Gold Today –New York closed at $1,264.30 yesterday after the previous close of $1,267.20 London opened at $1,265.40.

• The $: € was slightly stronger at $1.0877: €1 from $1.0890: €1 yesterday.
• The Dollar index was stronger at 98.75 from 98.61 yesterday.
• The Yen was weaker at 104.42: $1 from yesterday’s 103.89 against the dollar.
• The Yuan was weaker at 6.7792: $1 from 6.7735: $1 yesterday.

 

• The Pound Sterling was barely changed at $1.2226: £1 from yesterday’s $1.2228 £1.

 

Yuan Gold Fix

Trade Date	Contract	Benchmark Price AM 1 gm	Benchmark Price PM 1 gm
2016  10  25      2016  10  24	SHAU SHAU	276.39 275.90	276.93 276.41
Dollar equivalent 1 oz @ $1: 6.7792 $1: 6.7735		$1,268.10 $1,266.92	$1,270.58 $1,269.26

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. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

Demand from China remains strong as we see above, with another higher price level in Shanghai. New York tries to hold back prices but is begrudgingly being pulled higher by Shanghai and in the face of heavy SPDR sales, the day before yesterday.

So is it a strong dollar or a weak Yuan? Certainly the People’s Bank of China is taking advantage of the dollar’s strength to weaken the Yuan, seemingly, without it being accused of currency manipulation. And the weakness continues in line with the government’s plans. Our forecasts that after the adoption of the Yuan, as one of the SDR currencies, the Yuan would depreciate, is proving right. As we forecast in the Gold Forecaster much earlier this year China needs to export huge amount of Yuan for it to be used by other nations in its reserves. The increased availability of the Yuan will also eventually enable its use in settling trade and capital transactions, in place of other currencies. It is from this source that eventually we will see increased currency volatility increasing the importance of gold globally.

LBMA price setting:  The LBMA gold price setting was at $1,269.30 against yesterday’s $1,267.00. The gold price in the euro was set higher at €1,166.85 against yesterday’s €1,163.24.

Ahead of the opening of New York the gold price was trading at $1,270.75 and in the euro at €1,168.83.  At the same time, the silver price was trading at $17.76.

Silver Today –The silver price rose to $17.59 at New York’s close yesterday from $17.54, Monday.  

Price Drivers

What has riveted our attention this morning is the resilience of the gold price in the face of the massive sales from the SPDR gold ETF of 16.611 tonnes. This should have placed enormous downside pressure on the gold price, but the gold price barely blinked!

What does this tell us? It tells us that support at these levels is robust, to say the least.  If the gold price can hold these levels then it will take only a small amount of buying to kick it higher. We suspect that the sales were in support of short positions if not short positions themselves. These will have to be covered when such buying starts and quickly.

It also confirms that Asian investment demand is reaching the physical market strongly now.

As to the dollar’s current strength we doubt it will hit above 100 on the dollar index. Hence we see the dollar topping soon, despite efforts from Japan or the E.U. to weaken their currencies. Monetary policy via easing seems to have expended its momentum, so we expect the drive to be taken out of the ‘currency wars’, with the exception of the Yuan. Nevertheless, we do expect sporadic pockets of volatility in currency markets in 2017.

Repeat: – This will provide an excellent climate for rising gold and silver prices throughout 2017. Gold ETFs – There were no changes in the holdings of the SPDR gold ETF and the Gold Trust yesterday, leaving their respective holdings at 953.564 tonnes and 228.16 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs have risen by 380.745 tonnes.

Silver – Silver prices are expected to continue rising with gold.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance