Gold back over $1280; Silver over $17; U.S. recovery fragile and vulnerable

Gold Today –New York closed yesterday at $1,279.30. London opened at $1,278.00 today. 

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

–         The $: € was stronger at $1.1732 after the yesterday’s $1.1760: €1.

–         The Dollar index was stronger at 93.70 after yesterday’s 93.61.

–         The Yen was weaker at 109.98 after yesterday’s 109.75:$1.

–         The Yuan was much stronger at 6.6594 after yesterday’s 6.6782: $1.

–         The Pound Sterling was weaker at $1.2980 after yesterday’s $1.3005: £1

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    8    10

     2017    8    9           

     2017    8    8

SHAU

SHAU

SHAU

/

273.77

273.21

Trading at 275.75

273.69

272.70

$ equivalent 1oz at 0.995 fineness

@   $1: 6.6594

       $1: 6.6782

       $1: 6.7059     

  /$1,270.07

$1,262.21

Trading at $1,282.92$1,269.70

$1,259.84

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 just under $10.00 higher than Shanghai’s close yesterday. Then today sees Shanghai lifting the gold price even higher as you can see. London is still lagging but not by much as it opened

We were looking to see if this was a jump on the back of the deteriorating situation with North Korea. We would have thought that if this were so, the gold price would have jumped higher. So far the evidence is not there.

London is $5 lower than Shanghai, but raced to catch up and at one point in London was the same as Shanghai’s earlier trading levels.

Silver Today –Silver closed at $16.86 yesterday after $16.38 at New York’s close Tuesday.

LBMA price setting:  The LBMA gold price was set this morning at $1,278.90 from yesterday’s $1,267.95.  The gold price in the euro was set at €1,091.03 after yesterday’s €1,080.30.

Just before the opening of New York the gold price was trading at $1,280.60 and in the euro at €1,092.38. At the same time, the silver price was trading at $17.10. 

Price Drivers

The gold price in dollars is now at $1,280, so the answer to yesterday’s question, “Will it run higher in the $1,270s?” was given in a day! So, where next?

The Yuan continues to strengthen strongly against the dollar, which itself is strengthening against other currencies.

The Fed

Members of the FOMC are talking to the media in very dovish manners. The evidence that inflation is falling has clearly disturbed them. After the 2015, 2016 steady building of inflation, it is falling back again. This implies that we may well not see another rate hike in 2017. They still feel that a start to the Fed’s Balance Sheet tightening will be made. After all, it will be slight and the Fed believes it will have barely any impact on markets.

While academically that may be true, psychologically it may be a mistake. The recovery remains vulnerable and fragile. Any hint of tightening may well cause a market reaction when they broach that subject with action. Meanwhile, the earnings picture is pointing to it peaking in the near term, if it has not already done so. This makes equity markets toppy. They could turn mercurial if evidence arrives that tightening, even slightly, is about to happen.

Gold will benefit from any stalling of Fed tightening. Real interest rates continue to be negative but if inflation falls back further until rates are not negative, we fully expect the Fed to turn back to the easing path.

North Korea

It is apparent that North Koreans are being fed propaganda that the U.S. is its main enemy and about to invade the country. This distracts from the dire economic state of the country. President Trump is reinforcing that idea with his responses. His words would, in the North Koreans eyes, justify continuing on the threatening war path. The President of the country is seen as a psychopath and intent on going ahead with his threats.

China, on the other hand, will not allow that buffer state to be destroyed, bringing the U.S., militarily dominated South Korea to its doorstep. This formula will lead to conflict, we now believe. But the markets have not yet responded to this potential. Gold has not jumped as it would have done if markets were reacting. The rise overnight in the gold price in the U.S. was not via physical buying but a dealer’s response to the North Korean situation. On the other hand the rise in Shanghai prices would be based on physical dealings. A $10 rise in Shanghai falls far short of a ‘war fear’ rise.

As we said yesterday, “Gold will benefit if war does break out as the war hurts financial markets the whole world over.”

Gold ETFs – Yesterday there were no changes in the holdings of the SPDR gold ETF or the Gold Trust holdings yesterday. The SPDR gold ETF and Gold Trust holdings are at 786.869 tonnes and at 211.43 tonnes respectively.

Julian D.W. Phillips  GoldForecaster.com | StockBridge Management Alliance

Gold and Silver weaker, dollar stronger, on U.S. jobs report

Gold Today –New York closed Friday at $1,264.40. London opened today at $1,258.40. 

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

         The $: € was stronger at $1.1802 after the Friday’s $1.1881: €1.

         The Dollar index was stronger at 93.38 after Friday’s 92.74

         The Yen was weaker at 110.81 after Friday’s 110.026:$1. 

         The Yuan was stronger at 6.7190 after Friday’s 6.7200: $1. 

         The Pound Sterling was weaker at $1.3050 after Friday’s $1.3149: £1

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    8    7

     2017    7    4           

     2017    7    3

SHAU

SHAU

SHAU

/

274.98

274.52

Trading at 273.75

275.49

274.22

$ equivalent 1oz at 0.995 fineness

@   $1: 6.7190

       $1: 6.7237

       $1: 6.7253     

  /

$1,266.35

$1,264.91

Trading at $1,262.24

$1,269.40

$1,263.53

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 $2 lower than Shanghai’s close Friday. But today, we are seeing a stronger dollar, and a lower dollar gold price in London. The jobs report was met with enthusiasm that turned the dollar higher for now. Even with a stronger dollar we are seeing a stronger Yuan. London opened $3.85 lower than Shanghai but Shanghai was trading at only $2 lower than New York’s Friday close.

