Gold and silver prices marked down – waiting for the BoE

The dollar is slightly stronger today against the Yen and weaker against a recovering pound. But the moves are not significant, nor are expected to be so, as the world waits for Mark Carney of the Bank of England tomorrow. Some believe he will do nothing so as to encourage the pound to recover, feeling his focus will be on the internal situation in Britain and delay any further easing until August.

But with a recession on the cards for the U.K., and his failure to try to protect the pound’s exchange rate since Brexit, so far, we feel that it is unlikely that he will do nothing. He has before him a real chance of lowering the pound’s exchange rate even further, which in itself will act as an economic stimulus to the U.K. economy.  Hence, we see a further easing now.

As to the news on China’s claim to sovereignty over the Spratly Islands chain, we see this, for now, as gold and silver neutral.  Likewise, the new British Prime Minister’s appointment, it will speed up negotiations on Brexit, but again this is gold and silver neutral.

The prime drivers of the gold price remain macro-economic and monetary factors which will not change overnight. Daily news factors are unlikely to change the upward trend in the gold price.

Gold ETFs – In New York on Monday there were huge sales of 16.035 tonnes of gold from the SPDR gold ETF but purchases of 0.45 of a tonne into the Gold Trust. Their holdings remain at 965.221 tonnes and at 214.54 tonnes in the SPDR gold ETF and Gold Trust respectively.

The sale of 16.035 tonnes was a massive number and precipitated the fall in the New York COMEX gold market. The timing and size of the sale is an extraordinary statement that was more than just a future view of the gold market on Friday, after the BoE actions. It appears to us to be an attempt to force the gold market lower at a time when gold dealing was sparse in New York.  Instead of shoving the market lower, Shanghai turned the price around and took it higher.

There may be another attempt to push prices down today in New York, but we expect London and Shanghai to take the same neutral stance in the gold market.

Since January 4th this year, the holdings of these two gold ETFs have risen by 382.17 tonnes.

Silver –Silver prices are keen to go higher but remain slightly restrained by lower gold prices. If gold does move higher we expect silver prices to spring higher.

Gold TodayGold closed in New York at $1,332.20 on Tuesday after Monday’s close at $1,354.60.  In Asia the gold price also fell further as you can see below  

  • The $: € fell to $1.1051 up from $1.1100.
  • The dollar index rose to 96.53 from 96.12 Tuesday.
  • The Yen was weaker at 104.32 from Tuesday’s 103.44 against the dollar.
  • The Yuan was slightly weaker at 6.6859 from 6.6859 Tuesday.
  • The Pound Sterling was stronger at $1.3271 up from Tuesday’s $1.3158 but waiting for Governor Carney tomorrow when we expect the BoE to add further easing of interest rates!

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  13

2016  07  12

SHAU

SHAU

286.90

292.05

288.16

291.86

Dollar equivalent @ $1: 6.6845

$1: 6.6859

$1,334.97

$1,358.65

$1,340.83

$1,357.76

The Chinese gold market followed New York down, but then turned it up at China’s morning Fix taking it higher during their day to set the pace for London’s morning.

The attempt to break the gold price down in New York with the very large physical gold sale worked to some extent, but Shanghai then ignored the sale as demand came in at the lower prices. Certainly, Shanghai took the reins in the last day against the will of New York. We will watch today to see who exerts dominant pricing power?

LBMA am price setting:  $1,340.25 down from Tuesday 13th July’s $1,352.85.

The gold price in the euro was set at €1,210.27 down €8.51 from Tuesday’s €1,218.78. The afternoon price was set at $1,342.75 and in the euro at €1,211.03.

Silver Today –The silver price closed in New York at $20.09 on Tuesday down from $20.29 Monday.  Ahead of New York’s opening the price was trading at $20.40 but has slipped a little to $20.20.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

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