Technical picture positive for gold 

Gold Today –New York closed at $1,227.90 Friday after closing at $1,219.30 Thursday. London opened at $1,231.00 today. 

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

         The $: € was weaker at $1.0979 after Friday’s $1.0864: €1.

         The Dollar index was weaker at 98.82 after Friday’s 99.64

         The Yen was stronger at 113.32 after Friday’s 113.75:$1. 

         The Yuan was stronger at 6.8919 after Friday’s 6.9047: $1. 

         The Pound Sterling was stronger at $1.2919 after Friday’s $1.2875: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    12

     2017    5    11

     2017    5    10










$ equivalent 1oz @    $1: 6.8919

       $1: 6.9047

       $1: 6.9040     







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 276.90 towards the close today. This translates into $1,244.66. New York closed at a $16.76 discount to Shanghai’s close Friday. London opened at a discount of $13.66 to Shanghai’s close today.

Shanghai continues to rise, pulling London higher and now New York higher. Pricing power is with Shanghai today.

On today’s moves, we would say Shanghai is dominating pricing power at the moment.

LBMA price setting:  The LBMA gold price was set today at $1,231.50 from Friday’s $1,227.90.  

The gold price in the euro was set at €1,122.20 after Friday’s €1,129.21.

Ahead of the opening of New York the gold price was trading at $1,235.50 and in the euro at €1,125.48. At the same time, the silver price was trading at $16.77. 

Silver Today –Silver closed at $16.44 Friday after $16.32 at New York’s close Thursday.

Price Drivers

The Technical picture is positive today so the gold price should rise steadily today, barring new news that halts its rise. But the main influence on today’s prices comes from Shanghai. While the discount of New York and London have been widening of late it is the lifting of today’s prices in Shanghai has caused prices in London and New York to suddenly rise. We expect the upward pressure from Asia to continue as the dollar weakness drops prices in India.

Sometimes it is difficult for gold investors to appreciate that the day’s news items are not responsible for gold price moves. Gold prices in different currencies are also not well understood. For instance, in India gold prices have been dropping because of the strong Rupee, which is in a country where it is low prices that incite gold buying. So while demand for gold has been strong there, only because prices are now historically low and the prospect of a new tax imposition from government is accelerating buying, the rise in the value of the Rupee has given Indian buyers this current opportunity. The average Indian investor would never be prompted by some Trump pronouncement to go into the gold market.  They would  only on gold prices that have stopped falling.

In China the GDP growth of 6.9% is a sure indication that individual and institutional wealth continues to grow expanding Chinese middle classes and their capacity to buy gold there. Demand for gold remains robust there.

So, on a day like today, when there is no specific gold related news, prices can rise in all currencies due to growing wealth in Asia alongside a weakening dollar. This trend should continue.

What is a major threat that would be positive for gold is North Korea and its psychopathic President intent on producing a clear and present danger to the U.S., no matter what risk this brings to North Korea’s world. The threat of sanctions and sanctions themselves may affect the people of North Korea but not the palace. It seems to us that that country’s President will not stop until stopped. But as yet we do not believe this has impacted global demand.

Gold ETFs – Friday 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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