Dollar stays weak but gold and silver weaker too

Gold Today –New York closed at $1,276.10 yesterday after closing at $1,279.20 Friday. London opened at $1,270.40 today. 

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

         The $: € was weaker at $1.0895 after yesterday’s $1.0843: €1.

         The Dollar index was weaker at 98.98 after yesterday’s 99.18

         The Yen was weaker at 110.48 after yesterday’s 110.108:$1. 

         The Yuan was barely changed at 6.8862 after yesterday’s 6.8865: $1. 

         The Pound Sterling was stronger at $1.2814 after Friday’s $1.2787: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    25

     2017    4    24

     2017    4    21    










$ equivalent 1oz @    $1: 6.8862

       $1: 6.8865

       $1: 6.8867








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.]

 The Shanghai Gold Exchange was trading at 283.90 towards the close today. This translates into $1,277.31. New York closed at a $0.69 premium to Shanghai’s close yesterday. London opened at a discount of $6.91 to Shanghai.

Despite New York trying to lift gold prices, Shanghai’s gold prices are slipping lower now. London is taking gold prices further down too.

Please note just how stable the Yuan exchange rate is against the dollar. This is in line with the policy of the People’s Bank of China’s as stated last week that they will not let the Yuan weaken significantly in the future.

The policy of the PBoC against speculation has now been extended to the equity markets. The application of this new policy caused the Shanghai equity market to fall back heavily. But once it has found its new non-leveraged floor it will be far more stable. As you can see the PBoC is not tolerating speculative pressures on the financial markets, unlike the developed world. The main speculators in the west are the banks, but in China these institutions are firmly under the control of the central bank. The overall impact on all financial markets will be to decrease volatility tremendously. The equity market in China, in the last few years has been more of a casino than a responsible financial market. This has deterred the retail market from investing into the market. We reiterate that the Shanghai gold exchange will see a far more stable market than has been the case to date and will bring that stability to the gold price globally.

LBMA price setting:  The LBMA gold price was set today at $1,270.50 from yesterday’s $1,271.80.  

The gold price in the euro was set at €1,167.95 after yesterday’s €1,171.84.

Ahead of the opening of New York the gold price was trading at $1,268.10 and in the euro at €1,163.98. At the same time, the silver price was trading at $17.77. 

Silver Today –Silver closed at $17.92 yesterday after $17.96 at New York’s close Friday.

 Price Drivers

The dollar index continues to weaken taking gold down with it in dollar terms while falling much faster in the euro. But the gold price has not yet broken down through support, while still consolidating.

Before London opened gold prices were marked down, not traded down, roughly in line with Shanghai’s fall.

With the dollar weaker we would have expected gold prices to rise but so far, London has not led the way, will New York? If so it is taking its time. We would expect speculators to try to push prices down on the back of a seemingly more secure E.U. in New York.

But we would be cautious enough to say that a convincing break down through support is needed for the positive gold picture to be changed.

Gold ETFs – Yesterday saw purchases of 1.481 tonnes into the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 860.171 tonnes and at 204.36 tonnes respectively.

Julian D.W. Phillips | | StockBridge Management Alliance 


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