Silver Today –Silver closed at $16.25 Friday after $16.63 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set this morning at $1,257.55 from Friday’s $1,269.30.  The gold price in the euro was set at €1,065.90 after Friday’s €1,068.34.

Just before the opening of New York the gold price was trading at $1,258.20 and in the euro at €1,065.73. At the same time, the silver price was trading at $16.21. 

Price Drivers

The jobs report was read by the market in a positive light. It turned the dollar stronger against all currencies and pulled the gold price down in dollar terms. We expected a rise in  the gold price because we expected higher employment and felt the market would only react to wage inflation, which, in line with our views, was barely noticeable. But the market looked only at the jobs numbers.

In the euro there was only a small drop in the gold price. So where is the dollar going from now on? We don’t see the gold price falling in other currencies and indeed we are not convinced by the jobs report spurring wage inflation soon. The jobs being created are easily low, but on top of that the impact of technology on quality jobs is heavy. The failure of full employment to spur wages is a structural change that will not reverse.

In the Gold Forecaster we have outlined that in the developed world up to 50% of all jobs will be permanently lost to A.I. and machines. This fact has not been accepted in general, by economists. Until, not just the problem but new-industry, job creation is put into effect it is unlikely that wage inflation will take off. In turn, that slows the recovery and makes it vulnerable. Likewise, for fixed interest markets! The current equity, fixed interest rate levels are becoming more vulnerable by the day.

So we don’t move away from a weak dollar. We see the current rise as being short lived before the dollar resumes its fall.  This translates into gold holding current levels in currencies other than the dollar, then rising in the dollar once more. It will see a good boost in the Autumn when the gold ‘season’ kicks off.

Gold ETFs – 

There were sales from the SPDR gold ETF (GLD) of 4.731 tonnes but no change in the Gold Trust (IAU) holdings on Friday. The SPDR gold ETF and Gold Trust holdings are at 787.144 tonnes and at 211.43 tonnes respectively.

 Julian D.W. Phillips – GoldForecaster.com | StockBridge Management Alliance 

Gold’s resilience remarkable as GLD holding falls further

How much further can SPDR Gold Shares (GLD), the world’s largest gold ETF, continue to bleed gold without adversely affecting the metal price?  It has shed a hair over 75 tonnes since its 2017 peak some 6 weeks ago, 61.8 tonnes in the past month alone and over 162 tonnes in the past year.  It is now at a level not seen since March 2016 when its holdings were rising sharply, yet the gold price over the past week or so has been trending upwards.  This is a huge contradiction in the yellow metal’s normal price movement.  We are either heading for a very sharp price reversal – or if the current price level around $1,260 holds – a very significant turning point leading to significant gains if the current falls in the GLD holding are reversed.

What makes the GLD performance even more anomalous is that the other large U.S. gold ETF – the much smaller iShares Gold Trust (IAU) – has actually added around 2.5 tonnes of gold over the past month while GLD has been moving sharply in the other direction.  Year to date IAU has added 14.7 tonnes to its gold holdings, which stand at 210.87 tonnes, while the GLD holding, currently 791.88 tonnes, has dropped by a little over 30 tonnes over the same period.  The performance differences are hard to explain given they are both serving the same investor market.

Yesterday in an article on the www.sharpspixley.com website we included the following quote from Ted Butler in trying to explain the big fall in the GLD gold holdings “”The most plausible and, in fact, only explanation I can come up with is that some large entity is converting shares into physical metal for the purpose of preventing share ownership from rising to or above reporting levels. When a big shareholder converts shares of SLV or GLD into metal, the shares no longer exist and, therefore, don’t need to be reported to any regulator. Likewise, direct physical ownership of silver or gold needn’t be reported to anyone no matter how large the position may grow. (This is another major factor behind why JPMorgan decided to buy physical silver). Again, a large entity amassing a large physical position in silver or gold on the sly is not bearish for price.” (See: GLD bleeds 71.58 tonnes of gold in just over a month).

What else could be behind the fall in GLD gold?  We have also noted on the Sharps Pixley website that the major Swiss gold refiners, which dominate the global remelting and re-refining market are, anecdotally, struggling to source enough physical gold to meet demand as gold out of them continues to flow very heavily to Asia and the Middle East – See: June Swiss gold exports: 90% moving east).  They have to be sourcing their gold from somewhere and they exported some 162 tonnes of gold in June alone – 90% to Asia and the Middle East.  Now maybe there are enough ‘friendly’ holders of GLD gold shares to lean on to supply them with bullion when physical gold is in short supply. The UK was the biggest source of Swiss imported gold in May, although was superseded as the biggest exporter of gold to Switzerland in June by the USA, but most GLD gold is vaulted in London.  Perhaps we will see the UK as being again the biggest exporter of gold to Switzerland this month which is when most of the GLD falls have occurred when the next Swiss announcement comes out in late August?  Certainly bullion coming out of the world’s biggest gold ETF could well be a principal source for all this gold heading East.

Gold and silver surge despite more big sales out of GLD

 Gold Today –New York closed the day before yesterday at $1,248.40. London opened at $1,262.00 today. 

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

         The $: € was weaker at $1.1728 after the day before yesterday’s $1.1654: €1.

         The Dollar index was weaker at 93.50 after the day before yesterday’s 93.97

         The Yen was unchanged at 111.25 after the day before yesterday’s 111.25:$1. 

