Gold and silver boosted by weak U.S. jobs report

Gold TodayGold closed in New York at $1,243.90 on Friday, and stood at $1,240 in Shanghai on Monday morning, but then moved to $1.243 in London’s Morning.

The $: € moved from $1.1240 to $1.1353 over the weekend.

LBMA price setting:  $1,240.55 up from Friday 31st May’s $1,221.25.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  06

2016  05  31







Dollar equivalent @ $1: 6.5671

$1: 6.5901





Last week’s rise in the gold price was reflected in Shanghai today, clear evidence that the Yuan gold Fixes are following U.S. and London prices, at the moment.

We are watching closely to see if Janet Yellen’s comments today will also be reflected in Shanghai gold prices following the U.S. prices. We continue to see the slight but steady fall in the Yuan against the U.S. dollar but last Friday’s fall of the dollar caught Shanghai by surprise. We do expect the rise that followed the dollar’s fall to fade away again as the Yuan continues to fall.

The gold price in the euro was set at €1,092.714 down from a week last Friday’s €1,086.52.

Ahead of New York’s opening, the gold price was trading at $1,244.55 and in the euro at €1,096.23.  

Silver Today –The silver price closed in New York on a week last Friday at $15.99, up from Thursday’s $16.32 a fall of three cents. The silver price jumped to $16.40 on Friday a level it began at this week.

Ahead of New York’s opening the silver price stood at $16.47.

Price Drivers

We were travelling for the last week, which allowed us to gain a clearer perspective on the gold and silver prices. In the last week these were lackluster though the week until the jobs report came out. That galvanized the market which jumped around 3%. The rise came because of the impact on the $:€ exchange rate which tumbled to today’s level of $1.1353.

Today sees Janet Yellen again comment on the U.S. economy and we expect her to try to calm markets after the poor jobs report on Friday. It is now two months of relatively poor numbers on this front and the perception is that the U.S. economy is cooling. The global economy certainly is, as evidenced by the poor German factory orders index, which fell by 2% last month. The fall covered a wide range of products.

After factoring in a rate rise, markets reacted brutally to the disappointment of not seeing one. The dollar tumbled and gold and silver jumped over 2%. This emphasized that the gold and silver markets, in line with other major markets, are reacting to the moves of the dollar. We were among the first, if not the first to call the end to the dollar bull market. Since we made that call the dollar index has not approached the 100 level and is now likely to weaken still further, particularly against the euro.

Before we went travelling last week we had included a comment by Mr Abe of Japan who came out openly and warned of a potential “Lehman” moment in the global economy, if nations do not do something to stimulate growth. We expect his comment will be taken more seriously as the days roll by. Certainly if we continue to see evidence of a slowing global economy the ratio of debt to GDP will grow, placing most countries in line to see a crisis of one sort or another.  

The jump in gold and silver prices was due to the falling dollar, but we expect physical demand to follow through over time. Over last week this happened, but we do expect to see more rises this week, in the U.S.A.

Gold ETFs – On Friday the 31st May the holdings of the SPDR & gold Trust were at 868.662 and 198.89 tonnes, respectively.  On Friday 3rd June they stood at 881.436, a rise of 12.774 tonnes over the week. In the Gold Trust we saw a fall of 1.99 tonnes, leaving the Trust’s holdings at 196.90 tonnes.

Silver –The silver price has not moved much since Friday’s $16.39 but we expect the silver market to need to digest the Friday’s job numbers too. More reactions should be seen in the week, if Janet Yellen fails to convince the market that all is well in the U.S. economy.

Julian D.W. Phillips | | StockBridge Management Alliance

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