Lower dollar keeping gold and silver stable

Gold Today –New York closed at $1,215.60 on the 17th January after closing at $1,196.20 on the 16th January. London opened at $1,213.00 today.

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

         The $: € was weaker at $1.0687: €1 from $1.0650: €1 yesterday.

         The Dollar index was weaker at 100.69 from 101.09 yesterday. 

         The Yen was almost unchanged at 113.45: $1 from yesterday’s 113.44 against the dollar. 

         The Yuan was stronger at 6.8425: $1, from 6.8860: $1, yesterday. 

         The Pound Sterling was stronger at $1.2298:£1 from yesterday’s $1.2115: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    18

     2017    1    17

      2017    1    16

SHAU

SHAU

SHAU

/

270.74

269.21

/

272.18

270.15

$ equivalent 1oz @  $1: 6.8425

      $1: 6.8860

$1: 6.9082

  /

$1,222.91

$1,212.10

/

$1,229.41

$1,216.32

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 held the same levels as yesterday, today, of around 272 Yuan. Because of the PBoC’s selling dollars to strengthen the Yuan it does seem that the gold price in the dollar jumped over $13 on yesterday in Shanghai.

If one takes today’s Yuan exchange rate and uses that to translate 272 Yuan into a dollar price you arrive at $1,236. In the last week the Yuan exchange rate has gone from 6.94 to 6.84 with the gold price in Yuan rising 8 Yuan at the same time.

If pricing power does reside in Shanghai as it has done in the last fortnight the Yuan price of gold will either hold or rise more in the Yuan.

New York closed $9 lower than Shanghai on yesterday. London opened at around $11.00 lower than Shanghai was trading today.

LBMA price setting:  The LBMA gold price setting was at $1,212.50 this morning against yesterday’s $1,217.50. 

The gold price in the euro was set lower at €1,135.25 after yesterday’s €1,138.49 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,213.20 and in the euro at €1,135.53.  At the same time, the silver price was trading at $17.12. 

Silver Today –Silver closed at $17.17 at New York’s close yesterday from $16.76 on the 13th January. 

Price Drivers

President-elect Trump has pointed out that the dollar is too strong. And we feel he is right. Bearing in mind that the U.S. has run a Trade deficit since before the beginning of this century, it is clearly the use of the dollar in international trade that has caused its strength, particularly as the oil currency.

We have pointed out that such use will change, particularly in the oil market in the future. Add to that the growing presence of the Yuan in international trade and most likely, its increasing place in national reserves.  

The problem is that other currencies such as the euro and the Yen will try to weaken their currencies so the dollar does not fall against them. If the U.S does follow a road to weaken the dollar the ‘currency’ war will gain considerable momentum and the multi-currency monetary system will be on us. This would be very positive for gold.

U.S. physical buying or selling into or from the U.S.-based gold ETFs continues to be absent from the market. As we said yesterday, with a weaker dollar, New York did see a ‘shunt’ effect and go higher, simply because of the price differential. We expect this to continue!

Gold ETFs – Yesterday, in New York, there no purchases or sales into or from the SPDR gold ETF (GLD) or the Gold Trust (IAU), leaving their respective holdings at 807.96 tonnes and 198.30 tonnes. 

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

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