Shanghai Fix Sets Gold On Upwards Trend

Gold Today –Gold closed in New York at $1,340.60 on Tuesday after Monday’s close at $1,335.30.  London opened at $1,352.

  • The $: € was down at $1.1146 from $1.1092.
  • The dollar index fell to 95.82 from 96.35 Tuesday.
  • The Yen was stronger at 101.43 from Tuesday’s 102.32 against the dollar.
  • The Yuan was stronger at 6.64 from 6.6614 Tuesday.
  • The Pound Sterling was stronger at $1.3050 up from Tuesday’s $1.2990.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  10

2016  08  9







Dollar equivalent @ $1: 6.6400

$1: 6.6615





Shanghai has taken the lead in pricing gold today. We have not seen such a jump since the Fixing in Shanghai began.

The jump of $15 from New York’s close was large. London came in at the open at $1,352, but there is always a reason when prices jump like this. Demand in Shanghai, the world’s largest gold market, clearly jumped. With 8.3 million individual gold investors and 10,000 institutional investors dealing on this market, supply must be tight in this physical market. We watch with interest to see if this demand feeds into London and New York.

One caveat is the Yuan which strengthened overnight. The Chinese gold investor is fully aware that the Yuan will weaken over time. Gold, as one of the few investment mediums for investors there is certain to attract more and more attention as this story unfolds. We have been warned and explicitly so that the government of China favors its citizens investing in gold long term. Any news that implies Chinese investment in gold is weakening long term, has to be adjusted against this background. [More in our newsletters – subscribe below].

It is a day when the dollar is weaker, but these days with gold often moving alongside the dollar and not the euro, we no longer read too much into the currency moves on a daily basis.

LBMA price setting:  $1,351.85 after Tuesday 9th August’s $1,332.90.

The gold price in the euro was set at €1,209.98 up €6.90 from Tuesday’s €1,202.11.

Ahead of the opening in New York the gold price stood at $1,353.25 and in the euro at €1,209.99.

Silver Today –The silver price closed in New York at $19.85 on Tuesday up from $19.70 on Monday.  Ahead of New York’s opening the price was trading at $20.37.

Price Drivers

With gold sales from U.S. gold ETF investors being small in the last day one would have thought the gold price would have dropped, but it has jumped in China. As we said above, will this physical demand in Shanghai feed through to the west? If it does, we need to ask if it is a pressure point on supply that will allow Shanghai to take hold of pricing power.

Such days may not be continuous in the future, but occur once in a while, until physical demand in Asia is overwhelming global supply. In such a market COMEX will have to bend to the physical markets.

Gold ETFs – In New York on Monday there were sales of 1.187 tonnes sold from the SPDR gold ETF but purchases into the Gold Trust of 0.84 of a tonne. This left their respective holdings at 972.618 tonnes and 221.24 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 396.243 tonnes.

Silver –Silver prices jumped over 5% compared to gold’s less than 1 % rise overnight. This well describes the potential for silver, should gold continue to ri

Julian D.W. Phillips | | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

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