Gold holding higher levels. Set for a further rise?

Gold Today –New York closed at $$1,255.30 yesterday and at 1,247.90 on the 24th March, after closing at $1,246.20 on the 23rd March. London opened at $1,253.00 today. 

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

-         The $: € was unchanged at $1.0863: €1 from $1.0798: €1 Friday.

-         The Dollar index was slightly stronger at 99.17 from 99.73 Friday. 

-         The Yen was slightly weaker at 110.29:$1 from Friday’s 111.20 against the dollar. 

-         The Yuan was stronger at 6.8804: $1, from 6.8877: $1, Friday. 

-         The Pound Sterling was stronger at $1.2554: £1 from Friday’s $1.2490: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    28

     2017    3    27       2017    3    24

    2017     3   23













$ equivalent 1oz @    $1: 6.8804

      $1: 6.8758

      $1: 6.8877

 $1: 6.8860









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 standing at Yuan 280.60, which directly translates into $1,268.48. But allowing for the difference in fineness of gold being traded this equates to a price of $1,263.48. This more than $8.18 higher than the New York close and $10.48 higher than London.

Shanghai is steady at higher levels today as the Trump/Republican defeat continues to be digested. As you can see there was a $15 jump in the price yesterday, which we expect to filter through to London and New York this week.  The margins are more than enough for arbitrageurs to profit from, so the process may be quick.

LBMA price setting:  The LBMA gold price was set today at $1,253.65 from Friday’s $1,244.00.  

The gold price in the euro was set at €1,154.01 after Friday’s €1,151.53.

Ahead of the opening of New York the gold price was trading at $1,257.55 and in the euro at €1,157.75. At the same time, the silver price was trading at $18.16. 

Silver Today –Silver closed at $18.10 at New York’s close yesterday against $17.74 on the 24th March.

Price Drivers

With the failure of Trump and the Republicans to pass the repeal of the Obamacare bill Friday makes this week a week of digestion of the fact and reaction to it.

For gold, before London opened on Monday Shanghai had already reacted through the western night. It was at $1,257 when we first looked during Shanghai’s day on Monday and is currently holding that level now.   If it holds above $1,250 it will have broken through overhead resistance, which will become support, which appears to be happening now.

This week see the monthly options expiry which while being a short term influence demonstrates the net long or short position of the paper market. It looks as if we will see higher gold prices from it as the short and longs net out.

The Healthcare Bill is not just about healthcare or about Donald Trump but about the ability of the Republican majority to turn what has been political gridlock for the last two terms into decisive government. Because the bill failed to pass the markets are confirming our view that despite the hype about President Trump’s ‘get things done’ ability, the government remains in political gridlock, with the majority disunited. We expect him to switch to election promises that he believes will pass to he can regain some lost political momentum.

We are seeing a lower dollar and expect lower equities in the days to come [where the rise since his election accounts for 14% of the rise in the Dow] and higher gold.

Gold ETFs – Friday saw purchases 0f 1.776 tonnes into the SPDR gold ETF and purchases yesterday of 2.665 tonnes but no change in the holdings of the Gold Trust.  Their respective holdings are now at 835.285 tonnes and 198.72 tonnes. 

 Julian D.W. Phillips | | StockBridge Management Alliance


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