Another significant sale from GLD – but gold price little moved.

Gold TodayGold closed in New York at $1,319.80 on Tuesday after Monday’s close at $1,314.10.  

    • The $: € was down at $1.0991 up from $1.007.
    • The dollar index rose to 97.29 from 97.03 Tuesday.
    • The Yen was weaker at 105.64 from Tuesday’s 104.13 against the dollar.
    • The Yuan was stronger at 6.6709 from 6.6754 Tuesday.

 

  • The Pound Sterling was weaker at $1.3120 down from Tuesday’s $1.3081.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  27

2016  07  26

SHAU

SHAU

283.34

283.84

283.17

283.71

Dollar equivalent @ $1: 6.6709

$1: 6.6786

$1,321.09

$1,322.53

$1,320.30

$1,321.92

Shanghai prices were in line with New York’s close and London held it at the same level adjusting for a slight exchange rate change.

With China the world’s largest gold producer [450 tonnes] and the Shanghai Gold Exchange the largest global gold market, we expect to see its influence over the gold price rise substantially, unless it is in the interests of the P.B. of C. to hold prices around the levels seen in London and New York. The P.B. of C. as the main counterparty is able to do that.

On the supply side we must factor into the long term picture the fall off in exploration and development in the gold mining industry.  This will impact production over the long term. If the gold price goes higher, gold miners increase their reserves as the break-even point falls. This usually leads to a fall-off in production as lower grade ore moves through the mills.

LBMA price setting:  $1,320.80 after Tuesday 26th July’s $1,321.25.

The gold price in the euro was set at €1,201.60 up €0.46 from Monday’s €1,201.14.

Ahead of the opening in New York the gold price stood at $1,319.80 and in the euro at €1,200.80.  

Silver Today –The silver price closed in New York at $19.64 on Tuesday up from $19.51 on Friday.  Ahead of New York’s opening the price was trading at $19.60.

Price Drivers

Not only is the FOMC meeting under way but the markets are expecting an announcement from the Bank of Japan shortly, telling us that they will add more stimuli to their economy. We have no doubt that the BoJ is hoping this will weaken the Yen as well as make another attempt to contain structural deflation in the country. We expect both central banks announcements to be good for gold and silver.

However, we may have to wait until the Fed announcement before we see them react.

Gold ETFs – In New York on Wednesday there were sales of 4.453 tonnes of gold from the SPDR gold ETF (GLD), but no purchases or sales into or from the Gold Trust(IAU), leaving their holdings at 954.235 tonnes and 217.99 tonnes, respectively.

This sale, the second in two days at a similar level should have been enough to hurt the gold price as the first one did, but it didn’t. This is a positive sign, particularly because it is the SPDR gold ETF which is the main driver of the gold price at the moment.

Clearly, as we enter August the proximity of the ‘gold season’, the rising demand potential from India and the ongoing macro-economic problems, worldwide are causing the gold price to hold above $1,300. Add this week’s central bank statements and we expect more potential for a gold price rise than a fall. Once a rise begins, we expect gold ETF demand to resume.

Since January 4th this year, the holdings of these two gold ETFs have risen by 374.61 tonnes.

Silver –Silver prices could have a quiet time today, until gold leads the way again.

Julian D.W. Phillips

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

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