Strong Asian gold demand making an impact

Gold TodayNew York closed at $1,302.90 yesterday after the previous close of $1,296.40 London opened at $1,300.00.

    • The $: € was almost unchanged at $1.1099: €1 from $1.1100: €1 yesterday.
    • The Dollar index was almost unchanged at 97.26 from 97.24 yesterday.
    • The Yen was weaker at 103.29: $1 from yesterday’s 102.901 against the dollar.
    • The Yuan was almost unchanged at 6.7619: $1 from 6.7626: $1 yesterday.

 

  • The Pound Sterling was stronger at $1.2457: £1 from yesterday’s $1.2334 £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
     2016  11    4      

     2016  10    3

     2016  10    2

SHAU

SHAU

SHAU

283.64

283.42

281.71

283.00

283.75

282.08

$ equivalent 1 oz @ $1: 6.7619

$1: 6.7626

$1: 6.7650

$1,304.69

$1,304.24

$1,295.22

$1,301.75

$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.]

Shanghai closed lower than New York and London moved in line with Shanghai at the opening [allowing for the pricing of different quality gold].

Currency changes in the last day show us that any exuberant, speculative price increases in New York are not feeding through to the global market, i.e. volatility is being contained by Shanghai.

LBMA price setting:  The LBMA AM gold price setting was at $1,301.70 against yesterday’s $1,293.00. The gold price in the euro was set higher at €1,172.70 against yesterday’s €1,166.76.

Ahead of the opening of New York the gold price was trading at $1,303.00 and in the euro at €1,174.93.  At the same time, the silver price was trading at $18.40.

Silver Today –The silver price fell to $18.34 at New York’s close yesterday from $18.50, Price Drivers

The gold price is sitting below heavy resistance, if this were treated as a normal Technical picture. But this overhead resistance is a position where few are likely to sell as stale bulls. With the prospect of prices moving higher current holders are back waiting where they were a short while ago when gold was last here. After all, the gold price at over $1,320 was the ‘norm’ for a good part of the second half of the year and then driven by buyers who will hold for the long term, particularly because of issues that had nothing to do with the U.S. election.

Asian demand is a factor that appeared late in the day in October, not December, but has grown so quickly in the last few weeks that it is supportive of higher prices. Yes, Indians are price sensitive, but heaven help the Indian investor if his wife asks him for gold for his daughter’s marriage this month and he tells to wait for lower gold prices! The marriage season is starting and there are around 500,000 marriages in the sub-continent each year.

We believe that Chinese demand at all levels is on the rise as reports of a burgeoning middle class in China, continues to buy gold alongside institutions there. It also adds strength to Shanghai’s pricing power too.

Add to this, fairly large buyers in the SPDR [GLD] gold ETF yesterday and gold prices are moving higher steadily.

Gold ETFs – There were purchases of 4.429 tonnes of gold into the SPDR gold ETF and sales of 0.6 of a tonne from the Gold Trust yesterday, leaving their respective holdings at 949.688 tonnes and 230.99 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs have risen by 379.669 tonnes.

Silver – Silver continues to pause, waiting for gold to break resistance around $1,320 and higher.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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