Gold and the markets: Volatile, Volatile, Volatile

Gold TodayNew York closed at $1,274.50 yesterday after the previous close of $1,275.60 London opened at $1,278.00.

    • The $: € was very strong at $1.0940: €1 from $1.1240: €1 yesterday.
    • The Dollar index was much stronger at 98.45 from 96.36 yesterday.
    • The Yen was much weaker at 105.40: $1 from yesterday’s 102.38 against the dollar.
    • The Yuan was much weaker at 6.7909: $1 from 6.7644: $1 yesterday.

 

  • The Pound Sterling was weaker at $1.2408: £1 from yesterday’s $1.2488: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
     2016  11    10      

     2016  10    9

     2016  10    8

SHAU

SHAU

SHAU

282.29

282.74

280.73

/

288.63

/

$ equivalent 1 oz @ $1: 6.7913

$1: 6.7644

$1: 6.7785

$1,292.86

$1,300.07

$1,288.14

/

$1,327.15

/

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 pulled gold prices back but not to the level seen at New York’s close. The exuberance of yesterday’s action quickly subsided [a fall of $35] and gave way to a more sober market.

Pricing power has not shown where it lies yet as the disparity remains at $13, allowing for the differences in the quality of gold priced in the two markets.

The dollar is surging and before New York opened the Dollar index rose to 99.06. Will it be allowed to rise further?

LBMA price setting:  The LBMA gold price setting was at $1,280.90 against yesterday’s $1,304.55. The gold price in the euro was set higher at €1,175.14 against yesterday’s €1,174.74.

Ahead of the opening of New York the gold price was trading at $1,278.75 and in the euro at €1,175.05.  At the same time, the silver price was trading at $18.63.

Silver Today –Silver rose to $18.40 at New York’s close yesterday from $18.34, the day before.  

Price Drivers

Volatility is what we saw in all global markets. We doubt the volume of trading in physical gold was that much, but dealers and speculators showed their confusion taking gold and silver prices very high at first only to pull them back to their lows later in the day. But as always these gentlemen are ‘full of sound and fury and signify nothing’. It certainly was no place for widows and orphans. As we can all see, the emotional content of all global financial markets was huge, sowing confusion all around. But as the shock or awe subside, the fog will clear and a trend established.

What may sow further confusion is the present media attitude, ‘it’s not as bad as it seems, after all Trump won’t stick to his election promises’. But then the huge media input on the subject of the elections showed a definite bias which turned out to be manifestly wrong. We have expressed our views on what to expect from President Trump and how it will affect gold and silver in the latest issue of the Gold Forecaster.

The physical demand and supply of gold in the U.S. showed the same confusion, but, netted out, physical demand was solid.   

The U.S. should see a huge infrastructural program going forward that will boost economic growth and dollar debt levels. But we cannot foresee a strong dollar longer term, unless ‘protectionist’ policies are imposed. Otherwise the U. S Economy will be hurt badly. This is positive for gold.

Gold ETFs – There were purchases 5.338 tonnes of gold into the SPDR gold ETF and sales of 3 tonnes from the Gold Trust yesterday, leaving their respective holdings at 955.026 tonnes and 227.99 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs have risen by 382.007 tonnes.

As we forecast yesterday the action picked up in the U.S. based gold ETFs, but in a confused manner with big sales and big purchases. It may take the rest of the week before we see a clear trend emerge.

Silver – Silver did move better than gold overall rising when gold fell. The picture should clear this week.

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