Gold Today –New York closed at $1,314.60 after the previous close of $1,313.60 yesterday.  London opened at $1,319 again.

• The $: € was weaker at $1.1147: €1 from $1.1187: €1 yesterday.
• The Dollar index was slightly stronger at 95.96 from 95.82 yesterday.
• The Yen was slightly stronger at 101.50: $1 up from 101.76: $1 yesterday against the dollar.
• The Yuan was slightly weaker at 6.6726: $1 from 6.6700: $1 yesterday.
• The Pound Sterling was slightly stronger at $1.2998: £1 from yesterday’s $1.2989: £1.

Yuan Gold Fix

Trade Date	Contract	Benchmark Price AM	Benchmark Price PM
2016  09  21      2016  09  20	SHAU SHAU	283.14 283.31	284.17 283.29
Dollar equivalent @ $1: 6.6726 $1: 6.6700		$1,319.82 $1,321.13	$1,324.62 $1,321.04

Shanghai ignored New York’s close and took the gold price higher by $10, no doubt reflecting the demand local investors demonstrated for physical gold.

Most importantly this is the first time of late, that substantial sales from the gold ETFs have not pulled gold prices down, but have been ignored to the extent that gold prices have risen.

LBMA price setting:  The LBMA gold price setting was at $1,319.60 against yesterday’s $1,315.40.

The gold price in the euro was set at €1,183.55 against yesterday’s €1,175.83.

Ahead of the opening of New York the gold price was trading at $1,324.60 and in the euro at €1,188.41.  At the same time, the silver price was trading again at $19.60.

Silver Today –The silver price rose to $19.23 at New York’s close yesterday up from $19.16, Friday.  

Price Drivers

There were substantial sales from the SPDR gold ETF yesterday, but Shanghai ignored it then London tried to pull prices back, to sit in the middle between New York and Shanghai.

This is only the second time Shanghai has walked its own road very clearly. Before, exchange rate changes could have explained the moves, but not this time. If this pattern is continued pricing power will be shifting to China from New York.

Why did this move occur now? The announcement from the Bank of Japan’s Kuroda basically did nothing for the Japanese economy. The policy moves we saw tell us that the Bank of Japan looks as though it has run out of ‘effective options’ to stimulate the economy there. With rates being held at current levels, we see the Bank of Japan unwilling to be seen furthering the ‘currency war’ by trying to lower its exchange rate. The moves by the BoJ were therefore at best hormone-free. This switches the attention back to the Fed’s FOMC meeting going on now.

In the light of all factors and Japan’s unwillingness to do anything solid, we cannot see the Fed surprising us by raising rates. Or can we? If they do, we do expect to see the dollar go stronger, albeit temporarily.

We are fully aware that the impact on the dollar exchange rates is a focal point for the FOMC. The U.S. cannot afford a strong dollar now. If the FOMC believe a rate hike of 0.25% will not affect the dollar’s exchange rate we may well see it happen. Otherwise, December will be the time when the Fed is more likely to make such a move.

Gold ETFs – There were sales of 3.858 tonnes from the SPDR gold ETF (GLD) but no sales from the Gold Trust yesterday, leaving their respective holdings at 938.753 tonnes and 223.51 tonnes.

Silver – Silver prices ignored the price action in gold yesterday climbing a little higher. Once again we say, ‘these are not the influences of fundamentals but U.S. silver investors expecting news that will send both gold and silver prices higher.’

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance