Dollar index breaches 100 and gold slips accordingly

New York was closed yesterday.  In Asia prices were pulled back to $1,068 as the dollar went stronger again, taking the dollar to 100.08 on the dollar index. The LBMA price setting fixed it at $1,064.65 down from 41,072.50 down $7.85 on yesterday’s LBMA price setting. The dollar is at $1.0590 up from $1.0615 against the euro.  In the euro the fixing was €1,005.43 down from yesterday’s €1,008.81.  Ahead of New York’s opening the gold price was trading at $1,073.00 and in the euro at €1,007.13.  

New York was closed for Thanksgiving yesterday. Ahead of New York’s opening the silver price stood at $14.10.

Price Drivers

With the gold price now holding below $1,080, despite attempts to break higher gold is moving lower as the dollar rises in all currencies.

Today sees New York re-open, but London is leading the way as it moves the gold price in line with the dollar index and the euro. Today’s jobs report today may well move the dollar strongly if there is no action by the Treasury to prevent that today. This will, in present market conditions, send the gold price lower.

The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust remain at 655.692 tonnes in the SPDR gold ETF and at 159.52 in the Gold Trust.

It is clear that with the E.C.B.’ implied moves soon to weaken the euro that there is a ‘currency war’ underway. Until now the U.S. has been quiet as it watched both the Yen and the euro weaken heavily against it. The euro has fallen from a peak of $1.40 and the yen from 76 against the dollar to 122.5 against the dollar.  Now the E.C.B. is making further moves to weaken the euro still further. If this has not been agreed with the U.S. then we expect retaliation by the U.S. Treasury even if it simply to weaken the dollar. If it fails to do that the damage to the U.S. recovery will be significant as it loses competitiveness internationally, weakening exports and inciting more imports, both of which will hurt the U.S. economy.

To us it is clear that the Chinese need to weaken the Yuan as it should not have climbed as the dollar has. No doubt if the Yuan weakens there will be howls of ‘currency manipulation’, even though there has been silence about exactly the same in Japan and the Eurozone.      

Julian D.W. Phillips for the Gold & Silver Forecasters - and

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