Gold Today –New York was closed on Monday but closed at $1,325.60 on Friday after Thursday’s close at $1,313.30.  London opened at $1,330.

• The $: € was almost unchanged at $1.1167 down from $1.1165 yesterday.
• The dollar index was slightly weaker at 95.59 from 95.65 yesterday.
• The Yen was almost unchanged at 103.26 from yesterday’s 103.28 against the dollar.
• The Yuan was slightly stronger at 6.6800 from 6.6770 yesterday.

 

• The Pound Sterling was stronger at $1.3338 from yesterday’s $1.3328.

 

Yuan Gold Fix

Trade Date	Contract	Benchmark Price AM	Benchmark Price PM
2016  09  6 2016  09 5	SHAU SHAU	285.59 284.84	285.73 285.24
Dollar equivalent @ $1: 6.6800 $1: 6.6770		$1,329.77 $1,326.87	$1,330.42 $1,328.73

After a lackluster day in London, when the gold price sat around $1,326 all day, Shanghai took the gold price higher to $1,330 and London held it there at the open. Will New York follow suit?

The Yuan was slightly weaker against the dollar once more. The pound continued to strengthen as you can see.

LBMA price setting:  The LBMA gold price setting this morning was at $1,330.05. Yesterday it was at set at $1,328.30.

The gold price in the euro was set on Tuesday at €1,191.05 up strongly on yesterday’s €1,189.91.

Silver Today –The silver price held its level while New York was closed at $19.36, after $19.39 yesterday.  

Price Drivers

With New York closed we saw London do nothing and then follow Shanghai this morning. With London being the center of physical demand and supply one would have expected London to lead the way, but is followed both New York and Shanghai. But we do need to see strong moves to see clearly which market holds pricing power. At the moment it is New York and has been for a long time. Gold itself wanted to drift higher, which should set the tone for New York today.

Another underwhelming G-20 meeting was held in Shanghai where only the nicest things were said about China’s hosting the event and the inclusion of the Yuan in the currencies that make up the SDR of the IMF.  Essentially, it is recognition of the present and growing use of the Yuan in the world monetary system. Having set that milestone in place we expect to see a steady erosion of the use of the dollar in global trade at the expense of the dollar over time.

We see the role of gold growing in this structural change largely being used to ‘smooth out’ the transition’.

In our next issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

Over in China, we note there is a number that is not issued and could well have a big impact on the volumes imported into China. While Chinese officials point to the withdrawals from the Shanghai Gold Exchange as a measure of imports into China, the size of gold holdings in the SGE are not published. It is possible that these could be growing solidly, increasing the levels of imports. While the People’s Bank of China uses SAFE and others to hold gold for them before these are included in “Official reserves” we note that the PBoC controls the SGE and may well also hold gold through the SGE? Usually “Official Gold Reserves” are imported separately and not included in SGE numbers but there is no reason why they should not be, in reality, part of these.

Gold ETFs – As New York was closed yesterday there were no sales or purchases into or from the SPDR gold ETF or from or to the Gold Trust, leaving their respective holdings at 937.89 tonnes and 225.39 tonnes.

Silver – The silver price is keen to follow gold but needs to see action in New York after the holiday yesterday before we see any big moves.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance