Gold up, Silver up, GLD returns to taking in gold

Gold TodayGold closed in New York at $1,351.30 on Friday after Thursday’s close at $1,337.00.  

  • The $: € was down at $1.1175 from $1.1086.
  • The dollar index fell to 95.64 from 96.37 Friday.
  • The Yen was stronger at 102.20 from Friday’s 103.38 against the dollar.
  • The Yuan was stronger at 6.6415 from 6.6525 Friday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  1

2016  07  29

SHAU

SHAU

288.65

286.98

287.95

286.01

Dollar equivalent @ $1: 6.6415

$1: 6.6525

$1,351.84

$1,341.76

$1,348.53

$1,337.23

Shanghai prices were slightly lower but London stayed in line with Shanghai’s close. Shanghai continues to remain in synch with both New York and London despite the fact it is a far, far bigger physical gold market than the two put together. The Chinese appear to be quite happy to let the two smaller markets make the gold and silver price. But for how long?

LBMA price setting:  $1,348.85 after Friday 29th July’s $1,332.50.

The gold price in the euro was set at €1,208.21 down €8.89 from Friday’s €1,199.32.

Ahead of the opening in New York the gold price stood at $1,348.05 and in the euro at €1,207.39.  

Silver Today –The silver price closed in New York at $20.34 on Friday up from $20.22 on Thursday.  Ahead of New York’s opening the price was trading at $20.50.

Price Drivers

This week at noon [U.K. time] on Thursday, the Bank of England reveals its stimulus package on the U.K. having garnered the first impact of Brexit on the U.K. economy. The data suggests a near-term stagnation with a high risk of recession. An interest rate cut of 25 basis points and an expansion of the Q.E. program is on the cards. This event is likely to hang over the market until it happens.

With the Pound already down over 10% since Brexit, we expect more falls to come, with a positive reaction in the gold price not only in sterling but in the dollar as well.

Some months ago now we called the end of the dollar bull market and have proved correct since then. Today, we see the dollar moving back towards its lows since we made that call, but only now are we hearing others beginning to join us, including a major U.S. bank. We see this as happening because of the impact the global economy will have on the U.S. and a treasury preference towards a weaker dollar.

Once again we are hearing talk in Japan of more stimulus, this time from the government. But despite all these efforts the Yen is strengthening. But this is not strength for positive reasons. We are not seeing Japan grow and we are not seeing deflation defeated despite all the government’s three arrow efforts.

Global growth is still shrinking, as well described by U.S. growth, last week. Gold is being recommended by more and more institutions now.

Gold ETFs – In New York on Friday there were purchases of 3.86 tonnes bought into the SPDR gold ETF (GLD)  and a purchase of another 0.6 of a tonne into the Gold Trust (IAU) leaving their holdings at 958.095 tonnes and 219.19 tonnes, respectively.

Since January 4th this year, the holdings of these two gold ETFs have risen by 379.67 tonnes.

Silver –Silver prices showed a different volatility today, jumping up to the mid-$20 area as gold prices recovered nearly $20, on Friday. Repeat – We expect this volatility to continue in the days to come.

Julian D.W. Phillips

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

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