Gold and Silver slump after NY open

 Gold Today –New York closed yesterday at $1,224.70. London opened at $1,221.65 today. 

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

         The $: € was weaker at $1.1414 after yesterday’s $1.1353: €1.

         The Dollar index was weaker at 95.98 after yesterday’s 96.22

         The Yen was weaker at 113.70 after yesterday’s 113.33:$1. 

         The Yuan was stronger at 6.7990 after yesterday’s 6.8037: $1. 

         The Pound Sterling was weaker at $1.2897 after yesterday’s $1.2935: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    7

     2017    7    6            

     2017    7    5







Trading at 270.50



$ equivalent 1oz at 0.995 fineness

@    $1: 6.7990

       $1: 6.8037

       $1: 6.7988     




Trading at $1,232.46



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.]

 Shanghai is stabilizing again today, but not by much. New York traded at $6 lower than Shanghai following Shanghai’s close yesterday. Today London opened $11 lower than Shanghai. Until gold makes a firm break one way or another we consider it directionless as it has been for most of the second quarter.

Today, once again, remains a critical day for the gold price in all three global centers as the direction forward is still to be established.

Silver Today –Silver closed at $16.01 yesterday after $16.03 at New York’s close Wednesday. The silver price has formed a double bottom, but, while a double bottom remains in place, traders are trying to push it down. It is refusing to go down and keeps turning back to $16.00. The way forward remains uncertain!

LBMA price setting:  The LBMA gold price was set today at $1,220.40 from yesterday’s $1,224.30.  The gold price in the euro was set at €1,069.40 after yesterday’s €1.075.13.

Ahead of the opening of New York the gold price was trading at $1,223.45 and in the euro at €1,065.26. At the same time, the silver price was trading at $15.91. 

Price Drivers

The gold and silver prices have us all on tenterhooks while their direction forwards remains to be confirmed. While some believe that rate tightening will still happen and stimuli be dropped by the main developed world central banks, the date, while so far slightly encouraging could well disappoint and the tightening direction postponed. So global financial uncertainty remains a concern in the developed world in particular.

While the jobs numbers were encouraging at 222,000 wages stayed flat, adding to concerns that inflation is just not rising, a major worry of the Fed. The dollar weakened immediately after that.

What is now constantly overlooked in the financial world is that it is governments that bear the prime responsibility for economic growth, but since the financial crisis of 2008 they have either been unable to promote it or found the political gridlock has prevented them from doing so. The burden has fallen unfairly but squarely on the back of their central banks equipped only with blunt tools to do the job. That’s why today we see so much importance placed on data [past not present] that will influence central bank’s decisions. At times our focus is pushed onto too few factors and too intensely for us to have the balanced perspective on what is likely to happen, in the near future. This adds to the risks facing the developed world economies.

Today, Friday is usually the busiest day of the week because any positions held become not just a one day risk but a three day risk. So we may see some important moves made today after the long move sideways, then a fall to current levels not far short of $1,200. As we said yesterday, both the gold and silver prices are at critical points on the Technical scene. Following the New York open both gold and silver slumped suggesting the precious metals bears are currently in the driving seat.

Gold ETFs

Yesterday saw no sales or purchases from or into the SPDR gold ETF but a purchase of o.45 of a tonne into the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 840.669 tonnes and at 210.76 tonnes respectively.

 Julian D.W. Phillips | StockBridge Management Alliance 


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