Julian Phillips’ regular commentary on the gold and silver markets, ETFs and geopolitical matters affecting precious metals prices.
Gold Today –New York closed yesterday at $1,219.70 down $14.30. In Asia the gold price lifted to $1,222.40. London took it up and it was Fixed at $1,225.25 down $10.25 and in the euro, at €1,080.753 down €11.643, while the euro slightly stronger at $1.1337. Ahead of New York’s opening gold was trading in London at $1,224.60 and in the euro at €1,080.47.
Silver Today – The silver price closed at $16.79 down 12 cents. Ahead of New York’s opening it was trading at $16.90.
There were no purchases or sales from or into the SPDR gold ETF or the Gold Trust on Tuesday, once again, despite the slippage in gold prices. The holdings of the SPDR gold ETF are at 773.305 and at 167.75 tonnes in the Gold Trust. Events in the E.U. have the gold world mesmerized. These will not be resolved until the end of the month.
Gold is sitting on support, only just. The support at these levels is very strong right down to $1,180. Support in this area has been tested many times over the last few years and held. Is there anything out there that warrants the gold price going lower?
With the Chinese New Year almost on us [people are already headed home from the big Chinese cities] we do expect demand to moderate there, but we do not think that the seasonal demand is that much greater than the non-seasonal demand. Overall Chinese demand is set to continue to grow over time. Bear in mind that the Chinese banks are also importing gold to use in their financial system too. Chinese demand is already at such a level that it leaves little for the rest of the gold world.
In India, rumors are flying that the import duty on gold will be lowered to 2% from 10% in Modi’s budget on 28th February. This will have an impact of replacing smuggling. As gold will have a value close to the international price [no duty premium] we expect demand to rise from that quarter. That’s if the heavy duty reduction does happen, for India is a place where rumor after rumor goes unfulfilled. As the marriage season remains in full swing there, the main impact of such a cut will be for wholesalers increasing inventory. Until rumor becomes fact, stock levels will be held down until the rumors come true.
As expected, Greece made no headway with E.U. leaders. More and more are now expecting a departure from the euro by Greece. While the deadline is 28th February, we see the time between now and then being the political dressing of the inevitable
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