Could be a volatile long weekend for gold as U.S. holiday kicks in

Gold Today –Gold closed in New York at $1,313.30 on Thursday after Wednesday’s close at $1,308.30.  London opened at $1,310.

–         The $: € was weaker at $1.1182 down from $1.1134 yesterday.

–         The dollar index was weaker at 95.79 from 96.11 yesterday.

–         The Yen was almost unchanged at 103.57 from yesterday’s 103.55 against the dollar.

–         The Yuan was slightly weaker at 6.6823 from 6.6801 yesterday.

–         The Pound Sterling was stronger at $1.3267 from yesterday’s $1.3140.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
      2016  09  2

2016  09 1

SHAU

SHAU

282.69

282.32

282.50

281.63

Dollar equivalent @ $1: 6.6823

$1: 6.6801

  $1,315.81

$1,314.52

$1,314.93

$1,311.31

After New York pulled up from its lows around $1,305 to $1,313 Shanghai stabilized too, following New York, as did London.

The Yuan weakened against the dollar while the dollar weakened against other currencies. It was a day when the U.S. began to wind down ahead of the long weekend.

LBMA price setting:  The LBMA gold price setting on Friday was at $1,311.50. On Thursday it was at set at $1,305.70.

The gold price in the euro was set on Friday at €1,172.34 up slightly on Thursday’s 1,171.45.

Ahead of the opening in New York the gold price was trading at $1,314.05 and in the euro at€1,174.20.  The silver price is trading at $18.87 ahead of New York’s opening. Gold surged in New York following the poorer than expected nonfarm payroll increases in August.  At one time spot gold rose to over $1,130 before coming back down to the mid to low $1320s as trading progressed.

Silver Today –The silver price closed in New York at $18.87 Thursday up from $18.65 Wednesday. 

Price Drivers

Today in New York markets should be quiet as the long weekend has begun for so many. While the trading desks will have few dealers on hand the day is a great opportunity for those large speculators who like to create big movements in prices.

This week alone has seen attempts on COMEX to crush the gold price with High Frequency Trading dumping $1.5 billion worth of Futures contracts onto the market. The day before yesterday and yesterday saw over 17 tonnes of gold dropped into the physical market [which should feed through to London] and yet the gold price in the last day has bounced off $1,306.

With markets now closed from end of business today until Tuesday, there may well be position-squaring to minimize exposure for such a long time [three days in markets is a long time]. Perhaps that is what happened this week, as it is also a week when one month ended and another began.

Nevertheless, the markets are vulnerable to great volatility.

Some may say that it is the dire situation in Venezuela that’s caused the sell-off in gold. We have difficulty with that as this would be seen in London’s market and prices, not in New York, on COMEX or in the SPDR gold ETF. They would be selling directly to willing buyers and more likely to be courted by those looking for large tonnages which would go direct to the sellers and not through the market place.

Gold ETFs – In New York yesterday there was another large sale of 5.342 tonnes from the SPDR gold ETF (GLD)but no change in the holdings of the Gold Trust (IAU). This left their respective holdings at 937.89 tonnes and 225.44 tonnes.

Silver – The silver price was higher at London’s opening, after New York again took it higher. It simply took gold to stabilize at current levels for silver to continue rising. Market stability has certainly made both dealers and buyer feel that the silver price has fallen too far.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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