         The Yuan was stronger at 6.7377 after the day before yesterday’s 6.7506: $1. 

         The Pound Sterling was stronger at $1.3138 after the day before yesterday’s $1.3031: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    27

     2017    7    26           

     2017    7    25

SHAU

SHAU

SHAU

/

272.64

274.40

Trading at 275.00

271.95

273.84

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7377

       $1: 6.7506

       $1: 6.7504     

  /

$1,251.19

$1,259.36

Trading at $1,264.49

$1,248.01

$1,256.78

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 reaction to the Fed’s inaction not just on rates but on the timing of the contraction of the Fed’s Balance Sheet, interrupted the gold price relationship between global markets. New York closed at the same level as Shanghai yesterday, but London opened at just $2.50 below Shanghai’s trading level this morning. The price differentials between the global markets were nearly eliminated on the back of the Fed’s inaction. We look today to see just how global markets interact and to see if they are really narrowing their differences.

If you had been following our commentary in the Gold Forecaster newsletter on China and the shift of pricing power to the east, you would not have been tempted to sell your holdings of gold or silver!

It is clear that it is now necessary to understand what drives each gold market across the world if one is to understand the gold price and where it is going. To focus on just the U.S. market, as if it is the only gold price driver, is to make yourself vulnerable to grave portfolio mistakes on gold. One cannot be this parochial any more, as the U.S. lost that pricing power a while ago.

To ignore the deep fundamentals driving each market would do the same. To ignore other global gold markets would do the same too.

Silver Today –Silver closed at $16.45 the day before yesterday after $16.40 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set this morning at $1,262.05 from yesterday’s $1,245.40.  The gold price in the euro was set at €1,077.11 after the day before yesterday’s €1.074.68.

Just after the opening of New York the gold price was trading at $1,263.52 and in the euro at €1,078.78. At the same time, the silver price was trading at $16.78. 

Price Drivers

The Fed decided not to raise rates, as expected but only said they would start lowering the Fed’s Balance Sheet, relatively soon. This disappointed markets including the global gold markets that are taking the gold price above previous resistance levels into the $1,260 region.

But once again the biggest feature of the day was the softening dollar. It has confirmed it is in a ‘bear’ market and will decline over the next few years. More and more analysts including major institutions are now talking the dollar down, over the long term.

Bear in mind the analogy that the currency world has had the dollar, almost as the tree trunk, while other currencies have been the branches of that tree. If the trunk withers what will happen to the branches? The only way to save the tree is to replace it with several trunks. These will come from the main trading blocs of the world. The euro will be joined by the Yuan [which now accounts for just under 2.00% of global trade pricing – it could be more if we include oil] with the dollar in a diminished role.

Gold will then become the facilitator between currencies to reinforce confidence in them.

Gold ETFs – In the last two days we have seen sales of 14.20 tonnes of gold from the SPDR gold ETF (GLD) sales of 0.99 of a tonne from the Gold Trust (IAU). The SPDR gold ETF and Gold Trust holdings are a 785.424 tonnes and at 210.87 tonnes respectively.

Despite these ongoing, heavy, persistent gold sales from the SPDR gold ETF the gold price has risen through more levels of heavy resistance. There is no doubt in our minds that if the gold price holds above $1,260 and rises, these investors will return to gold and drive gold prices higher.

With U.S. sales of gold now greater than has been acquired in 2017 and accounting for longer term holders of gold, we believe that U.S. gold investors are now close to being sold out.

Since January 6th 2017 No tonnes of gold have been added to the SPDR gold ETF and the Gold Trust. In fact, in this year 2017 the level of gold in those funds is now -6.168 tonnes.

Julian D.W. Phillips 

GoldForecaster.com | StockBridge Management Alliance 

Gold and silver confirm the bottom is in

 Gold Today –New York closed yesterday at $1,216.40. London opened at $1,218.50 today. 

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

         The $: € was weaker at $1.1448 after yesterday’s $1.1396: €1.

         The Dollar index was weaker at 95.76 after yesterday’s 96.11

         The Yen was stronger at 113.36 after yesterday’s 114.32:$1. 

         The Yuan was stronger at 6.7881 after yesterday’s 6.7995: $1. 

         The Pound Sterling was weaker at $1.2855 after yesterday’s $1.2902: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    12

     2017    7    11            

     2017    7    10

SHAU

SHAU

SHAU

/

267.30

267.12

Trading at 269.00

267.30

266.45

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7995

       $1: 6.8034

       $1: 6.7990     

  /

$1,217.03

$1,215.95

Trading at $1,225.51

$1,217.03

$1,212.89

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.]

 Both New York and London turned higher yesterday. New York rose to Shanghai’s level again, at the close yesterday and London today went higher but still left a differential with Shanghai at $7 which was lower than yesterday’s differential. All global gold markets have found their bottom.

Today –Silver closed at $15.84 yesterday after $15.66 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set today at $1,219.40 from yesterday’s $1,211.90.  The gold price in the euro was set at €1,064.23 after yesterday’s €1.063.26.

Ahead of the opening of New York the gold price was trading at $1,217.20 and in the euro at €1,062.69. At the same time, the silver price was trading at $15.83. 

Price Drivers

The gold price has confirmed the bottom is in and it rose to $1,219 this morning in London. The support at the $1,200 level is very large.  But you will note that in the euro, it has barely moved. We see the weakening dollar playing a strong role in the dollar gold price going forward. This means that we must gauge the gold price by looking at it in different currencies as well as the dollar.

