Big sale out of GLD on Friday dented gold price – but not for long.

Gold TodayGold closed in New York at $1,334.60 on Friday after Thursday’s close at $1,337.90.  London opened at $1,341.80.

    • The $: € was slightly weaker at $1.1168 from $1.1156.
    • The dollar index fell slightly to 95.65 from 95.83 Friday.
    • The Yen was slightly weaker at 101.07 from Friday’s 101.04 against the dollar.
    • The Yuan was weaker at 6.6459 from 6.6440 Friday.

 

  • The Pound Sterling was weaker at $1.2924 down from Friday’s $1.2956.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  15

2016  08  12

SHAU

SHAU

286.66

286.86

286.97

286.95

Dollar equivalent @ $1: 6.6459

$1: 6.6440

$1,341.60

$1,342.92

$1,343.05

$1,343.34

Shanghai again turned out to be higher than New York’s close but this time without any exchange rate influence as the Yuan was relatively steady. London followed Shanghai this time too, opening just slightly lower than Shanghai’s close.

As the time approaches when the Yuan becomes one of the world’s ‘hard’ currencies it is meeting the definition of being widely traded in the global monetary system. Just to what extent remains to be publicized. Certain Capital Controls still persist but the silence on this ahead of the incorporation of the Yuan in the IMF’ Special Drawing Rights is deafening.

At the same time the discussions over the type of gold trading London will see in the future has, on one side, Goldman Sachs and the Chinese ICBC who are pressing for a more transparent system. No doubt if precise numbers were published on London’s gold trade, they would influence just where gold’s pricing power resides.

LBMA price setting:  $1,339.20 after Friday 12th August’s $1,336.70.

The gold price in the euro was set at €1,198.90 up €0.50 from Friday’s €1,198.40.

Ahead of the opening in New York the gold price stood at $1,337.25 and in the euro at €1,196.32.  

Silver Today –The silver price closed in New York at $19.69 on Friday down from $19.95 on Thursday.  Ahead of today’s New York’s opening the price was trading at $19.77.

Price Drivers

On Friday in New York there was a very big sale of gold from the SPDR gold ETF of over 12 tonnes. This prompts the question, “Has U.S. demand for the shares of the gold ETFs fallen away?’  The data out of the U.S. on the economy is weak telling us that while the economy is OK, it is not as strong as it needs be to invigorate growth. The rest of the world [with the exception of China] is also giving a poor showing. Against the backdrop of globally burgeoning debt, the conditions where even the U.S. investor discards his gold do not exist at present. Add to that the approaching ‘gold season’ and we do not expect to see the thundering herd leave its gold positions. Indeed demand from gold from the U.S. has not reached the point where it is a ‘thundering herd’. It has a long way to go before U.S. investors are well stocked with gold in their portfolios.

We have a couple or more weeks before the ‘gold season’ comes into play so the gold price will continue to consolidate.

Gold ETFs – In New York on Friday there were very large sales of 12.171 tonnes from the SPDR gold ETF (GLD) but purchases of 1.65 tonnes into the Gold Trust (IAU). This left their respective holdings at 960.447 tonnes and 222.89 tonnes.  Undoubtedly the big GLD sale coincided with the sharp mid-session drop in the gold price on Friday, from which its appears to have been recovering gradually today.

Since January 4th this year, the holdings of these two gold ETFs have risen by 385.722 tonnes.

Silver –Silver prices were pulled back below $20 in line with the fall in gold prices after the heavy sale from the SPDR gold ETF.  We wait to see whether New York will counter this as bargain hunters move in.

Julian D.W. Phillips

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

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