Gold and Silver weakening on options, SGE closing and GLD sale

 

Gold Today –New York closed at $1,200.10 on the 25th January after closing at $1,209.90 on the 24th January. London opened at $1,197.85 today.

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

         The $: € was weaker at $1.0732: €1 from $1.0724: €1 yesterday.

         The Dollar index was weaker at 100.11 from 100.31 yesterday. 

         The Yen was weaker at 113.78:$1 from yesterday’s 113.69 against the dollar. 

         The Yuan was stronger at 6.8755: $1, from 6.8766: $1, yesterday. 

         The Pound Sterling was stronger at $1.2635: £1 from yesterday’s $1.2509: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    26

     2017    1    25

      2017    1    24

SHAU

SHAU

SHAU

/

269.04

270.41

/

267.84

269.70

$ equivalent 1oz @  $1: 6.8755

      $1: 6.8766

$1: 6.8541

  /

$1,216.89

$1,227.10

/

$1,211.46

$1,223.88

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 266.80 Yuan or in dollars, at today’s exchange rate, $1,206.95. The dollar was weaker across the board, but only slightly against the Yuan.

We correct ourselves and inform you that today is the last trading day before the ‘Year of the Rooster’ celebrations, which begin tomorrow and end next Thursday. Business will continue next Friday, there.

This marks the exit of Chinese demand from the global gold market for the next week.

London opened on Thursday $4.00 lower than Shanghai was trading at today. Shanghai continues to drive prices but to the downside now.

LBMA price setting:  The LBMA gold price was set today at $1,191.55 down from yesterday’s $1,203.50.  

The gold price in the euro was set lower at €1,111.21 after yesterday’s €1,118.08 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,193.25 and in the euro at €1,112.59.  At the same time, the silver price was trading at $16.89. 

Silver Today –Silver closed at $16.99 at New York’s close yesterday against $16.99 on the 24th January. 

 Price Drivers

Yesterday in New York there was a very heavy sale of gold from the SPDR gold ETF of over 5 tonnes. The market in New York fell during New York’s day below $1,200 to $1,196 but recovered overnight to $1,200.

In Shanghai the gold price today fell back to the equivalent of $1,206, when allowing for the difference of quality of gold being priced. It coincided with the closing date for Options today and may have been sold to lower the ‘striking price’ of those options, which would be around $12 lower, favouring the ‘put’ option holders.

The sale has also coincided with the last day of business in Shanghai before the Chinese New Year holiday.

As we have said in our weekly newsletter before, “It will take substantial daily sales of gold from the SPDR gold ETF to hold the dollar gold price down.” We do not think this will happen in the days to come.

Nevertheless the forecast we made yesterday of “expectations are moving to see lower gold prices in the very short term” has come true.

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

This is positive for gold.  

Gold ETFs – Yesterday, in New York, there were sales of 5.038 tonnes of gold from the SPDR gold ETF (GLD) but there were no purchases or sales into or from the Gold Trust (IAU), leaving their respective holdings at 799.070 tonnes and 198.75 tonnes.  This sale was sufficient to cause the fall in the gold price.

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

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