Gold and silver await Jackson Hole

Gold TodayGold closed in New York at $1,338.60 on Tuesday after Monday’s close at $1,343.40.  London opened at $1,341 again.

    • The $: € was at $1.1275 from $1.1335 yesterday.
    • The dollar index was at 94.67 from 94.39 yesterday.
    • The Yen was at 100.20 from yesterday’s 100.15 against the dollar.
    • The Yuan was weaker at 6.6536 from 6.6447 yesterday.

 

  • The Pound Sterling was at $1.3230 from yesterday’s $1.3184.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  24

2016  08  23

SHAU

SHAU

286.76

286.47

286.73

286.56

Dollar equivalent @ $1: 6.6536

$1: 6.6447

$1,340.51

$1,340.96

$1,340.37

$1,341.37

Once again, overall, all global gold markets, together with global currencies seem to be moving sideways today with an emphasis on a slightly stronger dollar. But this strength is small. So we have gold prices in the dollar falling and those in the euro rising.

Friday’s Jackson Hole comments by Mrs. Yellen of the Fed will be the focal point of the week with markets finely measuring the emphasis she puts on her words, looking for the smallest sign of what the Fed is going to do and when. This is what she doesn’t want, so how she is going to play it with so much influence each word will have, is a difficult one.

She would do well to repeat her last speech so as not to give room for wrong impressions. Unfortunately, unless she does repeat her last speech, any emphasis that inclines hearers to believe that a rate hike is due in September, or later this year, will have all financial markets moving strongly, one way or the other. This includes the precious metal markets.

LBMA price setting:  $1,337.90 after yesterday’s $1,338.50.

The gold price in the euro was set at €1,187.03 up €5.34 from yesterday’s €1,181.69.

Ahead of the opening in New York the gold price stood at $1,338.15 and in the euro at €1,187.46.  It took a knock when the New York market opened falling back to the mid-$1,320s on renewed nervousness ahead of Jackson Hole, and on a slightly stronger dollar.

Silver Today –The silver price closed in New York at $18.88 yesterday down from $18.99 Monday.  Ahead of New York’s opening the price was trading at $18.90.  Like gold it fell immediately after New York markets opened.

Price Drivers

The market in gold has a very tight trading range around $1,340, but in London the gold price keeps trying to slip. Some have postulated that this is Venezuela selling off its reserves at $1,350 – 55. No one can say whether it is or it isn’t.

But we would have thought that any central bank still acquiring gold, such as China, would have negotiated a deal to take all available amounts direct, at a particular price, or with reference to the market price at the time of delivery. It does not make sense to open oneself up to the risk of either not reaching a particular price, or seeing prices fall. Selling directly into the market is a way to ensure a low price or a price that will go much lower if it becomes known that they are sellers in the open market. It hints at desperation!

On the buy side it would pay to take that gold off the market at say, $1,350 in one chunk and allow the overhang to be removed to see prices rise thereafter.

Gold ETFs – In New York on yesterday there was no change in the holdings of either the SPDR gold ETF or the Gold Trust. This left their respective holdings at 958.369 tonnes and 223.85 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 384.604 tonnes.

Silver –Silver prices now holding around $18.87 showing that they will remain sensitive to even small moves in the gold price.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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