Big gold sales from GLD Friday but having little price impact

Gold Today –New York closed at $1,133.40 Friday after closing at $1,127.4 on the 15th December. London opened again at $1,140.85 today.

 Overall the dollar is slightly weaker against global currencies today.

         The $: € was weaker at $1.0415: €1 from $1.0441: €1 Friday.

         The Dollar index was stronger at 103.09 from 102.95 Friday. 

         The Yen was stronger at 117.11: $1 from yesterday’s 118.17 against the dollar. 

         The Yuan was much weaker at 6.9510: $1 from 6.9463 $1 yesterday. 

         The Pound Sterling was weaker at $1.2373: £1 from yesterday’s $1.2430: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2016  12    19

      2016  12    16

      2016  12    15

SHAU

SHAU

SHAU

/

261.65

263.55

/

261.75

263.45

$ equivalent 1oz @  $1: 6.9510

      $1: 6.9463

$1: 6.9352

  /

$1,171.59

$1,181.99

/

$1,172.04

$1,181.54

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 prices were not available when we produced this report.

LBMA price setting:  The LBMA gold price setting was at $1,137.60 this morning against Friday’s $1,134.85. 

The gold price in the euro was set higher at €1,092.11 after Friday’s €1,085.31.

Ahead of the opening of New York the gold price was trading at $1,139.75 and in the euro at €1,093.71.  At the same time, the silver price was trading at $16.10.

 Silver Today –Silver closed at $16.09 at New York’s close Friday from $16.00 on the 15th December. 

 Price Drivers

This week’s performance by gold and silver will be the result of two factors:

  1. The dollar.
  2. Gold ETF sales or purchases.

We feel that the dollar has run too far, for too long on the back of hopes under the Trump administration. It is certainly against the interest of the U.S. to have a strong dollar at this point in the U.S.

With the Yuan continuing to fall we may well see our forecast of 7.00 against the dollar reached by the end of this year. In 2017 we expect more falls in the Chinese currency. Let’s be clear on this, if the dollar continues to strengthen much more, the likelihood of import controls via stringent tariffs increases.

Trump’s rhetoric, via Tweets against China, are not stopping, making the divisions between the U.S. and China ever greater.  While China is pragmatic it also understands the many ways it can retaliate to its advantage.

As such we do expect to see gold demand increase from China and for a strong dollar to be capped in 2017. In a divided world, under tension, gold sees greater demand as history has shown throughout the ages.

2017 will see such tension and happenings that are the unforeseen, unforeseen. It will not be a quiet year. With gold prices at current levels we see gold not being far from its bottom. This next fortnight will confirm this, we think.

Gold ETFs – Friday, there were sales of 5.333 tonnes from the SPDR gold ETF and sales 0f 0.75 of a tonne from the Gold Trust, leaving their respective holdings at 836.991 tonnes and 195.60 tonnes. These sales were again large, but had no impact on the gold price. It would appear that when sales are ONLY as large as this, the buoyancy of the market is stronger than such sales.

The influence of the dollar exchange rate seems greater than physical sales at the moment!

Since January 4th this year, 232.121 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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