Indian gold demand rebuilding; gold price consolidating

Gold Today –New York closed at $1,195.40 on the 12th January after closing at $1,190.90 on the 11th January. London opened at $1,195.45 today.

 Overall the dollar is slightly weaker against global currencies today. Before London’s opening:

         The $: € was slightly weaker at $1.0633: €1 from $1.0631: €1 yesterday.

         The Dollar index was slightly stronger at 101.33 from 101.25 yesterday. 

         The Yen was slightly weaker at 114.70: $1 from yesterday’s 114.52 against the dollar. 

         The Yuan was stronger at 6.8873: $1, from 6.9115: $1, yesterday. 

         The Pound Sterling was weaker at $1.2168: £1 from yesterday’s $1.2249: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    13

     2016    1    12

      2016  12    11

SHAU

SHAU

SHAU

/

269.17

268.72

/

269.25

269.00

$ equivalent 1oz @  $1: 6.8873

      $1: 6.9225

$1: 6.9244

  /

$1,215.59

$1,209.31

/

$1,215.95

$1,210.57

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 gold prices corrected this morning. While we cannot get access to today’s Shanghai’s Fixings, gold was trading down, between $1,191 and $1,196 or back to 263.73 Yuan and 264.83 Yuan. After the gold price rises in Shanghai during this week, a correction was needed to make the market healthy.

With this correction London and New York are now higher than Shanghai [see note below table].

LBMA price setting:  The LBMA gold price setting was at $1,196.35 this morning against yesterday’s $1,206.65. 

The gold price in the euro was set higher at €1,123.54 after yesterday’s €1,133.96 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,198.00 and in the euro at €1,125.15.  At the same time, the silver price was trading at $16.80. 

Silver Today –Silver closed at $16.78 at New York’s close yesterday from $16.73 on the 11th January. 

 Price Drivers

With no sales or purchases into or out of the U.S. based gold ETFs yesterday we expect week’s end in both London and New York to be neutral with a likelihood of a correcting price. The psychological $1,200 will cause the gold price to pause as it is doing now. But we feel $1,200 will not be a significant barrier.

The dollar is stabilizing today but for how long? The exuberant expectations, discounted in markets, of what a President Trump will bring are dissipating and the dollar is losing momentum. If it falls back to below 100 on the index then we expect it to weaken further, benefitting gold.

India

It is clear that Modi’s attack on “Black Money” has failed, as 97% of the Rs.500 and Rs.1,000 notes have been collected by the banks. We had expected that not just because of the ingenuity of the Indians but because overall government and its bureaucrats are inherently corrupt, despite Modi’s noble efforts. Indians will remain a cash society against government efforts to see into their businesses because of cash being so difficult to monitor.

We expect gold to be bought with the new notes and hidden away, as before. No statistics issued by the government on gold imports of late, will be accurate now as the buying undoubtedly went through smugglers.

With Indian seasonal demand set to continue until May, we do expect to see ‘legal’ demand figures to be on the rise from now on. Overall gold demand in India is resuscitating now.

Gold ETFs – Yesterday, in New York, there were no sales or purchases from the SPDR gold ETF or any from or into the Gold Trust, leaving their respective holdings at 804.996 tonnes and 198.30 tonnes. 

As we said in an earlier report, “Substantial sales of gold on a daily basis are needed for New York to control the gold price”.

Since January 4th 2016, 202.416 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust.  We remain at almost at half the total level accumulated in 2016.

Julian D.W. Phillips GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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