GLD purchase halts gold price slide

New York closed Wednesday with the gold price at $1,116.00 down $11.40 from $1,127.40. With China closed for the next week the gold price held at New York’s close overnight. The dollar was a little stronger at €1.1175 this morning in London and the dollar index a little higher at 96.27. In London’s morning the LBMA gold price was set at $1,114.20 down from $1,122.50. In the euro this was €998.48 down from €1,001.16.  Ahead of New York’s opening gold was trading at $1,113.10 and in the euro at €997.58.  

The silver price closed at $14.54 down 10 cents over Wednesday in New York. Ahead of New York’s opening, silver was trading at $14.52.

Price Drivers

With China closed for the next week, the market price of gold could easily be distorted by traders in New York. However, the gold ETF SPDR in the U.S. saw a healthy purchase of 3.276 tonnes and a purchase of 0.36 of a tonne into the Gold Trust yesterday, but this was insufficient to lift the gold price, but certainly halted its fall.  This leaves the holdings of the SPDR gold ETF at 687.417 tonnes and 160.65 tonnes in the Gold Trust. The trading range of the gold price is at the bottom end of support at $1,114. We may see a strong move shortly, either way.

The IMF and the World Trade Organization has issued another warning on the global economic front. They see global economic growth falling from current levels. This may well place additional pressures on emerging nation’s exchange rates and interest rates in addition to the pressures already on large corporates across the world. It is only a matter of time before banks pull the plug on some of these. So be ready for more bouts of global, financial market volatility.

We pointed to the possibility of a series of financial markets falls yesterday, similar to 2008. Then the gold price fell from $1,200 to below $1,000, before turning around and soaring to a record $1,921. At that time the U.S. was very long of gold, which was sold off to cover margin calls and provide liquidity to cover shortages. Some believe that we will see the same again soon. The difference between then and now is that the U.S. holdings of gold were not rebuilt after the massive sell-off in April 2013. Since then on balance their holdings have fallen lower. The implication is that gold should not have a very heavy sell-off as we saw in 2008, despite U.S. investors search for sources of easily liquidatable holdings. The subsequent turning to gold may happen much quicker. Before that, we should see markets very volatile.

Silver is back in sync with the gold price and should continue to stay so today.

Julian D.W. Phillips for the Gold & Silver Forecasters – and


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