Demand from China remains strong as you can see from the numbers out of Shanghai [above], but demand out of India is scant.

The buying in India ahead of the new GST tax took demand away for a period after its imposition. Once this is soaked up by the market, demand will return to normal. With the Monsoon still underway we do not expect demand to pick up until the end of August.

Trump or A.I.

The media in the U.S. is hounding President Trump and his family relentlessly. But now they are attributing his son’s actions in meeting Russians as a reason for Treasury yields moves. The impact they are having is that the new Administration’s plans on stimulating the economy and ‘draining the swamp’ have led to the Administration finding they are stuck in the mud and can’t get going on their plans. This in itself is weakening the dollar and holding back the economy from becoming robust.  Markets will price this in, not the Trump/Russia issue.

What is now coming to the fore in matters concerning the dollar and the Fed is falling inflation and the failure of wages to rise as expected with ‘full’ employment. While we have been highlighting artificial intelligence as a major economic factor for years now, we see banks recognizing it a contributing strongly to the poor quality jobs being taken up and for workers inability to wage bargain. We see A.I. continuing to do this in the years ahead and now likely to affect Fed policy on interest rates. The impact will be increasingly dovish and lead to the dollar weakening over the years ahead. It is already close to entering a bear market. The same problem is being felt in all industrialized countries including China.

Gold ETFs

Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 832.391 tonnes and at 211.41 tonnes respectively.

Julian D.W. Phillips 

GoldForecaster.com | StockBridge Management Alliance 

Gold clobbered by big ETF sales. Silver hit even harder

Gold Today –New York closed Friday at $1,212.40. London opened at $1,207 today. 

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

         The $: € was stronger at $1.1408 after Friday’s $1.1414: €1.

         The Dollar index was stronger at 96.15 after Friday’s 95.98

         The Yen was weaker at 114.21 after Friday’s 113.70:$1. 

         The Yuan was stronger at 6.8034 after Friday’s 6.7990: $1. 

         The Pound Sterling was weaker at $1.2873 after Friday’s $1.2897: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    10

     2017    7    7            

     2017    7    6

SHAU

SHAU

SHAU

/

269.34

270.06

Trading at 267.50

269.52

270.35

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8034

       $1: 6.7990

       $1: 6.8037     

  /

$1,232.15

$1,229.59

Trading at $1,222.94

$1,232.98

$1,230.92

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.]

 As you can see Shanghai has not dropped as far as New York or London. The price differential is very wide now on today’s price of $15.94 between Shanghai and London. We have no doubt that today gold, from the SPDR [GLD} is flowing across to Shanghai via HSBC the Custodian of the gold ETF.

The big question is will Shanghai pull up London and New York prices or will Shanghai be pulled down to a much narrower differential? At the moment it is New York and London that are pulling prices down, but at the cost of gold flowing eastwards.

Silver Today –Silver closed at $15.56 Friday after $16.01 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set today at $1,207.55 from Friday’s $1,220.40.  The gold price in the euro was set at €1,069.40 after Friday’s €1.075.13.

Ahead of the opening of New York the gold price was trading at $1,212.75 and in the euro at €1,065.03. At the same time, the silver price was trading at $15.40. 

Price Drivers

The gold price breakdown on the Technical front is now being seen in their prices. Today, the gold price is holding just above $1,200 and the silver price tumbled over $1.23 in the last three business days. Where to now? It has taken around 27 tonnes of sales from the SPDR gold ETF over the last two weeks, with virtually no purchases to cause the breakdown in the gold price.

The G-20 meeting on Friday was the most dramatic one we have seen for over a decade. Instead of coming out with the usual platitudes, this one came out with divisions between the U.S. and the other major blocs, China and the E.U. There is a clear distance building up between the E.U. and the U.S. So much so that the euro could rise to $1.20 by year’s end. The E.U. has solidified a Free Trade Agreement between each other. The G-20 agreed to fight Protectionism but the U.S. was not included in that agreement.

As we have pointed out exchange rates will be affected. We would go so far as to say that an E.U. – China trade agreement would be conducted either in Euros or Yuan or both. The increasing path to isolation that appears to be being followed now will impact the dollar and heavily. We see the result of the G-20 meeting as being the entrance to a full blown multi-currency system. This is extremely positive for gold at all levels.

Gold ETFs – Yesterday saw sales of 5.324 tonnes from the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU) holdings. The SPDR gold ETF and Gold Trust holdings are at 835.345 tonnes and at 210.76 tonnes respectively.

This was a hefty sale and follows two earlier sales last week of a similar size. Combine these sales with the 12 tonne sale the week before and the physical downward pressure was too much to hold the gold price above the “Golden Cross”.

Since January 4th 2016, 196.206 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 33.691 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

 

Gold recovery continues from Monday’s flash crash

Gold Today –New York closed at $1,249.10 yesterday after closing at $1,244.30 Monday. London opened at $1,253.00 today. 

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

         The $: € was much weaker at $1.1358 after yesterday’s $1.1256: €1.

         The Dollar index was weaker at 96.36 after yesterday’s 96.97

         The Yen was weaker at 112.36 after yesterday’s 111.77:$1. 

         The Yuan was stronger at 6.8036 after yesterday’s 6.8145: $1. 

