Gold waits to be Trumped

Gold Today –New York closed at $1,251.00 on the 27th February after closing at $1,256.70 on the 24th February. London opened at $1,251.70 today.

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

         The $: € was slightly stronger at $1.0593: €1 from $1.0586: €1 on yesterday.

         The Dollar index was slightly stronger at 101.09 from 101.06 on yesterday. 

         The Yen was slightly weaker at 112.44:$1 from yesterday’s 112.30 against the dollar. 

         The Yuan was stronger at 6.8689: $1, from 6.8800: $1, yesterday. 

         The Pound Sterling was slightly stronger at $1.2427: £1 from yesterday’s $1.2412: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    28

     2017    2    27

      2017    2    24

SHAU

SHAU

SHAU

/

280.67

278.49

/

280.57

279.76

$ equivalent 1oz @  $1: 6.8689

      $1: 6.8800

$1: 6.8717

  /

$1,268.87

$1,260.53

/

$1,268.42

$1,266.28

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East 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.]

 At the close in Shanghai today, the gold price was trading at 280.0 Yuan once again, which directly translates into $1,267.88. But allowing for the difference of gold being traded this equates to a price of $1,262.88. This is $11.88 higher than the New York close and $11.18 higher than London.

If Trump’s speech is positive for gold then we should see the price in New York rise to meet the Shanghai price, at least.

LBMA price setting:  The LBMA gold price was set today at $1,251.90 down from yesterday’s $1,256.25.  

The gold price in the euro was set lower at €1,181.15 after yesterday’s €1,185.02.

Ahead of the opening of New York the gold price was trading at $1,252.70 and in the euro at €1,182.02.  At the same time, the silver price was trading at $18.28. 

Silver Today –Silver closed at $18.23 at New York’s close yesterday against $18.35 on the 24th February.

Price Drivers

Later today in the U.S. we await President Trump’s speech before Congress. We are told he will raise defense spending by $54 billion, but of more importance to the gold price will be any mention of infrastructure spending or any indication of tax cuts. These will directly affect the dollar against other currencies as well as the dollar gold price.

As you can see most developed world markets are marking time until they hear what he proposes. But note that Shanghai has not marked time, but moved slightly higher reflecting the fundamentals of the gold market, leaving New York and now London pulling back ahead of his speech. Today may well show in both London and New York much higher volatility in the very short term. Thereafter the currency and gold world in the west will settle down and follow Shanghai again. This is where Shanghai’s new dominance over the gold price will show itself.

The previous statements from President Trump pointed to much greater debt and likely inflation in his attempts to promote growth. Being a media master, we may well see him make today’s speech dramatic by encompassing his fiscal and taxation measures at the same time as he mentions defense and infrastructure. It will be these that impact the dollar and gold as well as silver, the metal that follows gold, ‘wherever she shall go.’ On balance we expect his speech to benefit gold, when the dust settles.

Gold ETFs – Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 201.82 tonnes. These gold ETFs have been quiet in the last week or so. After today we may well see activity increase. But will investors sell or buy? Today may well point the way forward.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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