Gold: Ascending top breakout confirmed

Gold Today –New York closed at $1,272.60 yesterday after closing at $1,254.30 Monday. London opened at $1,273.4 today. 

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

         The $: € was weaker at $1.0621 after yesterday’s $1.0608: €1.

         The Dollar index was weaker at 100.61 after yesterday’s 100.90

         The Yen was stronger at 109.70 after yesterday’s 110.66:$1. 

         The Yuan was stronger at 6.8943 after yesterday’s 6.9012: $1. 

         The Pound Sterling was stronger at $1.2497 after yesterday’s $1.2416: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    12

     2017    4    11

     2017    4    10    

SHAU

SHAU

SHAU

/

281.14

280.96

/

281.53

281.52

$ equivalent 1oz @    $1: 6.8943

       $1: 6.9012

       $1: 6.9019

      

  /

$1,267.09

$1,266.28

/

$1,268.85

$1,268.67

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 284.30 towards the close today.

This translates into $1,277.61. New York is trading at a $5.01 discount to Shanghai and London opened at a $4.21 discount to Shanghai.

With the New York close $9 higher than Shanghai’s opening today Shanghai had to chase gold prices higher. Likewise London had to lift prices strongly at the opening or risk arbitrageurs moving into buy heavily. It may have been either the Chinese ICBC or the global HSBC that took what stock they could off the market before the London opening to even out London’s prices with Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,272.30 from yesterday’s $1,255.70.  

The gold price in the euro was set at €1,199.94 after yesterday’s €1,183.28.

Ahead of the opening of New York the gold price was trading at $1,275.50 and in the euro at €1,203.53. At the same time, the silver price was trading at $18.33. 

Silver Today –Silver closed at $18.28 yesterday after $17.94 at New York’s close Monday.

Price Drivers

We were wrong about more consolidation yesterday. Consolidation is a very difficult process to gauge accurately in terms of timing. It is a process of demand matching supply to the point where a small sale or purchase can make the next move a strong one. We did not realize that this point was reached yesterday, suddenly. After all it has been several weeks since the gold price has been building up sufficient strength to effectively tackle overhead resistance at $1,260, the 200-day average. Yesterday saw it do so, when an ascending top breakout was confirmed technically.

The global political scene was turned combative by Trump’s tweet that North Korea is looking for trouble. After Trump’s punitive strike in Syria, it seems plausible that he is capable of doing the same in North Korea.  Safe haven assets are now in play. These include the Japanese Yen, a haven that will be fought by Japan’s central bank, which we expect will intervene in the exchange rate now. This brings gold center stage alongside the less international silver.

The dollar is weaker, but not so much against the euro to make the upward move a dollar play, as the euro price of gold hits 1,200.  U.S. gold investors came in with a large, but not huge, set of purchases into the U.S. based gold ETFs, but this was sufficient to break through overhead resistance.

India

Gold imports by India jumped in March from a year earlier as jewelers stocked up anticipating a demand recovery during the wedding season that began this month and the Akshaya Tritiya festival. Shipments advanced 582.5% to 120.8 metric tons last month from a year earlier. Buying should rise heading into Akshaya Tritiya that falls toward the end of April this year. The availability of new banknotes is reaching the level of the old now illegal tender notes to ‘normal levels in May.

Gold refiners continue to work 24/6 to meet Indian and Chinese demand.

Gold ETFs – Monday saw purchases of 1.77 tonnes of a tonne into the SPDR gold ETF (GLD). Yesterday another 3.88 tonnes were taken into GLD.  The Gold Trust (IAU) a purchase of 1.o5 tonnes yesterday. Their holdings are now at 842.41 tonnes and at 201.67 tonnes.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold takes a step back

Gold Today –New York closed at $1,251.50 on the 28th February after closing at $1,251.00 on the 27th February. London opened at $1,244.00 today.

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

         The $: € was stronger at $1.0557: €1 from $1.0593: €1 on yesterday.

         The Dollar index was stronger at 101.57 from 101.09 on yesterday. 

         The Yen was weaker at 113.45:$1 from yesterday’s 112.44 against the dollar. 

         The Yuan was weaker at 6.8783: $1, from 6.8689: $1, yesterday. 

         The Pound Sterling was weaker at $1.2373: £1 from yesterday’s $1.2427: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    1

     2017    2    28

      2017    2    27

SHAU

SHAU

SHAU

/

279.66

280.67

/

279.65

280.57

$ equivalent 1oz @  $1: 6.8783

      $1: 6.8689

$1: 6.8800

  /

$1,266.35

$1,268.87

/

$1,266.30

$1,268.42

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.]

 At the close in Shanghai today, the gold price was trading at 279.50 Yuan once again, which directly translates into $1,263.89. But allowing for the difference of gold being traded this equates to a price of $1,258.89. This is $7.39 higher than the New York close and $14.89 higher than London.

President Trump’s speech was a patriotic call mainly but lacked sufficient details to move markets significantly. We expect London and New York to move back up towards the Shanghai price in the next few days in line with dollar moves.  But gold got hit by statements from various US Fed officials which raised the likelihood of an interest rate rise as soon as this month.  The FOMC meets on March 14-15.

LBMA price setting:  The LBMA gold price was set today at $1,246.05 down from yesterday’s $1,251.90.  The gold price in the euro was set higher at €1,182.21 after yesterday’s €1,181.15.

Ahead of the opening of New York the gold price was trading at $1,245.05 and in the euro at €1,181.26.  At the same time, the silver price was trading at $18.35. 

Silver Today –Silver closed at $18.34 at New York’s close yesterday against $18.23 on the 27th February.

Price Drivers

Before London’s opening the gold price was moved down by $8 from New York’s close. This sort of move is not unusual and can easily be reversed. With the Trump speech a patriotic rallying cry, but lacking in specific details the U.S. markets are relatively unmoved. We expect a similar reaction in the gold price but being seen in a recovery of the price to levels from which it has fallen in the last day.What he did state was that the government will spend $1 trillion to boost growth in the U.S. and provide jobs for Americans. This is a vast number that will be paid for by more debt. For anyone to properly assess Trump’s plans they need to have details of his Tax cuts. He tells us the cuts will be huge. We expect the market to react by weakening the dollar, over time, and to favour gold, over time, in the U.S. as U.S. debt becomes excessive. We are already seeing foreign investors begin to shy away from investing in U.S. Treasuries.

India

India’s February imports of gold surged in February to 50 tonnes, up more than 82% from a year ago, on pent-up jeweler demand and as retail consumers ramped up purchases for weddings.

The rise in imports by the world’s second-biggest consumer of the precious metal will support global prices that had been trading near their highest level in 3-1/2 months.

 

India’s gold imports had fallen to 27.4 tonnes in February 2016 as buyers postponed purchases in anticipation of a reduction in the import duty in the budget at the time.

This February, retail demand improved as cash supplies moved to the normal levels before de-monetization.

 

Gold ETFs – Yesterday saw no sales or purchases from or into the SPDR gold ETF but a purchase of 0.41 of a tonne into the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 202.24 tonnes.   Once the markets have digested the Trump speech, we may well see activity increase.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance