Swiss gold exports still flowing East. India top recipient
| Gold Today –New York closed at $1,257.20 yesterday after closing at $1,265 Friday. London opened at $1,255.00 today.
Overall the dollar was stronger against global currencies early today. Before London’s opening:
– The $: € was stronger at $1.0908 after Friday’s $1.0940: €1.
– The Dollar index was stronger at 99.13 after Friday’s 98.76.
– The Yen was weaker at 112.14 after Friday’s 111.37:$1.
– The Yuan was weaker at 6.8969 after Friday’s 6.8944: $1.
– The Pound Sterling was weaker at $1.2875 after Friday’s $1.2939: £1.
Yuan Gold Fix
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 281.30 towards the close today. This translates into $1,263.60. New York closed at a $6.40 discount to Shanghai’s close yesterday. London opened at a discount of $8.60 to Shanghai’s close today.
Shanghai re-opened today after the May Day holiday so will not be at usual speed until tomorrow.
LBMA price setting: The LBMA gold price was set today at $1,255.80 from Friday’s $1,265.55.
The gold price in the euro was set at €1,151.27 after Friday’s €1,159.99.
Ahead of the opening of New York the gold price was trading at $1,255.75 and in the euro at €1,151.11. At the same time, the silver price was trading at $16.93.
Silver Today –Silver closed at $16.89 yesterday after $17.30 at New York’s close Friday. Should the gold price return to an upward path, we see silver racing higher than gold’s rise.
London and Shanghai were closed yesterday, so New York dominated the gold price. We saw small sales of gold from the Gold Trust, but not an amount likely to affect the gold price. But with the dollar falling at the same time as the gold price the market is seeing factors that are not strong enough to hit the gold price more than for a short period of time. History has it that the gold price should be rising when the dollar falls, so we question the current gold price’s ability to hold at this level and direction for long.
With London and Shanghai closed yesterday, control over the gold price lay in New York’s hands. We saw dealers marking down the gold price on little negative news. As you can see above, after New York’s lowering of the gold price, demand in China has not yet responded. With London open today as well, we expect tomorrow will see global gold prices point the way forward.
What could be temporarily softening the gold price is the threat of war in Korea now appears to be abating, for now.
From a Technical viewpoint, the gold price has fallen through support to just above the next level of support.
India & China imports of gold from Switzerland
Many may think the gold price reflects demand and supply of physical gold. It doesn’t. It primarily reflects marginal supply and demand, speculative activity and the assumptions of the main dealers as to where the market is going. The physical demand and supply of gold is mainly directly contracted between physical buyers and sellers, with the contract price, primarily the London pm price setting, but for a growing number of market professionals the Shanghai gold Fix is being used by both parties to the contract. In other words the trading in physical gold, in the case of around 95%+ of such buyers and sellers, does not influence the gold price.
Should the buyers of gold demand more than the suppliers can provide in the physical market, then the extra demand will overwhelm the gold price. This is why it is so important to keep ones finger on the pulse of the physical market. That’s why we keep our eyes firmly on the Shanghai Gold Exchange, the largest physical market in the world. So, when we see the Swiss export monthly figures to, in particular India and China, growing so strongly over time we know there is a point when they will overwhelm supply and then affect the gold price significantly. Last month showed clearly the volumes of physical gold demanded by those two countries.
In March exports from Switzerland, in figures reported by the Swiss Customs Administration, show that India, was easily the top recipient, taking 55.6 tonnes. Hong Kong imported 24.3 tonnes and the Chinese Mainland 24.0 tonnes directly. These latter figures confirm that of total Chinese imports around 40-50% flow directly into the Chinese Mainland through other ports of entry than Hong Kong. (See: March Swiss gold exports show India no.1 again.
India, Hong Kong and China alone accounted for around 74% of Switzerland’s total gold exports, while Asia and the Middle East accounted for just under 88%, emphasizing the continuing flows of gold from West to East.
Total February gold imports totaled over 89 tonnes in February into India. With only 37.2 tonnes being sourced from Switzerland that meant that nearly 60% of Indian gold imports were sourced from countries other than Switzerland during that month which puts an additional new complexion on likely total Indian gold imports for the year. These figures exclude the, not reported, smuggling of gold into the country.
Why through Switzerland? London and New York deal in ounces, whereas Asia deals in the metric measurements of grams and kilos. This is why to ensure one can always deal in gold [without a re-refining process] it is better to buy bars in metric measurements
Yesterday saw no sales or purchases from or into the SPDR gold ETF but a sale of 0.54 of a tonnes from the Gold Trust. Their holdings are now at 853.362 tonnes and at 203.82 tonnes respectively.
Since January 6th 2017 45.772 tonnes have been added to the SPDR gold ETF and the Gold Trust.
Julian D.W. Phillips
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