Gold firm – seeing good support as GLD adds more gold

Gold Today –New York closed at $1,219.00 on the 3rd February after closing at $1,215.30 on the 2nd February. London opened at $1,223.20 today.

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

         The $: € was slightly stronger at $1.0750: €1 from $1.0758: €1 on Friday.

         The Dollar index was getting stronger at 99.96 from 99.88 on Friday. 

         The Yen was stronger at 112.62:$1 from Friday’s 113.12 against the dollar. 

         The Yuan was stronger at 6.8625: $1, from 6.8632: $1, Friday. 

         The Pound Sterling was weaker at $1.2457: £1 from Friday’s $1.2524: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    06

     2017    2    03

      2017    1    31

SHAU

SHAU

SHAU

/

269.93

/

/

269.52

/

$ equivalent 1oz @  $1: 6.8625

      $1: 6.8632

$1: 6.8772

  /

$1,223.30

/

/

$1,221.44

/

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 in gold at Yuan 269.85/gramme during today’s session before London opened. This equates to $1,223.06. For the first time in the last month all global gold markets appear in line. The reality is that Shanghai is lower due to the higher quality of gold it prices at $1,218.06. Therefore New York and London are higher than Shanghai. It’s the first time we have seen this, this year.

We need to make allowances for the fact that the Lunar New Year holiday only finished last Thursday. It’s still gaining trading momentum.

LBMA price setting:  The LBMA gold price was set today at $1,221.85 down from Friday’s $1,213.05.  

The gold price in the euro was set higher at €1,137.45 after Friday’s €1,129.78.

Ahead of the opening of New York the gold price was trading at $1,226.55 and in the euro at €1,141.83.  At the same time, the silver price was trading at $17.62. 

Silver Today –Silver closed at $17.46 at New York’s close Friday against $17.47 on the 2nd February. 

Price Drivers

With Shanghai still gathering cruising speed, London and New York are looking firm. The gains of Friday are still holding as President Trump continues to stir the pot on all fronts. But the currency front looks quiet at the moment. The dollar index has fallen through support and looks like we will see weakness, a factor favoring gold.

The market today looks as though it has built a base above support just above $1,200 and is set to rise. Continued U.S. ETF physical buying points to a palpable change to the positive, in the U.S. and London gold markets.

Remarkably we hear the German Finance Minister informing the world that the euro is too weak to benefit Germany. Is this a misquote? Was he serious? Nothing has helped Germany more since the euro was invented than that weak currency. By tying weak economies into a single currency in Europe, Germany has managed to drain capital and skills to itself because of its robust exports and strong economy. If the euro had not been weak and Germany retained the Deutschemark, it would have priced German goods out of the market long ago!

What is becoming clear to all is that Marine le Pen in France may well do a Trump in the coming elections. If she takes the French Presidency she will have a referendum to leave the E.U. And the media there is doing what the media did in the U.S. and persistently talked down that eventuality.

It is also clear that Italy is facing a crisis that brings it into the ‘want to exit’ the E.U., making a ‘Europe Unie’ a dubious concept. We hear many reports now on how Italy may well head to the exit too.

The moment such talk hits the airwaves, the moment we hear that will mean a collapsing euro. We cannot buy that at all

But with the weakening dollar, gold is doing well. But please note it is not just rising against the dollar, but against all currencies.

Gold ETFs – On Friday we saw 3.287 tonnes of gold bought into the SPDR gold ETF (GLD) but no change was seen in the holdings of the Gold Trust (IAU).  Their respective holdings are now at 814.505 tonnes and 199.91 tonnes. 

We are now seeing a steady pattern of gold buying into the U.S. based gold ETFs. In turn, this is pulling London up as the gold for these ETFs are sourced in London. We believe the London banks will not delay in buying as this could cause them to lose out as prices rise.

The buying is persistent enough for the bullion banks to keep their books ‘long’ of gold. The potential for any shortage of open market stocks is great now, as the mood towards gold goes positive. So dealers and banks have re-positioned themselves for higher prices.

Since January 4th 2016, 213.535 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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