Weaker dollar boosts gold and silver prices

 Gold TodayGold closed in New York at $1,339.40 on Monday after Friday’s close at $1,334.60.  London opened at $1,350.75.

    • The $: € was heavily weaker at $1.1268 from $1.1168.
    • The dollar index fell to 94.94 from 95.65 Monday.
    • The Yen was stronger at 100.25 from Monday’s 101.07 against the dollar.
    • The Yuan was stronger at 6.6270 from 6.6459 Monday.

 

  • The Pound Sterling was slightly stronger at $1.2934 up from Monday’s $1.2924.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  16

2016  08  15

SHAU

SHAU

287.48

286.66

288.47

286.97

Dollar equivalent @ $1: 6.6270

$1: 6.6459

$1,349.27

$1,341.60

$1,353.92

$1,343.05

Shanghai was higher than London’s opening and much higher than New York’s close. London opened at $1,350 whereas as you can see, the p.m. Fix in Shanghai was at nearly $1,354. Shanghai’s physical demand is greater than New York’s paper demand today. U.S. physical demand via the gold ETFs was absent yesterday.

The rise in Yuan prices was against a backdrop of a stronger Yuan, which was in the face of a weak dollar. The Yuan has shown strength in the last few days despite good reasons to weaken against the dollar. We expect that this is because of the impending ‘Go!” signal for the Yuan to be ‘officially’ designated one of the world’s hard currencies. Once that IMF confirmation is published, we expect to see the Yuan decline steadily.

LBMA price setting:  $1,349.10 after Monday 15th August’s $1,339.20.

The gold price in the euro was set at €1,196.97 down €1.93 from Monday’s €1,198.90 due to the weaker dollar.

Ahead of the opening in New York the gold price stood at $1,353.70 and in the euro at €1,198.76.  

Silver Today –The silver price closed in New York at $19.81 on Monday down from $19.69 on Friday.  Ahead of New York’s opening the price was trading at $20.08.

Price Drivers

After many institutions forecast a stronger dollar it continues to weaken against reason, or so it seems. Emerging market currencies and bonds are doing well as they offer much higher yields. Once the Fed, eventually, does lift interest rates, we expect a huge unwinding of these positions.

On several fronts, developed world and emerging world bonds, equity markets and on the currency front, any lifting of U.S. interest rates would catapult these markets down, while the dollar would be catapulted higher. So the weight of responsibility on the U.S. Fed grows by the day. We at Gold Forecaster do not expect such a rise in rates for a long, long time because of this risk.

This is very positive for gold and silver, because such dramatically heightened risks for world markets makes gold and silver a haven set apart from these markets and a port in the coming storms.

Gold ETFs – In New York on Monday there were no sales or purchases from or into the SPDR gold ETF (GLD) or the Gold Trust (IAU). This left their respective holdings at 960.447 tonnes and 222.89 tonnes.

 

Silver –Silver prices are above $20 at the moment as gold rises to the midpoint in its trading range again. Should gold rise further even to $1,360 you will see silver run ahead.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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