Resolution point for gold

 Gold Today –New York closed at $1,219.30 yesterday after closing at $1,219.80 Tuesday. London opened at $1,222.00 again, today. 

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

         The $: € was slightly weaker at $1.0870 after yesterday’s $1.0872: €1.

         The Dollar index was slightly stronger at 99.65 after yesterday’s 99.43

         The Yen was weaker at 114.19 after yesterday’s 113.95:$1. 

         The Yuan was slightly weaker at 6.9056 after yesterday’s 6.9040: $1. 

         The Pound Sterling was weaker at $1.2941 after yesterday’s $1.2969: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    11

     2017    5    10

     2017    5    9










$ equivalent 1oz @    $1: 6.9040

       $1: 6.9064

       $1: 6.9035









The Shanghai Gold Exchange was trading at 274.00 towards the close today. This translates into $1,229.12. New York closed at a $14.82 discount to Shanghai’s close yesterday. London opened at a discount of $7.12 to Shanghai’s close today.

With China continuing to see a slowly falling gold price, New York and London have stopped falling [for now?] seeing prices sitting on support around $1,220. It is clear that gold prices in Shanghai have to stop falling if we are to see gold prices turn around.

We need a clear move in gold prices to see where pricing power lies in the gold world.

LBMA price setting:  The LBMA gold price was set this am at $1,221.00 from yesterday’s $1,222.95.  

The gold price in the euro was set at €1,123.48 after yesterday’s €1,125.02.

Ahead of the opening of New York the gold price was trading at $1,223.65 and in the euro at €1,126.91. At the same time, the silver price was trading at $16.32. 

Silver Today –Silver closed at $16.22 yesterday after $16.15 at New York’s close yesterday.

 Price Drivers

We are seeing the influence of falling gold prices in Shanghai on New York and London, as we commented above, but New York prices are holding on despite no gold ETF demand. This demand has been responsible for U.S. gold prices rising. Until we see the strong move, we expect [either way], we cannot clearly see the way forward. We are at one of those junctures we call a ‘point of resolution’.

When all markets see less and less volatility it does mean that demand and supply have come into balance. Once that happens, it takes a relatively small sale or purchase to trigger a strong move. The situation is also ripe for a classic ‘bear raid’ one would think. But the growing influence of Shanghai and its policies against speculation has recently made such raids unsuccessful. So we sit and wait!

Events like the Comey firing do not move gold prices. What they do do, is to cause us to reflect on the state of President Trump’s administration and its ability to get things done as he promised. Trump’s promises of major tax cuts, combined with promises of infrastructure renewal, have not yet happened. While we expected these promises to take time to implement, the problems President Trump is hitting in his own party, as well as in government, point to enormous difficulty in getting these measures passed by Congress and the Senate, when he does try to get them through. Hence, we have to lower our expectations of “making America Great again”. Overall this is supportive of gold prices.

Gold ETFs – Yesterday once again saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

 Julian D.W. Phillips | | StockBridge Management Alliance 


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