         The Pound Sterling was stronger at $1.2810 after yesterday’s $1.2748: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    28

     2017    6    27              

     2017    6    26

SHAU

SHAU

SHAU

/

275.63

278.15

Trading at 276.80

276.41

278.03

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8036

       $1: 6.8145

       $1: 6.8427     

  /

$1,253.06

$1,259.33

Trading at $1,260.42

$1,256.52

$1,258.78

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 three global gold markets are moving back into line today with London and New York rising to almost Shanghai’s level. New York rose to within $7.32 of Shanghai’s prices down from $16 lower than Shanghai, and London opened $7.42 lower lifting the discount to Shanghai, from $13.42. This is again, confirming Shanghai dominating pricing power.

The Yuan continues to strengthen as you can see above. The Shanghai gold price is moving independently of the Yuan’s exchange rate.

Silver Today –Silver closed at $16.68 yesterday after $16.57 at New York’s close Monday. Today, silver is telling us it wants to rise. Is it leading the way for gold?

LBMA price setting:  The LBMA gold price was set today at $1,251.60 from yesterday’s $1,250.40.  The gold price in the euro was set at €913.58 after Friday’s €1,111.17.

Ahead of the opening of New York the gold price was trading at $1,252.80 and in the euro at €912.45. At the same time, the silver price was trading at $16.84. 

Price Drivers

The IMF has cut U.S. growth forecast to 2.1% from 2.3% in 2017 with a declining growth rate in the years following, due to the U.S. having trouble adapting to trends such as changes to the job market from technology, low productivity growth and an aging population, the IMF said, noting that household incomes are stagnating for a large share of the population.

At the same time Draghi of the E.C.B. has indicated that it looks like the E.U. has turned the corner for the better after fears over the last couple of years are dissipating and he is considering reducing the stimuli currently in operation in the E.U. The immediate result has been for the euro to begin to rise strongly. If the euro rises through $1.17 we should see it beginning to soar against the dollar.

As we move to a world where a multi-currency system is coming into being we watch for evidence that confirms that. To many, Brexit is clearly a separation of the U.K. from the E.U. The U.K. will, as it has done for the last century, will remain very close to the U.S. Alongside this we see a growing distance on the monetary front between the E.U. and the U.S. We expect to see this in the €: $ exchange rate. In the past the rate peaked at $1.40. It is important that the previously assumed relationship between gold and the dollar was largely based on the €: $ exchange rate. That has clearly broken down as the euro rises and gold continues to consolidate around the $1,250 area. The strength of the euro has taken the euro price of gold down below €1,000

We note that the gold price has almost recovered in the dollar from the 56 tonne sale at the beginning of the week. This has confirmed our conclusions in yesterday’s report. Some respected advisors put forward the idea that it was Venezuela doing the selling. That could not be so because Venezuela would sell physical and not in one batch. This was a “paper” futures sale involving no physical gold. That’s why the gold price has recovered.

One of the important factors in the gold price comes from dealers. To understand the gold price one cannot ignore the pricing by dealers of gold. This happens usually without actual gold sales or purchases.. As we said yesterday “… physical dealers move prices higher for fear of more physical gold buying…” They drop prices if they fear sales. This adds to the volatility of the gold price and further illustrates the differences between Shanghai, where high liquidity and the absence of market dominant dealers contrasts with London and New York where the bullion banks act as dealers.

Gold ETFs – Yesterday saw no purchases or sales of gold from the SPDR gold ETF but purchases no change in the Gold Trust. Their holdings are now at 853.684 tonnes and, at 208.41 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

 

 

Gold Market Morning: Quick recovery from yesterdays’ flash crash

Gold Today –New York closed at $1,244.30 yesterday after closing at $1,255.90 Friday. London opened at $1,250.00 today. 

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

         The $: € was weaker at $1.1256 after yesterday’s $1.1199: €1.

         The Dollar index was weaker at 96.97 after yesterday’s 97.25

         The Yen was weaker at 111.77 after yesterday’s 111.49:$1. 

         The Yuan was weaker at 6.8145 after yesterday’s 6.8427: $1. 

         The Pound Sterling was slightly weaker at $1.2748 after yesterday’s $1.2751: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    27

     2017    6    26              

     2017    6    23

SHAU

SHAU

SHAU

/

278.15

277.34

Trading at 277.90

278.03

277.76

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8145

       $1: 6.8427

       $1: 6.8374     

  /$1,259.33

$1,256.63

Trading at $1,263.42$1,258.78

$1,258.54

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 ignored the price action in London and New York. As you can see above, the gold price there has steadily risen in the last three days and adjusted for the gyrations in the Yuan as it suddenly went strong after weakening in the last two days. With both London and New York recovering fast now Shanghai is pulling them up. New York went $16 lower than Shanghai yesterday, but London opened $13.42 lower than Shanghai. If the recovery continues in both London and New York today, we will see more evidence of Shanghai dominating pricing power.

The action on the Yuan corrected our view that thought that the P.B. of C. was allowing the Yuan to weaken. Its sudden strength showed they do not want a weaker Yuan at all and will act accordingly. Those positioning in a weaker Yuan paid a hefty price. We think such actions by them discourage speculative action by punishing speculators with losses.

Silver Today –Silver closed at $16.57 yesterday after $16.70 at New York’s close Friday.

LBMA price setting:  The LBMA morning gold price was set today at $1,250.40 from yesterday’s $1,240.85.  The gold price in the euro was set at €1,111.17 after Friday’s €1,109.88.

