The New York gold price closed at $1,063.20 up from $1,052.70 a rise $10.50 on Thursday. In Asia prices were pulled back to $1,061.85 as the dollar weakened from 100.19 on the dollar index to 97.88. The dollar is at $1.0938 down from $1.0586 against the euro. The London a.m. price was set at $1,063.00. In the euro the fixing was €975.68 down from Thursday’s €995.17 because of the stronger euro. Ahead of New York’s opening the gold price was trading at $1,061.70 and in the euro at €974.53.
The silver price in New York closed at $14.11 up 8 cents on Thursday’s close. Ahead of New York’s opening the silver price stood at $14.16.
The moves by the E.C.B. underwhelmed the market and the dollar fell back heavily against the euro. It was expected that the euro would fall to $1.03 but instead it has risen to $1.0938. If the gold/euro relationship holds anywhere around here, we should see a further rise in gold towards the critical $1,080 level. This is subject to what the Fed does today. The shorts got a shock and may well have started to close positions, or are waiting for the Fed today before they do. They may precipitate the rally.
We have written about how critical the $: € is to both the E.U. and the U.S. looking to see just how they will ‘manage’ the exchange rate. From what we saw yesterday there appears to be agreement that the $+1.07 level is the point that the two agree is the line in the sand. If this is true the actions of the Fed today will confirm this. If so, this applies to gold and silver too, going forward.
We do expect a rate rise, but it could be less than the expected 0.25%? If so, we have no doubt that the E.C.B. accepted that their actions must not strengthen the dollar or weaken the euro against the dollar. This would add fact to the thought that the dollar’s ‘bull’ market, at least against the euro, is over? Hence today is an important day for the gold and silver prices! Ahead of New York’s opening the markets were virtually frozen waiting for the Fed’s announcement.
After massive sales of 15.776 tonnes of gold from the SPDR gold ETF we saw a tiny sale of 0.226 of a tonne and a sale of 0.9 of a tonne from the Gold Trust, yesterday. The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust remain at 638.797 tonnes in the SPDR gold ETF and at 157.07 in the Gold Trust. These investors remain in a holding pattern waiting for the Fed too.
The silver price remains over $14.00 and should move with gold after the Fed’s announcement today.
Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com