Gold vaulting upwards as U.S. physical demand continues

Gold TodayGold closed in New York at $1,262.20 up from $1,240.90. In Asia on Friday, it moved higher to $1,266 ahead of London’s opening. In London it moved higher, but at the LBMA price setting it jumped to be set at $1,271.50 up from $1,241.95 yesterday. The dollar index is lower at 97.52.

The dollar is down against the euro at $1.0981 from $1.0879 yesterday. The gold price in the euro was set at €1,157.91 up from €1,141.60.

Ahead of New York’s opening, the gold price was trading at $1,264.00 and in the euro at €1,152.23.  

Silver Today –The silver price closed in New York at $15.22 up 27 cents.  Ahead of New York’s opening the silver price stood at $15.32.

Price Drivers

Global Equity markets continue to rally today. Is this because the future is much brighter or are the falls overdone?  Whatever it is, we can’t see an alteration in the longer term picture when the falls began [leaving dark clouds on the horizon].  When gold and equities move up together we do not read a great deal into it as the relationship between the two is a long term one. We see the weakening dollar having more impact on gold and it is now nearly a cent weaker than yesterday. So the reason that gold rose on the day was the change in direction of the dollar a U.S. factor, which again we forecast.

Gold is now seeing the strong move we forecast.

Gold ETFs An amount of 4.758 tonnes of gold was bought into the SPDR gold ETF and a purchase of 0.63 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 793.332 tonnes and at 190.77 tonnes in the Gold Trust.   The weight of physical gold buying via the States into the London gold market is now heavy. It is even heavier than the tonnage withdrawn from the Shanghai Gold Exchange on a daily basis.  Such weight of buying, points to institutional buying on a persistent basis.

With so much gold having been absorbed into Asia and India supplies are short in the developed world. So if there is a body determined to hold prices down, they are paying a very heavy price in terms of market liquidity, in London, in particular. Now, U.S. investors will have to pay up to get supplies. Asia does not like rapidly rising prices so holds back when they go that way, leaving space for U.S. buyers to move in. U.S. buyers like to buy on a rising market.

Those gold investors calling for gold to be sold are being bitten hard, so today may well see short covering and then taking long positions, but at a price!

Silver – The silver price is well back over $15.00 and is racing to catch gold up as we said it would yesterday.

Julian D.W. Phillips | | StockBridge Management Alliance

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