Gold: Ascending top breakout confirmed

Gold Today –New York closed at $1,272.60 yesterday after closing at $1,254.30 Monday. London opened at $1,273.4 today. 

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

-         The $: € was weaker at $1.0621 after yesterday’s $1.0608: €1.

-         The Dollar index was weaker at 100.61 after yesterday’s 100.90

-         The Yen was stronger at 109.70 after yesterday’s 110.66:$1. 

-         The Yuan was stronger at 6.8943 after yesterday’s 6.9012: $1. 

-         The Pound Sterling was stronger at $1.2497 after yesterday’s $1.2416: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    12

     2017    4    11

     2017    4    10    










$ equivalent 1oz @    $1: 6.8943

       $1: 6.9012

       $1: 6.9019








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.]

 The Shanghai Gold Exchange was trading at 284.30 towards the close today.

This translates into $1,277.61. New York is trading at a $5.01 discount to Shanghai and London opened at a $4.21 discount to Shanghai.

With the New York close $9 higher than Shanghai’s opening today Shanghai had to chase gold prices higher. Likewise London had to lift prices strongly at the opening or risk arbitrageurs moving into buy heavily. It may have been either the Chinese ICBC or the global HSBC that took what stock they could off the market before the London opening to even out London’s prices with Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,272.30 from yesterday’s $1,255.70.  

The gold price in the euro was set at €1,199.94 after yesterday’s €1,183.28.

Ahead of the opening of New York the gold price was trading at $1,275.50 and in the euro at €1,203.53. At the same time, the silver price was trading at $18.33. 

Silver Today –Silver closed at $18.28 yesterday after $17.94 at New York’s close Monday.

Price Drivers

We were wrong about more consolidation yesterday. Consolidation is a very difficult process to gauge accurately in terms of timing. It is a process of demand matching supply to the point where a small sale or purchase can make the next move a strong one. We did not realize that this point was reached yesterday, suddenly. After all it has been several weeks since the gold price has been building up sufficient strength to effectively tackle overhead resistance at $1,260, the 200-day average. Yesterday saw it do so, when an ascending top breakout was confirmed technically.

The global political scene was turned combative by Trump’s tweet that North Korea is looking for trouble. After Trump’s punitive strike in Syria, it seems plausible that he is capable of doing the same in North Korea.  Safe haven assets are now in play. These include the Japanese Yen, a haven that will be fought by Japan’s central bank, which we expect will intervene in the exchange rate now. This brings gold center stage alongside the less international silver.

The dollar is weaker, but not so much against the euro to make the upward move a dollar play, as the euro price of gold hits 1,200.  U.S. gold investors came in with a large, but not huge, set of purchases into the U.S. based gold ETFs, but this was sufficient to break through overhead resistance.


Gold imports by India jumped in March from a year earlier as jewelers stocked up anticipating a demand recovery during the wedding season that began this month and the Akshaya Tritiya festival. Shipments advanced 582.5% to 120.8 metric tons last month from a year earlier. Buying should rise heading into Akshaya Tritiya that falls toward the end of April this year. The availability of new banknotes is reaching the level of the old now illegal tender notes to ‘normal levels in May.

Gold refiners continue to work 24/6 to meet Indian and Chinese demand.

Gold ETFs – Monday saw purchases of 1.77 tonnes of a tonne into the SPDR gold ETF (GLD). Yesterday another 3.88 tonnes were taken into GLD.  The Gold Trust (IAU) a purchase of 1.o5 tonnes yesterday. Their holdings are now at 842.41 tonnes and at 201.67 tonnes.

 Julian D.W. Phillips | | StockBridge Management Alliance 


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