Gold and silver moving up on weaker dollar

Gold Today –New York closed at $1,196.20 on the 16th January after closing at $1,198.30 on the 13th January. London opened at $1,213.20 today.

Overall the dollar is weaker against global currencies today. Before London’s opening:

-         The $: € was weaker at $1.0650: €1 from $1.0593: €1 yesterday.

-         The Dollar index was weaker at 101.09 from 101.70 yesterday. 

-         The Yen was stronger at 113.44: $1 from yesterday’s 114.11 against the dollar. 

-         The Yuan was stronger at 6.8860: $1, from 6.9082: $1, yesterday. 

-         The Pound Sterling was stronger at $1.2115: £1 from yesterday’s $1.2056: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    17

     2017    1    16

      2017    1    13










$ equivalent 1oz @  $1: 6.8860

      $1: 6.9082

$1: 6.8873







Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 Shanghai gold prices moved higher, with strength, through the $1,210 resistance. It traded today over Yuan 270 reaching 272 at one point. This equates, on today’s exchange rate, to $1,219.57 and $1,228.60.

Chinese investors know the Yuan will continue to fall and are protecting themselves against this. While the People’s Bank of China has been selling dollars to lift the Yuan over the last week, we doubt they will keep doing this after President Trump as of the 20th January takes office. China is preparing for a confrontation with him. We therefore see the Yuan continuing to weaken in 2017 and Chinese demand to remain robust, despite Xi’s plea not to go to a trade war and keep markets free at Davos.

New York closed $15.12 lower than Shanghai on yesterday. London opened at around $7.00 lower than Shanghai was trading today.

LBMA price setting:  The LBMA gold price setting was at $1,217.50 this morning against yesterday’s $1,202.75. 

The gold price in the euro was set higher at €1,138.49 after yesterday’s €1,135.96 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,214.20 and in the euro at €1,133.97.  At the same time, the silver price was trading at $17.00. 

Silver Today –Silver closed at $16.76 at New York’s close yesterday from $16.80 on the 13th January. 

Price Drivers

U.S. physical buying or selling into or from the U.S.-based gold ETFs was absent from the market yesterday due to the Martin Luther King Day holiday. With a weaker dollar, this should have led to higher gold prices, but somehow New York prices did not go higher despite stronger prices in London and Shanghai. New York’s influence over the gold price in such conditions is weak, so we expect New York to see a ‘shunt’ effect and go higher today, simply because of the price differential.

In London the gold prices moved with the euro, rising in dollar terms but steady in the euro. Before New York opened the dollar continued to weaken, but dealers, aware of New York’s close yesterday pulled prices back. This will accelerate the moves higher.

Influences to make it rise further in the developed world will be significant as Prime Minister May made clear her policies on Brexit. Prime Minister Theresa May pledged to pull Britain out of the European Union’s single market while staying inside parts of its customs union, saying the U.K. parliament will get a vote on the final Brexit deal.

Sterling was discounting some of the bad news, but has the capacity to fall further and further in the days to come. This means that gold is rising strongly in st

erling terms and will continue to do so. However, at the time of writing, sterling was strengthening.

The fundamentals for gold are improving strongly as Indians return to the gold market, alongside Chinese demand. The tensions of a Trump Presidency are mounting promising confrontations with China and with the E.U. as his tweets indicate. The relative calm on the international front seems to have already been disrupted by Trump. We wait to see just how many of these comments can be brought to action?

Gold ETFs – As noted above, yesterday, in New York, there no purchases or sales into or from the SPDR gold ETF or the Gold, leaving their respective holdings at 807.96 tonnes and 198.30 tonnes. 

Since January 4th 2016, 205.38 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

Julian D.W. Phillips : | | StockBridge Management Alliance  

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