Ahead of the opening of New York the gold price was trading at $1,250.80 and in the euro at €1,108.96. At the same time, the silver price was trading at $16.68. 

Price Drivers

Yesterday, we thought the sale at the open in London must have been a physical sale, but it wasn’t, it was a ‘paper’ sale, where one theory was that someone made a huge mistake selling ‘lots’ in the futures market instead of ounces.  The deal was 56 tonnes of gold a massive amount that has not been seen since the gold price was crushed in 2013. Whatever it was, we learned a great deal about the behavior of markets then right up until now and likely tomorrow.

Lesson 1: Shanghai, a physical gold market, is not influenced by London and New York in such speculative lurches.

Lesson 2: To impact the gold price solidly, physical sales are needed in gold’s global markets.

Lesson 3: The influence of ‘paper’ gold markets [Futures and Options] is declining rapidly as physical sales or purchases directly affect gold prices. Paper sales do not involve physical gold sales in such cases. The speed of the price recovery in the face of such massive sales confirms what we are saying.

Lesson 4: When such speculative sales take place dealers in London and New York take up defensive positions in case of stop losses or further sales, but return to higher prices when buyers came in, which they  are doing in both the ‘paper’ and physical gold markets. The charts may show a rapid take up of such ‘paper’ contract sales, as one saw in the F & O markets, probably by ‘limit’ purchase orders below the market prices. Nevertheless, the SPDR gold ETF saw buyers come in at these levels to buy physical gold. The markets both physical and ‘paper’ now know the strong underlying strength below $1,250. The ‘Golden Cross’ remains intact!

We see the gold price recovering to levels seen before the sale, at least, as physical dealers move prices higher for fear of more physical gold buying, likely from Shanghai through arbitrageurs. If the sale of 56 tonnes was an attempted ‘bear’ raid we do not expect to see more in the future, unless they involve large amounts of physical gold. When they do come in, expect Shanghai to pick up the physical stock sold.

Gold ETFs – Yesterday saw purchases of 2.666 tonnes of gold from the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 853.684 tonnes and, at 208.41 tonnes respectively.

Since January 6th 2017 49.64 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Gold price technical trend still bullish despite fall

Gold Today –New York closed at $1,279.50 yesterday after closing at $1,293.20 Wednesday. London opened at $1,275.00 today. 

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

         The $: € was stronger at $1.1178 after yesterday’s $1.1232: €1.

         The Dollar index was stronger at 97.44 after yesterday’s 96.89

         The Yen was weaker at 110.37 after yesterday’s 110.07:$1. 

         The Yuan was slightly weaker at 6.7988 after yesterday’s 6.7954: $1. 

         The Pound Sterling was much weaker at $1.2720 after yesterday’s $1.2941: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    9

     2017    6    8

     2017    6    7

SHAU

SHAU

SHAU

 

 

282.78

283.66

 

Trading at 280.00

283.13

283.67

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7988

       $1: 6.7954

       $1: 6.7931     

 

   

 

$1,289.32

$1,293.79

 

Trading at $1,275.96

$1,290.92

$1,293.84

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 and Shanghai stayed at the same level yesterday and this morning. New York led the way down and Shanghai took it down further. London opened at the same level as Shanghai. The global gold markets continue to move together.

Silver Today –Silver closed at $17.41 yesterday after $17.69 at New York’s close Wednesday.

LBMA price setting:  The LBMA gold price was set this morning at $1,274.25 from yesterday’s $1,284.80.  The gold price in the euro was set at €1,139.76 after yesterday’s €1,143.37.

Ahead of the opening of New York the gold price was trading at $1,273.75 and in the euro at €1,147.52. At the same time, the silver price was trading at $17.34. 

Price Drivers

Technical picture

The pullback in the gold price is a correction that has not altered the trend. This remains to the upside.  A weaker euro has led to higher prices for gold in the euro and lower prices in the dollar. This shows a recovering dollar is the main reason for gold’s fall at the moment.

Over the last day global uncertainty has increased due to issues on both sides of the Atlantic and in the Middle East.

Middle East

In the Middle east tensions there continue to rise as actions are taken against Qatar. It is clear that this is not simply political issues between the Persian Gulf nations but between the two sides of Islam. These cannot be solved by simple diplomacy. We can’t see a solution to these or to terror itself. At best, the police in different countries may be able to contain it, but with wars smashing on in different parts of the Middle East over the religious issues, we cannot see an end of them at all.

British Elections have turned out to be disaster for Prime Minister May as we see a hung Parliament. As a result we expect to see more easing and perhaps a rate cut in the near future as uncertainty kicks into the way forward for Brexit. Most believed that the only issue was the size of the conservative majority. But this result changes things. Already the gold price is rising in the pound sterling, as the pound falls heavily.

This is a year of considerable surprises.  We now look to Italy for the next surprise.

The Dollar

The dollar is stronger today as it consolidates. This is the prime reason the gold price has fallen in the dollar. It has risen in other currencies.

With gold ETF purchases continuing in the U.S. uncertainty surrounding the way forward under President Trump increases. The resulting slowing of his agenda continues to provide a backdrop for gold to rise, but the markets see in Comey’s testimony, no reason to fall. It does appear so far that there are no grounds for impeachment of the President, but his agenda does seem to be mired in controversy.

Gold ETFs – Yesterday, saw purchases of 2.071 tonnes of gold and with the last two days before this the total purchases of the last three days is 17.005 tonnes of gold bought into the two gold ETFs, in the last three days. Yesterday saw 0.6 of a tonne bought into the Gold Trust.  Their holdings are now at 866.998 tonnes and, at 206.16 tonnes respectively.

