Muted effect on gold from Macron victory in France


Gold Today –New York closed at $1,229.30 Friday after closing at $1,239.50 Thursday. London opened at $1,230.00 today. 

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

-         The $: € was weaker at $1.0973 after Friday’s $1.0964: €1.

-         The Dollar index was weaker at 98.73 after Friday’s 98.83

-         The Yen was weaker at 112.68 after Friday’s 112.23:$1. 

-         The Yuan was weaker at 6.9035 after Friday’s 6.8994: $1. 

-         The Pound Sterling was stronger at $1.2975 after Friday’s $1.2935: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    8

     2017    5    5

     2017    5    4










$ equivalent 1oz @    $1: 6.9035

       $1: 6.8994

       $1: 6.8949








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 275.6 towards the close today. This translates into $1,236.71. New York closed at a $7.41 discount to Shanghai’s close yesterday. London opened at a discount of $6.71 to Shanghai’s close today.

Arbitrageur margins are tight at around $7 so, we see the global gold market prices very close, as they all move down roughly in line with each other.

LBMA price setting:  The LBMA gold price was set today at $1,229.70 from Friday’s $1,239.40.  

The gold price in the euro was set at €1,124.45 after Friday’s €1,130.99.

Ahead of the opening of New York the gold price was trading at $1,230.30 and in the euro at €1,124.07. At the same time, the silver price was trading at $16.33. 

Silver Today –Silver closed at $16.38 Friday after $16.47 at New York’s close Thursday.

 Price Drivers

The Macron victory implies that the E.U. will hold together in the future and that the euro will not collapse. While Italy remains uncertain on the subject, it is not enough to curb the optimism that pervades markets this morning.

What is uncertain is the ability of the French President, without a political party behind him, to govern effectively. Will he try to rule by government decree? We will have to wait until mid-June and the Parliamentary elections to see if he can establish a majority and govern, or if he will simply become a figurehead.

The gold price had discounted this result so there are no major moves taking place in Europe. The dollar continues to weaken which should mean higher gold prices, but, of late, the gold price has been slipping with the dollar. Will the $1,230 level hold or will we see more slippage to around $1,220 where strong support sits.

What we did see early in the day was an attempt to drive the gold price down by the selling of $300 million of gold futures early in Europe’s day. It failed to break the gold price down which was then seen as recovering to the mid-$1,230 area.

London Vault Holdings to be published soon.

The LBMA and the LPMCL announced that from summer 2017 the LBMA will be publishing the gold and silver physical precious metals holdings of the London vaults, with the platinum and palladium holdings to be published at a later date.

The data only includes physical metal held within the London environs and does not include precious metals physical holdings readily available at short notice in other secure overseas vaulting facilities.

Gold ETFs – Friday saw no change in the SPDR gold ETF but the Gold Trust saw sales of 1.34 tonnes. Their holdings are now at 853.075 tonnes and at 201.69 tonnes respectively.

 Julian D.W. Phillips | | StockBridge Management Alliance 


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