Julian Phillips’ daily roundup on what is driving the gold and silver markets
New York closed at $1,181.70 down $4.50. Today sees the dollar almost unchanged at $1.1263 with the dollar index almost unchanged at 94.90 down from 94.97. The LBMA Gold Price was set at $1,178.50 down $3.60 with the equivalent euro price at €1,045.60 down €4.64. Ahead of New York’s opening, gold was trading in London at $1,179.50 and in the euro at €1,045.84.
The silver price fell to $16.02 down 9 cents in New York. Ahead of New York’s opening it was trading at $15.98.
The FOMC meeting has been today’s focus of attention that markets will react to despite the fact that they will not raise interest rates today. It seems the constant question remains, “When will the Fed raise interest rates?” The market discussion is now, “Will it be September or next year?” The most recent data was not as encouraging as hoped, so much later this year or early next year seems to be the general opinion now.
Will this affect gold? It shouldn’t, but speculators hate markets that don’t move, so they may try to push the price down. London and New York are only seeing thin markets a situation that is likely to persist until the end of next week, when the Greek Tragedy sees its last Act and last scene of that Act.
Asian demand is robust in China and in India, despite the heavy 10% duty on gold imports in India.
India is essentially on the sidelines of the market until September, after selling the harvest in late August / September. Then not only will Indian demand come to life as their festival season begins, but developed world demand joins the fray with its focus on the year end festivities.
But, lest we paint the gold market as a purely seasonal market, monetary matters as well as dramatic economic matters can come in to change the picture rapidly. After all, gold’s peak price around $1,921 happened in these ‘Doldrums’.
We now return to that addition of the Bank of China to the number of banks that set the LBMA gold price daily. While the Bank of China emphasized the likelihood that its addition to this group would reinforce the connection between the Chinese domestic market and overseas markets, making the international gold price better reflect the supply and demand in China, we must ask how could this happen? The essence of their ability to do this is to be able to draw off physical amounts of gold from the trading side of the London Bullion market, at the LBMA price setting times. This price setting session, twice a day, is where the bulk of London’s physical gold trading takes place and cuts out the middlemen [foreign banks] for China and gives access to the heart of the gold market.
There were no sales or purchases of gold from or into the SPDR gold ETF or the Gold Trust on Tuesday. The holdings of the SPDR gold ETF are at 701.897 tonnes and at 167.01 tonnes in the Gold Trust.
Silver and gold have a strong undertone.