Gold rising; silver too even more so but may see a temporary pause

Silver bounding higher, gold still rising as structural damage begins to be realized!

Gold TodayGold closed in New York at $1,323.70 after yesterday’s $1,317.60.  In Asia the gold price jumped higher and London was trying to take the gold price higher just after its opening.  

  • The $: € slipped to $1.1152 down from $1.1067.
  • The dollar index moved higher to 95.89 from 95.51 yesterday.
  • The Yen strengthened slightly [102.65 down from 102.88].
  • The Yuan was strengthening up to 6.6572 from 6.6441 yesterday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  1

2016  06  30







Dollar equivalent @ $1: 6.6572

$1: 6.6441





Once again Shanghai took the lead in taking gold prices higher in their today, as the perspective on the global economy continued to point to more deflation and national monetary policies targeted more easing. The Bank of England of the United Kingdom [How long will it be called that if Scotland has a referendum to remain in the E.U. – will we have Border Controls in Berwick?] indicated lower interest rates, likely in August. The pound continues to slip.

LBMA price setting:  $1,331.75 up from Thursday 30th June’s $1,317.00.

The gold price in the euro was set at €1,199.02 up €18.07 from Thursday’s €1,180.95.

Ahead of New York’s opening, the gold price was trading at $1,334.30 and in the euro at €1,199.42.  

Silver Today –The silver price closed in New York on Thursday at $18.78 up from Wednesday’s $18.26 a rise of 52 cents. Ahead of New York’s opening the silver price stood at $19.20. We expect it to continue to outpace gold, particularly when gold rises itself.

Price Drivers

The preoccupation in the U.S. with when the next rate hike will be, is giving way to the possibility of rates easing. Perhaps additional Q.E. will come onto market screens as global deflation continues its firm grip on the developed world economies.  We do not believe the U.S. dollar can carry the burden of a strong Dollar.

Japan has announced a further fall in prices, which to us is confirmation that the Bank of Japan’s stimuli is failing badly.

In the United Kingdom we are likely to see a recession. The Governor of the Bank of England, Mark Carney, stated today, “It now seems plausible that uncertainty could remain elevated for some time. The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer.”

Any loosening by the BoE would be its first since 2012, when it last expanded its asset purchase program. Its key interest rate has been at a record-low 0.5% since March 2009. The BOE has signaled it can go closer to zero. Sterling has fallen about 11% since the EU vote.

Asked about the initial drop after the referendum result, Carney said big moves were to be expected and there had been a need for the pound to “find a new level.” It is doing so and will likely fall further.

Gold is moving higher and will likely continue to do so in the face of monetary easing engulfing the global economy at the same time as deflation grows.

Gold ETFs – On Wednesday the holdings of the SPDR gold ETF remained the same leaving their holdings at 950.054 tonnes and the holdings of the Gold Trust rose a relatively massive 4.46 tonnes to take the holdings to 208.17 tonnes.   Since January 4th this year, the holdings of these two gold ETFs have risen 361.438 tonnes.

Silver –Silver prices need to pause before tackling overhead resistance.

Julian D.W. Phillips | | StockBridge Management Alliance

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