We have focused on the vote and its potential impact on markets, but we have not factored in a potentially devastating set of ‘ripple’ effects!

The scene is gold positive and consequently silver positive.

Gold ETFs – On Friday the holdings of the SPDR & gold Trust rose as 6.535 tonnes was purchased into the gold ETF, leaving its holdings at 893.918. No purchases or sales were made in the Gold Trust, leaving its holding at 196.90 tonnes.

These purchases are sufficient to move the gold price in the U.S. as we saw and see now. Just remember that none of this demand can be met out of Chinese production or arbitrage out of China. It all comes out of London and any new supply left that is routed through London.

Silver –We are seeing the pause we forecast last week in silver prices as it continues to mark time in a tight trading range ar0und $17.35. It should make a strong move shortly, either way.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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