Poor global data keeping gold price steadyish

Gold TodayNew York closed yesterday at $1,345.00 yesterday.  London opened at $1,348 again.

    • The $: € was weaker at $1.1267 down from $1.1245 yesterday.
    • The Dollar index was weaker at 94.78 from 94.85 yesterday.
    • The Yen was unchanged at 101.62 yesterday against the dollar.
    • The Yuan was almost unchanged at 6.6640 from 6.6638 yesterday.

 

  • The Pound Sterling was weaker at $1.3348 from yesterday’s $1.3408.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  8

     2016  09  7

SHAU

SHAU

289.20

289.78

289.35

290.13

Dollar equivalent @ $1: 6.6640

$1: 6.6638

$1,349.81

$1,352.56

$1,350.51

$1,354.19

The Peoples Bank of China (PBoC) has taken steps to increase borrowing costs offshore in an attempt to halt the decline of the Yuan against the U.S. dollar. We are still over three weeks away from acceptance of the Yuan as one of the currencies of the SDR. The Chinese do not want any accusations of manipulating the Yuan lower ahead of this acceptance as one of the world’s ‘hard’ currencies.

LBMA price setting:  The LBMA gold price setting on Thursday was at $1,348.00. Yesterday it was at set at $1,348.75.

The gold price in the euro was set on Thursday at €1,194.08 against yesterday’s 1,199.32.

Ahead of the opening of New York the gold price was trading at $1,347.00 and in the euro at €1,193.20.  At the same time, the silver price was trading at $19.87.

Silver Today –The silver price was pulled back to $19.78 at New York’s close down from $19.93, yesterday.  

Price Drivers

Yesterday did not see any purchases of gold into the gold ETFs. As a result the gold price simply held at higher levels. All was quiet on the currency fronts leaving both silver and gold to mark time today.

The E.C.B. meeting is expected to be ‘boring’ and produce nothing new except to say they are doing what they can and they believe it is working. They may add a nudge to governments to do something to promote growth, but apart from that we do not expect any action from them. If there is, it will rattle markets. It is pretty clear that either the markets or the ‘powers that be’ are not willing to see a stronger dollar against the euro.

Gold ETFs – There was a small sale of o.324 of a tonne from the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 951.811 tonnes and 225.39 tonnes. It is clear that the reason the gold price jumped was because of a massive 14.25 tonne purchase on Tuesday of this week. This sort of purchase is not made on one piece of news. It was clearly a well thought out strategic decision.

We would guess that it is the sight of poor U.S. data and even poorer data from other countries. We cannot subscribe to positive news from China supporting the rest of the world’s growth. China is growing first because it is taking over the world’s manufacturing and secondly because of internal growth, which does not generate sufficient growth for importers to the country to keep their nations growing. Deflation is being kept at bay, just but a continuation of the data we are seeing now questions whether it can continue there. If deflation does succeed, then the debt over burden will bring consequences!

Manufacturing as part of GDP in the U.S. is right down to 15% with the rest of it coming from the services sector. We are of the opinion that the same is becoming true in the rest of the developed world. Economies so structured are very vulnerable!

Silver – The silver price followed gold higher to close at $20.04 yesterday and will move up faster than gold in percentage terms, if the rises continue.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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