U.S. buyers continue strong buyers of physical gold now. Today we may see a pause in their buying as the gold price consolidates at lower levels.

Since January 6th 2017 61.364 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Sharp markdown in gold price as European and US tensions ease

 Gold Today –New York closed at $1,293.20 yesterday after closing at $1,293.80 Tuesday. London opened at $1,284.00 today. 

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

         The $: € was slightly stronger at $1.1232 after yesterday’s $1.1254: €1.

         The Dollar index was stronger at 96.89 after yesterday’s 96.73

         The Yen was weaker at 110.07 after yesterday’s 109.30:$1. 

         The Yuan was slightly weaker at 6.7954 after yesterday’s 6.7931: $1. 

         The Pound Sterling was stronger at $1.2941 after yesterday’s $1.2898: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    8

     2017    6    7

     2017    6    6

SHAU

SHAU

SHAU

 

 

283.66

282.37

 

Trading at 283.50

283.67

282.97

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7954

       $1: 6.7931

       $1: 6.7954     

 

   

 

$1,293.79

$1,287.45

 

Trading at $1,292.62

$1,293.84

$1,290.19

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 and Shanghai stayed at the same level yesterday and this morning. London opened $9.20 lower. We see London preparing for sales of gold by marking prices down ahead of trading. With the geo-political and financial events taking place today in the U.K. and E.U  the market is pausing waiting for clarity going forward.

Silver Today –Silver closed at $17.62 yesterday after $17.69 at New York’s close Tuesday.

LBMA price setting:  The LBMA gold price was set today at $1,284.80 from yesterday’s $1,292.70.  The gold price in the euro was set at €1,143.37 after yesterday’s €1,151.01.

Ahead of the opening of New York the gold price was trading at $1,284.75 and in the euro at €1,143.17. At the same time, the silver price was trading at $17.63. 

Price Drivers

British Elections happen today. As we said yesterday, “With the discussions around the size of the conservative majority it appears to us that the result will not affect the gold price.”

Draghi and the E.U.

Growth in the Eurozone is now clearly evident, but inflation is falling. As we said yesterday, Draghi, who has repeatedly said that policy makers must be convinced that inflation can rise toward 2% on its own, before removing monetary stimulus, may well make a point of this, but will, it seems only change his language in the statement slightly confirming this. This is positive for gold.

The Dollar

We do expect the euro to continue getting stronger against the U.S. dollar. Today the $ index is consolidating.

Today the indications are that Japan is moving towards ending their stimulus program. Whether this is because they deem it is no longer working or whether they have  beaten back deflation is yet to be confirmed. Certainly falling and low inflation world-wide is indicating such battles have not been won.

Comey Testimony

Former FBI Director James Comey is to testify today on whether President Trump tried to interfere with FBI investigation into possible links between then Security Adviser  Michael Flynn and Russia.  Consensus was that Comey would not say anything too damaging to the Trump Administration and this consensus was a partial contributor to a sharp markdown in the gold price, along with profit taking and the stronger dollar. (Editor)

Gold ETFs – Yesterday, saw purchases of 9.764 tonnes of gold and with yesterday’s 4.61 tonnes of gold bought into the SPDR gold ETF, we have seen 14.93 tonnes of physical gold bought into U.S. based gold ETFs in the last two days. We saw 0.56 of a tonne bought into the Gold Trust. Their holdings are now at 864.927 tonnes and, at 205.56 tonnes respectively.

U.S. buyers are strong buyers of physical gold now although this may not continue if today’s gold price downturn lasts.

Since January 6th 2017 58.693 tonnes have been added to the SPDR gold ETF and the Gold Trust. This is an approximately 30% increase in the last two days!

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Gold pausing before tackling $1,300

Gold Today –New York closed at $1,293.80 yesterday after closing at $1,279.60 Monday. London opened at $1,292.65 today. 

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

         The $: € was slightly weaker at $1.1254 after yesterday’s $1.1246: €1.

         The Dollar index was slightly weaker at 96.68 after yesterday’s 96.73

         The Yen was stronger at 109.30 after yesterday’s 109.52:$1. 

         The Yuan was stronger at 6.7931 after yesterday’s 6.7954: $1. 

         The Pound Sterling was slightly weaker at $1.2898 after yesterday’s $1.2904: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    7

     2017    6    6

     2017    6    5

SHAU

SHAU

SHAU

 

 

282.37

281.27

 

Trading at 283.60

282.97

281.35

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7931

       $1: 6.7954

       $1: 6.8036     

 

   

 

$1,287.45

$1,280.86

 

Trading at $1,293.52

$1,290.19

$1,281.55

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 rose to the same level as Shanghai yesterday. Today, Shanghai is pausing at the same level. London opened at almost the same level as Shanghai.

Once again we see all three centers with gold prices at the same level. This is only the second time this has happened. The first was in the last month.

Silver Today –Silver closed at $17.69 yesterday after $17.57 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set this morning at $1,292.70 from yesterday’s $1,287.85.  The gold price in the euro was set at €1,151.01 after yesterday’s €1,144.40.

Ahead of the opening of New York the gold price was trading at $1,291.75 and in the euro at €1,150.37. At the same time, the silver price was trading at $17.67. 

Price Drivers

British Elections happen tomorrow. With the discussions around the size of the conservative majority it appears to us that the result will not affect the gold price.

