Gold waiting for the Fed tomorrow

 Gold Today –New York closed at $1,268.90 yesterday after closing at $1,266.00 Friday. London opened at $1,262 today. 

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

         The $: € was slightly stronger at $1.1212 after yesterday’s $1.1220: €1.

         The Dollar index was slightly weaker at 97.04 after yesterday’s 97.13

         The Yen was slightly weaker at 110.16 after yesterday’s 109.94:$1. 

         The Yuan was slightly stronger at 6.7979 after yesterday’s 6.7985: $1. 

         The Pound Sterling was slightly weaker at $1.2700 after yesterday’s $1.2704: £1.

Yuan Gold Fix

Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    13

     2017    6    12

     2017    6    9









Trading at 278.60




$ equivalent 1oz at 0.995 fineness

@    $1: 6.7979

       $1: 6.7985

       $1: 6.7988     







Trading at $1,269.72



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.]

 New York closed lower than Shanghai yesterday and London opened lower than Shanghai as the gold price continues to consolidate slightly lower.

Silver Today –Silver closed at $16.94 yesterday after $17.22 at New York’s close Friday.

LBMA price setting:  The LBMA gold price was set today at $1,261.30 from yesterday’s $1,269.25.  The gold price in the euro was set at €1,124.55 after yesterday’s €1,131.44.

Ahead of the opening of New York the gold price was trading at $1,263.85 and in the euro at €1,121.43. At the same time, the silver price was trading at $16.83. 

Price Drivers

Technical picture

The pullback in gold continues and can do so for another $10 before support is reached. But if it can hold above $1,260, it is a positive sign. The upward trend remains intact.  We are watching the gold market and currency markets wait for the Fed’s statement tomorrow to see if there will be a rate rise or not?

While the markets continue towards the expectation that there will be a rate hike by the Fed tomorrow, more and more people are saying what we said yesterday, With Janet Yellen such a cautious person she may well have been disturbed by the poor data of late. While 94% of the market believes a rate hike must come this week, there is room, we believe, for a delay in the rate hike until the data is more positive. If she does, you will see the dollar weaken and perhaps equity indices move too high. We see gold benefitting if this does happen.”

Central Banks and gold.

We comment further on the position of global central banks and gold. One can rightly say that western central banks are content with their current holdings and be absolutely certain that they will no longer be sellers. In the past they threatened to sell gold to manage the price down, but now that option is not available to them.

China, in particular, is on the acquisition trail for gold. Because it owns the Shanghai Gold Exchange and the banks that deal in gold, as they say, “They own gold through their people.” In other words, they have effectively confiscated gold in China. As it is it is illegal to exports gold from there. So when we look at the gold reserves of the People’s Bank of China, technically, because it is controlled by the PBoC we should consider the gold in China as available to them as reserves.

So when one looks at gold imports to China from wherever, it does go under the government’s control.  Ownership and control are two entirely different things [as one finds out, if one does not pay one’s mortgage for six months]. This sets the future scene where one has to ask, will western banks ever buy gold again? With Asia taking the bulk, if not all, newly mined gold for the last few years, any attempt by other global buyers, including central banks, will drive prices higher, much higher. Of course, any sight of a western central bank buying gold will trigger a stampede into gold. But as in the last century, when western central banks did attempt to drive prices down, they may want to do so again. But this time they will not be able to do so, as it will be bought up very quickly by the east. The only option then  will be to take it from owners in their jurisdiction as is the case in China.

That’s why with the gold price sitting very close to a major inflection point short-term, medium term and long term, we could be very close to a signal that we are very close to a dramatic change in both the gold and silver markets?

Gold ETFs – Friday, saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.45 of a tonne bought into the Gold Trust.

Their holdings are now at 866.998 tonnes and, at 206.61 tonnes respectively.


Since January 6th 2017 61.81 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips | StockBridge Management Alliance 


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