Silver holding higher levels, gold consolidating!

Gold TodayGold closed in New York at $1,233.70 down from $1,249.50 on Friday. On Monday morning in Asia it traded around that level, then London held it there.

LBMA price setting:  Was set at $1,230.85 down from Friday’s $1,245.40.

Yuan Gold Fix:

Trade Date Contract Benchmark Price AM Benchmark Price PM

2016 04 25              SHAU                        258.42                                              258.80

Dollar equivalent @ $1: 6.4945         $1,237.63                                      $1,239.44

The dollar index is lower today, at 94.80 down from Friday’s 94.92. The dollar is barely changed against the euro at $1.1256 from Friday’s $1.1255.

The gold price in the euro was set at €1,093.51 down from Friday’s €1,105.65.

Ahead of New York’s opening, the gold price was trading at $1,235.83 and in the euro at €1,097.65.  

Silver Today –The silver price closed in New York slightly lower at $17.03 on Friday almost unchanged on Thursday’s close. Ahead of New York’s opening the silver price stood at $17.00.

Price Drivers

The gold price is being pulled back not only by a weaker euro but by the upcoming FOMC meeting and that of the Bank of Japan. We do not expect any rate change from the FOMC but continued talk of how vulnerable the U.S. economy is to the global economy and a strong dollar. We expect that for the remainder of the year the Fed will be keenly watching U.S. data and will react to any strengthening of the Dollar negatively.

The trip by President Obama to Saudi Arabia to bandage wounds caused by the lifting of sanctions against Iran may well not succeed. Certainly, if U.S. citizens see a law enacted that will lead to suing the Saudi government for 911 implications, the agreement to price oil only in the dollar will be at risk.

Should Saudi Arabia accept other currencies, it will deal a blow to dollar hegemony far greater than the rise of the use of the Chinese Yuan in global trade. It does seem that the U.S. has lost its way regarding Middle Eastern politics.

In Japan, we also expect moves that try to lower the exchange rate of the Yen, no matter what Abe says. If we do hear such talk, we expect any Yen weakness to be short-lived. The’ talk’ will likely center around indications of the potential for bigger negative interest rates from Japan.

In both cases such intentions are harmful to the stable functioning of the global economy and will not be accepted easily by outside nations. We do not see such manipulation of exchange rates [currency war] being tolerated by competing nations including the U.S.A. This is gold positive!

Gold ETFs – Friday saw no sales or purchases into or out of the SPDR gold ETF or the Gold Trust. This leaves their holdings at 805.032 and 187.56 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price is continuing to show great strength as it holds around $17.00 while gold is lower. Today, it is has recovered from $16.89 to $17.00 before New York opened.

Julian D.W. Phillips | | StockBridge Management Alliance

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