Gold price slips and recovers

Gold TodayNew York closed at $1,296.40 yesterday after the previous close of $1,287.30 London opened at $1,294.30.

    • The $: € was weaker at $1.1100: €1 from $1.1065: €1 yesterday.
    • The Dollar index was weaker at 97.24 from 97.69 yesterday.
    • The Yen was stronger at 102.90: $1 from yesterday’s 103.91 against the dollar.
    • The Yuan was stronger at 6.7626: $1 from 6.7650: $1 yesterday.

 

  • The Pound Sterling was stronger at $1.2334: £1 from yesterday’s $1.2242: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
     2016  11    3      

     2016  10    2

     2016  10    1

SHAU

SHAU

SHAU

283.42

281.71

279.15

283.75

282.08

/

$ equivalent 1 oz @ $1: 6.7592

$1: 6.7650

$1: 6.7756

$1,304.24

$1,295.22

$1,281.44

$1,305.72

$1,296.92

/

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

Once again we see Shanghai leading the way higher, even accounting for the higher quality gold it prices. The falling dollar [and stronger Yuan] came into play on prices there. We do not see the U.S. elections affecting gold prices in Shanghai, but the Fed’s stance will.

LBMA price setting:  The LBMA gold price setting was at $1,293.00 against yesterday’s $1,295.85. The gold price in the euro was set higher at €1,166.76 against yesterday’s €1,165.41.

Ahead of the opening of New York the gold price was trading at $1,287.45 and in the euro at €1,162.69.  At the same time, the silver price was trading at $18.06.  Once New York opened though the price recovered some lost ground hitting $1,300 again.

Silver Today –The silver price rose to $18.50 at New York’s close yesterday from $18.33, Tuesday.  

Price Drivers

As you can see the rise of the gold price to $1,308 yesterday brought out sellers and has taken the gold price back to the same lower levels seen before New York opened then. This is an expected development as prices don’t rise continuously. The price hit overhead resistance at the psychological level of $1,308 and should consolidate around these levels as buyers and sellers trade in and out of these higher levels until the next move is made in either direction.

The Fed did not, as expected, raise interest rates. It is clear that they will only do so when inflation leads the way, leaving interest rates lower than inflation. This will prove negative for the dollar over the next few years, which is what Treasury and the Fed wants.

With Trump and Clinton neck and neck in the polls [but Trump still looking as though he is behind if polls of the Electoral College votes are counted] markets are continuing to position themselves for a Trump victory. The establishment is shocked that a man with real intentions to makes changes, not only in Washington, but in the position of the U.S. in the global economy, could take power.

Nevertheless, the gold price is not moving on the U.S. Presidential election, it is primarily moving on real interest rates. The election is acting as a catalyst and will in the very short term drive gold prices, but longer term real interest rates will be the driver alongside Asian demand. Globally the gold price is starting to reflect the growing uncertainty and potential future volatility in an increasingly divided world. This is a superb environment for gold and silver prices!

Gold ETFs – There were sales of 0.03 of a tonne of gold from the SPDR gold ETF and sales of 0.04 of a tonne from the Gold Trust yesterday, leaving their respective holdings at 945.259 tonnes and 231.59 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs have risen by 375.84 tonnes.

Silver – Silver is pausing waiting for gold to break resistance above $1,300.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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