Volatile times ahead for gold and currencies

On Wednesday New York closed at $1,088.10 down $9.10. The dollar was unchanged at $1.0964, with the dollar Index almost the same at 97.36. This morning the LBMA gold price was set at $1,080.05 down $5.60. The euro equivalent was €985.09 down €4.34 on yesterday. Ahead of New York’s opening, gold was trading in London at $1,081.00 and in the euro at €986.31.

The silver price closed at $14.74 down 8 cents in New York. Ahead of New York’s opening it was trading at $14.57.

There were no sales again from the SPDR gold ETF but sales of o.63 of a tonne from the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 680.154 tonnes and 162.92 tonnes in the Gold Trust. We note that the ‘bear raid’ has not continued, but today being a Friday may see another attempt at dumping gold in China on their Monday?

There is no news to send the gold price to lower levels or to send it higher for that matter, so dealers are taking the gold price the way of least resistance. It is a Friday the day when most moves are seen in the gold price and traders cut their positions so as not to have three days of risk. Currencies are stable, but equity and bonds favor the downside too. But with the Technical picture not looking good, it is understandable the traders favor the downside (Although there has been something of a bounce back towards $1100 in today’s trading so far.  Ed.).

In discussing the gold price with those of other countries, we asked them the gold price and they quoted a dollar price. We then asked them what did the gold price do in your currency and they were amazed as to how much it had climbed. And that’s as much the point as anything else. Gold and the dollar have risen against other currencies over the last two years after the major fall in the dollar in 2013. But looking ahead we see the Technical picture does point to a dollar ‘bull’ market [we have already seen it rise from $1.40 to $1.107] and some may feel the dollar will rise a lot more against all currencies. But then one looks at the ‘interests’ of the U.S.A. and they are not in line with a dollar going much stronger. Are these interests powerful enough to halt the dollar’s climb? We think so.

What’s more, with the Chinese Yuan set to come onto the monetary scene in full force by the end of 2015 [with the likelihood that some time after its arrival it is headed lower] the U.S. will be most unhappy to see the dollar much stronger. This implies a volatile fourth quarter for currencies and for gold and silver!

Julian D.W. Phillips for the Gold & Silver Forecasters - www.goldforecaster.com and www.silverforecaster.com

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