Big gold sale out of GLD as technical picture worsens


Gold TodayGold closed in New York at $1,308.30 on Wednesday after Tuesday’s close at $1,310.90.  London opened at $1,305.

    • The $: € was almost the same at $1.1134 from $1.1136 yesterday.
    • The dollar index was stronger at 96.18 from 96.11 yesterday.
    • The Yen was weaker at 103.55 from yesterday’s 103.24 against the dollar.
    • The Yuan was slightly weaker at 6.6801 from 6.6787 yesterday.


  • The Pound Sterling was stronger at $1.3140 from yesterday’s $1.3102.


Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  1

2016  08  31







Dollar equivalent @ $1: 6.6801

$1: 6.6800





Shanghai, once again, was stronger than New York yesterday, by $6, then London this morning opened $6 lower. Some may simply call this the premium on Chinese prices. But we have seen in these pages this figure change both higher and lower reflecting the pricing on the Shanghai Gold Exchange. It is certainly not a delay in supplying the gold market with physical stock, implying that China is short of stock, therefore prices gold higher.

We would attribute the price differentials to the inefficiencies of the arbitrage trade. Once the Chinese permit the export of gold [if they ever do] then this trade will be efficient.

We also see that while demand in China for gold, may be down on last year, it remains very strong relative to other markets.

We do expect the pattern of control by the People’s Bank of China to change after October 1st when the yuan becomes a part of the SDR

LBMA price setting:  The LBMA gold price setting on Thursday was at $1,305.70. On Wednesday it was at set at $1,314.45.

The gold price in the euro was set on Thursday at €1,171.45 down on Wednesday’s 1,180.04.

Ahead of the opening in New York the gold price was trading at $1,306.55 and in the euro at €1,171.80.  The silver price is trading at $18.66 ahead of New York’s opening.  It did pick up a few dollars mid-morning, though, on poor U.S. manufacturing data.

Silver Today –The silver price closed in New York at $18.65 Wednesday down from $18.61 Tuesday.  

Price Drivers

The Technical picture worsened in the last day as gold dropped closer to $1,300. Nevertheless, we are very aware that buyers are lined up ready for any incursion below $1,300. The dollar’s strength remains the focus of attention as the financial world attempts to pre-empt the Fed and expect a rate hike in September [well ahead of elections] and again possibly in December [after the elections] or later.

It seems that certainly the media, if not the financial world, expects the gold price to fall on a rate hike. However, a rate hike this time, is likely to follow rising inflation, leaving real interest rates negative. In the past this has actually caused gold prices to rise.

Yesterday saw the first gold ETF change we have seen for quite a few days now. This change was a very large sale that appeared to be caused by the change in the Technical picture. We expect the gold and silver market to become very sensitive in the next few days as a battle around $1,300 approaches.

Gold ETFs – In New York yesterday there was a massive sale of 12.169 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust. This left their respective holdings at 943.232 tonnes and 225.44 tonnes.

Silver – The silver price was moving sideways at $18.67 at London’s opening, despite gold’s fall to a poor Technical picture. Mind you, silver has already fallen 20%+ and gold has only fallen around 5% in the last few weeks.

Julian D.W. Phillips | | StockBridge Management Alliance

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