Gold moves on weaker dollar

Gold Today –New York closed at $1,255.00 Friday after closing at $1,248.90 Thursday. London opened at $1,255.25 today. 

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

         The $: € was much weaker at $1.1240 after Friday’s $1.1120: €1.

         The Dollar index was weaker at 96.94 after Friday’s 97.73

         The Yen was weaker at 111.34 after Friday’s 111.25:$1. 

         The Yuan was stronger at 6.8903after Friday’s 6.8929: $1. 

         The Pound Sterling was stronger at $1.3018 after Friday’s $1.2950: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    22

     2017    5    19

     2017    5    18

SHAU

SHAU

SHAU

279.29

280.67

Trading unavailable

279.28

280.6

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8903

       $1: 6.8929

       $1: 6.8814     

  /

$1,260.27

$1,263.61

/

$1,260.22

$1,263.29

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 trading price was not available today.

Silver Today –Silver closed at $16.84 Friday after $16.61 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set today at $1,255.25 from Friday’s $1,251.85.  The gold price in the euro was set at €1,117.17 after Friday’s €1,120.68.

Ahead of the opening of New York the gold price was trading at $1,256.80 and in the euro at €1,118.65. At the same time, the silver price was trading at $17.02. 

Price Drivers

Today’s gold price is all about a weaker dollar. But the dollar is barely changed against the Chinese Yuan.

The dollar took a hammering over the weekend falling to lows on the index that we have not seen for a long time. If the dollar continues to fall, as we expect, the dollar gold price will look strong. Technically, we see higher gold prices, but are keeping our eyes on overhead resistance to see if we can expect a breakout.

The prospects for the euro have improved considerably as the E.U. economy begins to recover solidly. The talk is that the E.C.B. may well either try to reduce its balance sheet before it raises rate or bring forward the time it is going to start exiting Q.E. another way. This is still rumor and needs to be verified. That’s why you see the gold price steady in the euro and strong in the dollar.

Russia buys for reserves again, but far less last month

The Russian central bank has announced another increase in its gold reserves during April, but this time only of 200,000 ounces (6.2 tonnes) compared with 800,000 ounces (24.9 tonnes) in March.  We cannot be certain of the reason a smaller amount was purchased as they do fluctuate substantially.  Russia is a substantial gold producer of around 20 tonnes a month. Of course when Russian miners are paid in Rubles it does have an inflationary impact, but makes considerably more sense than selling local production for dollars only to buy it back. Hence we see the amount purchased as having nothing to do with the dollar price of gold, simply what the Reserve bank deems appropriate to purchase that month.

Are they opaque, as China is in its reports on gold purchased monthly? We don’t have the information needed to come to that conclusion, but can see the advantage in being so to the Russians.

Gold ETFs – Friday, saw sales of 0.184 of a tonne from the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 850.707 tonnes and at 202.82 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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