Gold higher following Shanghai lead

 Gold Today –New York closed at $1,204.40 on the 10th March after closing at $1,201.90 on the 9th March. London opened at $1,209.20 today.

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

-         The $: € was weaker at $1.0713: €1 from $1.0611: €1 Friday.

-         The Dollar index was weaker at 101.04 from 101.82 Friday. 

-         The Yen was stronger at 114.59:$1 from Friday’s 115.40 against the dollar. 

-         The Yuan was stronger at 6.9051: $1, from 6.9160: $1, Friday. 

-         The Pound Sterling was stronger at $1.2232: £1 from Friday’s $1.2166: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    13

     2017    3    10       2017    2    9










$ equivalent 1oz @  $1: 6.9051

      $1: 6.9160

$1: 6.9113







Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East 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.]

At the close in Shanghai today, the gold price was trading at 273.0 Yuan, which directly translates into $1,229.71. But allowing for the difference of gold being traded this equates to a price of $1,224.71. This more than $21.31 higher than the New York close and $16.51 higher than London.

Demand in China has jumped and taken their prices much higher than New York’s close and is pulling London’s prices up too. The weakening dollar against all currencies is the prime cause of the rise in dollar prices, but we believe that London and New York are being increasingly influenced by Shanghai prices as we have said before.

LBMA price setting:  The LBMA gold price was set today at $1,207.80 up from Friday’s $1,196.55.  

The gold price in the euro was set higher at €1,131.43 after Friday’s €1,127.76.

Ahead of the opening of New York the gold price was trading at $1,207.10 and in the euro at €1,130.77 At the same time, the silver price was trading at $17.06. 

Silver Today –Silver closed at $17.04 at New York’s close Friday against $16.97 on the 9th March.

Price Drivers

It seems we were right to see the performance of gold rather like that of an expected oilfield discovery and the price after the strike was announced.

The gold price since the jobs report has steadily recovered in all global gold markets. The dollar has gone weaker against the euro and all other currencies, so this is truly dollar weakness. This is seen as the main reason why the gold price has been adjusted higher today.

Gold investors were sellers on Friday in particular the U.S. based gold ETFs. The sale of over 9 tonnes was, no doubt made by an investor to push prices down. But he/they must be regretting that now. To us, if such a sale cannot drive the price down, then it must have reached a point where it is telling all it wants to rise.

The important event the U.S. is looking at is Wednesday’s Fed meetings to determining the rate hike. A 0.25% is expected, but the market is looking to see if Janet Yellen will indicate a more robust approach to rate hikes going forward. But clearly, the gold price has already discounted a robust statement on the matter.

We believe Asian demand is a factor both from China as you can see above and from India as the cash shortages abate.

Gold ETFs – Friday saw sales of 8.885 tonnes from the SPDR gold ETF and 0.3 of a tonne from the Gold Trust.  Their respective holdings are now at 825.216 tonnes and 196.92 tonnes. 

Total sales from the gold ETFs above were very large and should have hit the gold price hard, but quite the reverse, they had no impact as the gold price recovered. With today seeing gold prices even higher we can only surmise that dealers are expecting to see prices rise as the rate hike this week looks almost certain, but has been fully discounted.  However gold did give up most of its gains once New York opened

Since January 4th 2016, 230.291 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 20.21 tonnes have been added to the SPDR gold ETF and the Gold Trust.

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


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