SGE still trying to push gold higher as yuan drifts lower

Gold TodayNew York closed at $1,251.40 on Friday after the previous close of $1,258.10.  London opened at $1,255.00.

    • The $: € was stronger at $1.0097: €1 from $1.1016: €1 Friday.
    • The Dollar index was stronger at 97.94 from 97.86 Friday.
    • The Yen was stronger at 104.10: $1 from 104.26: $1 Friday against the dollar.
    • The Yuan was weaker at 6.7388: $1 from 6.7246: $1 Friday.


  • The Pound Sterling was weaker at $1.2179: £1 from Friday’s $1.2210: £1.


Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
     2016  10  17

     2016  10  14







Dollar equivalent

1 oz @ $1: 6.7388

$1: 6.7246





Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat eastward metric measurements are used against 0.9999 quality gold.

Shanghai is holding the gold price higher than both London and New York. After New York’s close on Friday Shanghai lifted it $8.5 as the Yuan weakened. It remains in a very narrow trading band around $1,260. This morning London pulled it back in the morning to $1,252 before turning it higher. We continue on the brink of a strong move either way.

LBMA price setting:  The LBMA gold price setting was at $1,252.70 against Friday’s $1,256.15. The gold price in the euro was set higher at €1,139.85 against Friday’s €1,144.04.

Ahead of the opening of New York the gold price was trading at $1,254.30 and in the euro at €1,140.69.  At the same time, the silver price was trading again at $17.47.

Silver Today –The silver price fell to $17.45 at New York’s close Friday from $17.54, Thursday.  

Price Drivers

In India, gold prices have moved to a premium from the discount they have been standing at for most of this year. This tells us that smuggler’s stocks have been absorbed and stock levels in the wholesaler’s hands have fallen, allowing this premium on the price. Demand is now strong and likely to stay that way until prices are much higher.

Chinese demand as you can see above remains strong as it sits at higher levels than seen in London.

The current gold prices are low when set against the background of the earlier part of the year. The question is, “Will they rise now?” We are in the gold season and have been since September. September gold prices were a disappointment and despite some solid demand for gold by gold ETFs prices have been pushed lower in the U.S. But London continues to let New York prices rule, despite a 37% rise in Pound gold prices and the fact it is the developed world’s physical gold hub. Shanghai is walking its own road at higher prices than London, but not by that much and despite it being the globe’s physical gold hub and despite one of its leading gold banks being a market maker in London and again despite the Yuan steadily falling against the dollar. Meanwhile gold continues to hover in a very narrow trading range in the dollar.

Gold ETFs – There were purchases of 3.856 tonnes into the SPDR gold ETF and purchases of 0.33 of a tonne into the Gold Trust, leaving their respective holdings at 965.428 tonnes and 227.56 tonnes.  This was a large set of purchases which prevented any further falls in the gold price on Friday. Again, U.S. investment demand remains positive and is serving to stabilize prices at current levels.

Since January 4th this year, the holdings of these two gold ETFs have risen by 392.009 tonnes.

Silver – Silver prices continue to mark time alongside gold waiting for the breakout one way or the other.

Julian D.W. Phillips | | StockBridge Management Alliance 


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