Gold and silver market morning: Entering best time of year for gold demand

New York closed at $1,141.50 on Friday down from $1,145.80 on Thursday. It held that level in Asia before London opened. The LBMA price setting fixed it at $1,135.80 down from $1,147.75 on Friday. The dollar Index has risen and now stands at 96.80 down from 97.11 on Friday. The dollar was weakening this morning as London opened, trading against the euro at $1.1025 down from $1.0993.  In the euro the fixing was €1,030.20 down from €1,041.75.  At New York’s opening gold was trading in the euro at €1,032.87 and at $1,137.60.  

The silver price closed at $15.52 down 8 cents on Friday. At New York’s opening, silver was trading at $15.42.

Price Drivers

Friday saw sales from the SPDR gold ETF of 2.084 tonnes and of 0.66 of a tonne from the Gold Trust leaving their holdings at 692.60 tonnes and at 161.33 in the Gold Trust. In quiet trade this may have accelerated the fall of the gold price in both the dollar and the euro.

After rising to €1,050, the gold price has pulled back to €1,030, but still well above the below-€1,000 seen a month ago. Nevertheless, Friday continued to see support damaged with gold falling through that level. The Technicals are now in no-man’s land, below $1,060 and yet above $1,130. The downside risk appears limited unless gold falls through $1,130.

We have now entered the best time for gold demand in the last two months of 2015 and the first three months of 2016.

But the huge changes now expected come out of China with an announcement expected this month on China’s Yuan becoming one of the currencies that make up the Special Drawing Right of the I.M.F. While this may not be implemented until late 2016 it would be a major step forward for the Renminbi. Likely soon thereafter, we expect an announcement on the establishment of a Shanghai Gold Fix in the Yuan. This unleashes a structural change in the monetary system and the gold markets. We may not see an immediate change in these markets, but overtime will see just how important they are.

Silver prices are reflecting $ gold price moves despite the different market structure, as always. It demonstrates well the disjoint from fundamental conditions in that market.

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

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