Latest U.S. jobs figure way below expectations. Gold gets sharp boost

Gold Today –New York closed at $1,270.10 yesterday after closing at $1,267.00 yesterday. London opened at $1,262.10 today. 

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

         The $: € was unchanged at $1.1222 after yesterday’s $1.1222: €1.

         The Dollar index was slightly stronger at 97.20 after yesterday’s 97.17

         The Yen was slightly weaker at 111.51 after yesterday’s 111.15:$1. 

         The Yuan was much weaker at 6.8153 after yesterday’s 6.8062: $1. 

         The Pound Sterling was stronger at $1.2875 after yesterday’s $1.2855: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    2

     2017    5    1

     2017    5    31









Trading at 278.70




$ equivalent 1oz at 0.995 fineness

@    $1: 6.8153

       $1: 6.8062

       $1: 6.8180     







Trading at $1,266.92



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 Yuan is correcting lower, but this does not mean anything as the authorities in Shanghai are continuing their quest to attack speculation and bring stability to the Chinese financial markets.

Shanghai is still drifting lower but the falls are only slight.  We note that Shanghai was trading slightly lower than  New York today.

Silver Today –Silver closed at $17.28 yesterday after $17.32 at New York’s close yesterday.

As the gold price trading range tightens to a breakout point, we look at the silver price which is presenting a different Technical picture. If the gold price falls the silver price will tumble according to the charts. But if gold rises the silver price will follow as usual. But such a rise will change the Technical picture quite dramatically to the upside. Either way the silver price will prove more explosive than the gold price.

LBMA price setting:  The LBMA gold price was set today at $1,260.95 from yesterday’s $1,266.15.  The gold price in the euro was set at €1,121.09 after yesterday’s €1,128.58.

Ahead of the opening of New York the gold price was trading at $1,268.45 and in the euro at €1,125.71. At the same time, the silver price was trading at $17.33. 

Price Drivers

Today, it was London that pulled the gold price back at the price setting. Just ahead of New York’s opening the gold price rose quickly -presumably as news of the latest jobs figures began to surface. We now see Shanghai and New York in line with each other. If Shanghai turns higher with a higher Yuan price of gold tomorrow, we would expect to see prices rise. The gold price itself has already moved above resistance, but needs to hold over $1,275 before resistance is out of the way properly. The longer the gold price continues to consolidate the more significant the subsequent moves will be.

President Trump continues to upset the political world in the U.S.A. and across the globe.  But for gold the inability of the U.S. government to get ‘things done’ is disappointing markets. These remain focused on the June rate hike. Warnings that U.S. equity markets are too high are being ignored and U.S. investment in gold remains absent.  

The Fed – The U.S. jobs numbers out today disappointed to the downside, and the previous two months figures were downgraded sharply too.  These brought the U.S. dollar downwards and added to doubts as to whether the Fed will raise rates at this month’s meeting.  As a result, the gold price moved sharply higher – at least in U.S. dollar terms.  Will this be sustained – we will watch the reaction of investors into the U.S. based gold ETFs to get a clearer picture?

We do not see the U.K elections affecting the gold price. The same is true of the Brexit negotiations until some clear steps are made.  Until U.S. investors return to the gold market, via the US-based gold ETFs we believe the main influence on the gold price will be the steady shifting of gold bullion to China and India, via Swiss refineries. But not until London feels the squeeze on liquidity levels will we see Asian demand driving up the gold price.

Gold ETFs – Yesterday, again, saw no sales or purchases of gold to or from the SPDR gold ETF. Once again the internet page of the Gold Trust was a wrong page, so we cannot report on yesterday’s activity in that ETF. Their holdings are now at 847.452 tonnes and we presume, at 202.97 tonnes respectively.

Julian D.W. Phillips | | StockBridge Management Alliance 



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