Julian Phillips’ latest market analysis for gold and silver
New York closed Friday at $1,220.50 up $13.2 as the euro strengthened slightly. In Asia the gold price rose to $1,226.40 with the euro at $1.1851 ahead of London’s opening today at which the gold price tackled $1,230, the next overhead resistance, before retreating to $1,222 just before the Fix. The Fix saw the gold price set at $1,222.00 up $11.75 and in the euro, at €1,035.77 up €10.677 while the euro slightly weaker at $1.1798. Ahead of New York’s opening gold was trading in London at $1,222.30 and in the euro at €1,035.
The silver price closed Friday at $16.46 up 15 cents. Ahead of New York’s opening today it was trading at $16.55.
There were purchases of 2.988 tonnes into the SPDR gold ETF but no change in the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 707.821 and at 162.29 tonnes in the Gold Trust. With sales seen last week as well as purchases, the activity resembles a changing of the tide in U.S views on gold. What we take from this are two important factors, firstly gold is not being pulled down by the euro [if anything it is being lifted because of this] and secondly, the state of the U.S. economy is becoming stronger, which is not pulling gold down either. Gold is reflecting net global demand and not local conditions.
The gold price is reflecting local conditions in all local gold markets but only in China are these sufficient to impact the overall global market. In other words U.S. demand or supply is too small to change the global price by itself, but today is adding to demand elsewhere. Elsewhere, now includes the Eurozone, Russia, the Middle East, India and China as well as the rest of Asia. It is the net total demand that is overcoming the local influence in New York and London over time.
2015 has, so far, shown us that Asian demand remains robust but only accepting market prices offered and lifting them a little at a time. Today it was $5 over New York’s close before London pulled back prices. The Chinese market sees dollar prices and then translates them into Yuan prices. Euro prices are of no concern to them. New York will be aware of the $1,230 level as being the next resistance level. The gold price made its first attempt at breaching this today.
However, what will affect both European and U.S. attitudes to gold will be news from the E.U. on quantitative easing in the E.U. soon.
Meanwhile, the silver price is cautiously rising. If we see prices convincingly over $1,230 we could see silver start to run.