Shanghai leading gold price to downside

Gold Today –New York closed at $1,209.90 on the 24th January after closing at $1,215.30 on the 23rd January. London opened at $1,203.25 today.

Overall the dollar was stronger against global currencies early today. Before London’s opening:

         The $: € was stronger at $1.0724: €1 from $1.0752: €1 yesterday.

         The Dollar index was stronger at 100.31 from 100.20 yesterday. 

         The Yen was weaker at 113.69:$1 from yesterday’s 113.24 against the dollar. 

         The Yuan was weaker at 6.8766: $1, from 6.8534: $1, yesterday. 

         The Pound Sterling was stronger at $1.2509: £1 from yesterday’s $1.2482: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    25

     2017    1    24

      2017    1    23










$ equivalent 1oz @  $1: 6.8766

      $1: 6.8541

$1: 6.8546







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 was trading today around 268.75 Yuan or in dollars, at today’s exchange rate, $1,215.58. The dollar was stronger across the board, as well as against the Yuan. With only two more trading days before the celebration of the ‘Year of the Rooster’ begins we may well see last minute buying or a tapering off of demand. It is impossible to forecast which.

New York, Tuesday, closed well below Shanghai’s close seen earlier in the day, before New York opened. In New York there was another over 2 tonne of gold sale from the SPDR gold ETF.

London opened on Wednesday $7.50 lower than Shanghai was trading at today. Shanghai continues to drive prices but to the downside.

LBMA price setting:  The LBMA gold price was set today at $1,203.50 down slightly from yesterday’s $1,213.75.  

The gold price in the euro was set lower at €1,118.08 after yesterday’s €1,129.39 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,206.30 and in the euro at €1,121.31.  At the same time, the silver price was trading at $16.98. 

Silver Today –Silver closed at $17.18 at New York’s close yesterday from $17.07 on the 20th January. 

Price Drivers

There was another significant, but not heavy sale of gold from the SPDR gold ETF yesterday [see below].  The gold market mood is one of consolidation, particularly ahead of the Chinese New Year holiday as well as the Options closure day tomorrow. With gold consolidating around $1,213 it may be that expectations are moving to see lower gold prices in the very short term.

We then expect Chinese demand to come to life after the holidays, particularly if the gold price is lower.

President Trump today is unveiling plans to build a wall between Mexico and the U.S., the Great Wall of America. What he is doing is to tell markets he is taking a very firm grip of the U.S. in moves that would have been far too bold for previous Presidents going back to Johnson. In the process he is not reliant on ‘the establishment’, but ensuring they bow to his will.

[As an aside; one feature supporting his dominance is the way he shakes hands. He either pulls the other person to him or keeps holding their hand for far too long. It is a sign of that dominance.]  If he continues with this attitude [it is in his nature] we are certain that he will confront China.

Consequently, we see China becoming more assertive already, making clear they will defend ‘the Islands’ [now constructed for military use] from the U.S. Already there is a squaring up against the U.S. setting the scene for the next few years.

This is positive for gold.  

During London’s day the dollar weakened and on the Dollar Index fell back below 100. It looks certain to fall quite a bit further from now on. President Trump is getting his wish!

Gold ETFs – In New York, there were sales of 2.963 tonnes of gold into the SPDR gold ETF but there were no purchases or sales into or from the Gold Trust, leaving their respective holdings at 804.108 tonnes and 198.75 tonnes. 

 Julian D.W. Phillips: | | StockBridge Management Alliance 

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