Gold’s move east unstoppable

Gold Today –New York closed at $1,256.90 yesterday after closing at $1,257.20 Tuesday. London opened at $1,254.00 today. 

Overall the dollar was slightly weaker against global currencies early today. Before London’s opening:

         The $: € was weaker at $1.0912 after yesterday’s $1.0908: €1.

         The Dollar index was weaker at 99.08 after yesterday’s 99.13

         The Yen was barely changed at 112.16 after yesterday’s 112.14:$1. 

         The Yuan was stronger at 6.8921 after Friday’s 6.8969: $1. 

         The Pound Sterling was stronger at $1.2923 after Friday’s $1.2875: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    3

     2017    4    2

     2017    4    28










$ equivalent 1oz @    $1: 6.8921

       $1: 6.8969

       $1: 6.8944








Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East 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.]

 The Shanghai Gold Exchange was trading at 280.70 towards the close today. This translates into $1,261.78. New York closed at a $4.88 discount to Shanghai’s close yesterday. London opened at a discount of $7.78 to Shanghai’s close today.

LBMA price setting:  The LBMA gold price was set today at $1,253.95 from yesterday’s $1,255.80.  

The gold price in the euro was set at €1,148.88 after yesterday’s €1,151.27.

Ahead of the opening of New York the gold price was trading at $1,254.20 and in the euro at €1,149.06. At the same time, the silver price was trading at $16.81. 

Silver Today –Silver closed at $16.83 yesterday after $16.89 at New York’s close Monday. Should the gold price return to an upward path, we see silver racing higher than gold’s rise.

 Price Drivers

The gold price remains in a vulnerable position, capable once more, of making a strong move either way. A glance at the fundamental factors shows a rise in the dollar gold price remains more likely than a fall. What’s more, we note that despite this vulnerability all we have seen by way of opportunist, speculative attacks have been dealers marking down prices in expectation of sales. The lack of bear raids from New York, tells its own tale about the state of the gold market, particularly the physical gold market. Should they continue to be absent, it would be a piece of solid evidence that the influence of COMEX over the gold price is waning.

The unstoppable shift of gold bullion to the east.

As we pointed out in the piece on Swiss gold exports demand from Asia remains very strong indeed. The refineries in Switzerland have been working 24 hours a day and 6 days a week to convert gold into metric measurement bars. This has gone on for many years now and is set to continue for the foreseeable future. It is quite remarkable that the developed gold world is quiet on the subject because it is only a matter of time before the western gold markets becomes secondary markets to Shanghai. That is why one should always deal in gold [without a re-refining process] in metric measurements

The Fed

We expect no actions from the Fed today, but as usual, any slight change in the language of the statement will affect financial markets across the globe. The recent weak data in the U.S. is expected to be temporary but we would look to the Fed’s statement for such assurances. If it is a concern to the Fed, we expect the gold price to benefit.

The Fed must be frustrated by the delay in the implementation of President Trump’s election promises, to which their policy should be riveted. They cannot afford to be out of step with government, which now seems unable to deliver on its promises, so remain directionless until the way forward for government is clarified.

Gold ETFs – Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust. Their holdings are now at 853.362 tonnes and at 203.82 tonnes respectively.

Julian D.W. Phillips | | StockBridge Management Alliance 


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