11 tonne paper gold raid and Trump tax plans knock gold back temporarily

Gold Today –New York closed at $1,231.50 on the 9th February after closing at $1,240.50 on the 8th February. London opened at $1,225.00 today.

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

         The $: € was stronger at $1.0639: €1 from $1.0677: €1 on yesterday.

         The Dollar index was stronger at 100.87 from 100.38 on yesterday. 

         The Yen was weaker at 113.64:$1 from yesterday’s 112.24 against the dollar. 

         The Yuan was weaker at 6.8862: $1, from 6.8713: $1, yesterday. 

         The Pound Sterling was weaker at $1.2498: £1 from yesterday’s $1.2504: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    10

     2017    2    09

      2017    2    08

SHAU

SHAU

SHAU

/

276.07

275.16

/

276.5

275.01

$ equivalent 1oz @  $1: 6.8862

      $1: 6.8713

$1: 6.8860

  /

$1,249.65

$1,242.87

/

$1,251.60

$1,242.20

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 273.10 Yuan during today’s session before London opened. This equates to $1,233.53. Shanghai was trading in line with New York’s close and $3 higher than London at its opening.

LBMA price setting:  The LBMA gold price was set today at $1,225.75 up from yesterday’s $1,241.75.  

The gold price in the euro was set lower at €1,151.75 after yesterday’s €1,161.93.

Ahead of the opening of New York the gold price was trading at $1,226.70 and in the euro at €1,152.75.  At the same time, the silver price was trading at $17.62. Gold did move up a little back over $1,230 once New York opened.

Silver Today –Silver closed at $17.67 at New York’s close yesterday against $17.77 on the 8th February. 

 Price Drivers

We are all getting used to the new Presidential style with difficulty, but yesterday’ statements from the  President that the U.S. is about to see a fantastic new Tax reformation incited markets in the U.S. to reach new record highs and gold took a knock of $5 by the close. He is still amazing the U.S., by the fact that he is sticking to his election promises.

But there it is and our task as responsible commentators is to gauge just how deep and impact this will have on the gold price. Our view is that no physical sales of gold took place but a small physical purchase did in the U.S.  What did happen was a High Frequency Traders raid on the gold price that involved no physical gold. 3,927 April gold futures contracts (paper gold) was dropped on the COMEX. This is 11.1 tonnes of ‘paper’ gold which hit the COMEX trading floor and electronic trading system in a 60 second window. The subsequent fall was not substantial, so this is primarily a response to a stronger dollar.

Will the dollar move higher in the days, weeks and months to come. We know that the Fed and the Treasury as well as the government do not want a strong dollar. That policy is changing as the U.S. wants a globally competitive trade position in the world and a strong dollar goes against that. Hence, we see the rise in U.S. dollar and U.S. markets as being short lived.

Trump’s statement sent the dollar stronger so we see gold in dollar terms weakening as well as in other currencies. We know that dealers will mark down prices in the expectation of sales and not because they have seen them, so we look to see if sales do actually come to solidify prices at lower levels or whether we will see prices rise as no sales but buying is seen.

Gold ETFs – Yesterday we saw no purchases or sales into the SPDR gold ETF but saw a purchase of 0.60 tgonnes into the Gold Trust.  Their respective holdings are now at 832.577 tonnes and 200.90 tonnes. 

Since January 4th 2016, 232.867 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 22.786 tonnes have been added to the SPDR gold ETF and the Gold Trust.

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

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