Draghi and the E.U.

With inflation falling in the E.U. problems in the banking sector [Banco Popular has just been taken over by Santander in Spain]  Draghi, who has repeatedly said that policy makers must be convinced that inflation can rise toward 2% on its own, before removing monetary stimulus, is set to leave the current stimulus position in place through the rest of this year. This is positive for gold.

The Dollar

As you can see above, the dollar index continues to slip to a point where, if it falls to the lower 95 levels, it enters a bear market.  This is the main influence on the gold price, not the short term political news.

But this does not simply mean a falling dollar, it points to disruption in the global monetary system as all the globe’s currencies will be affected. It points to the proximity of a move from a dollar hegemony system to a multi-currency system. Within these changes lies a growing relevance of gold.

The environment globally, continues to be positive for gold.

Gold ETFs – Yesterday, saw purchases of 4.61 tonnes of gold into the SPDR gold ETF, but no change in the holdings of the Gold Trust. Their holdings are now at 855.163 tonnes and, at 205 tonnes respectively.

Since January 6th 2017 48.369 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips – GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold poised to attack $1,300

Gold Today –New York closed at $1,279.60 yesterday after closing at $1,278.20 Friday. London opened at $1,289.50 today. 

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

         The $: € was slightly stronger at $1.1246 after yesterday’s $1.1264: €1.

         The Dollar index was slightly weaker at 96.73 after yesterday’s 96.77

         The Yen was stronger at 109.52 after yesterday’s 110.51:$1. 

         The Yuan was stronger at 6.7954 after yesterday’s 6.8036: $1. 

         The Pound Sterling was barely changed at $1.2904 after yesterday’s $1.2905: £1.

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

     2017    6    5

     2017    6    2

SHAU

SHAU

SHAU

 

 

281.27

278.34

 

Trading at 283.60

281.35

277.96

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7954

       $1: 6.8036

       $1: 6.8153     

 

   

 

$1,280.86

$1,265.28

 

Trading at $1,293.08

$1,281.23

$1,263.55

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.]

 While New York saw the gold price rise a little it was Shanghai that gave the spurt to the gold price trading at $1,293 late in their day today. London was pulled up at the opening to just $4 below Shanghai.

Silver Today –Silver closed at $17.57 yesterday after $17.52 at New York’s close Friday.

LBMA price setting:  The LBMA morning gold price was set today at $1,287.85 from yesterday’s $1,280.70.  The gold price in the euro was set at €1,144.40 after yesterday’s €1,137.04.

Ahead of the opening of New York the gold price was trading at $1,294.15 and in the euro at €1,148.62. At the same time, the silver price was trading at $17.73 

Price Drivers

Mainland China is set to import about 1,000 metric tons from Hong Kong in 2017, says, president of the Hong Kong gold exchange. That compares with net purchases of 647 tons last year and would be the biggest since 2013, data from the Hong Kong Census and Statistics Department confirmed.

Local consumption was up 15% in the first quarter, with sales of bars for investment climbing more than 60% and dwarfing a 1.4% rise in jewelry buying, according to data from the China Gold Association.  

Imports from Switzerland topped 100 tons in the first four months of the year, according to calculations on data reported by the Swiss Federal Customs Administration. In December, China imported 158 tons from Switzerland, taking the total for the year to 442 tons, up from 288 tons in 2015.

One has to be guarded about figures from Hong Kong being representative of Chinese demand. Gold enters China from Switzerland but also through Beijing and other ports of entry. In addition, the country mines around 450 + tonnes a year. It also imports gold directly from mines it owns outside the country. So the figures mentioned here are  just part of the picture. What we do learn from these is that Chinese demand is running close to record levels. The government has encouraged this as a matter of policy, so as to build up the nation’s gold. Gold is not allowed to be exported from the country. The volatility of the Stock Exchange there is a discouragement for long term investors and is not regarded as competition for gold, as in most parts of Asia gold is not bought for profit but for financial security.  As the Chinese middle classes burgeon so more and more gold investors arrive in the market. On top of this present middle classes continue to buy more.

India

Ahead of GST, jewelers increased their purchases to replenish inventory, so as to profit from demand for gold after the additional GST was imposed. From a year ago the gold imports surged four-fold to 103 tonnes. Now that the GST rate increase has happened, it is likely that internal gold demand will jump until these extra stockpiles are reduced. We fully expect Indian gold imports to slow until the harvest time is over, round about September.

With the forecasts for the monsoon positive this year and indeed having already started in  some regions, we believe demand later in the year will increase strongly.

Inflation in the E.U. and U.S.

The Federal Reserve’s preferred price measure rose 1.7% in April from a year ago, down from 1.9% in March and 2.1% in February. Core inflation, which strips out volatile oil and food costs, also slowed to the weakest annual pace since 2015. This raises questions about next week’s rate hike.

In the Euro zone, while producer prices rose 4.3% from a year earlier in May, that pressure has yet to flow through to consumer inflation. Euro zone inflation decelerated to 1.4 % in May, the weakest reading this year, from 1.9% a month earlier. We do not expect the E.C.B. to begin slowing their stimulus program until there is a marked change in this figure.

Gold ETFs – Friday, saw no purchases of gold into the SPDR gold ETF, but saw purchases of 0.66 of a tonne of gold into the Gold Trust. Their holdings are now at 851.003 tonnes and, at 205 tonnes respectively.

Since January 6th 2017 43.759 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips  – GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold starts the week at over $1,280

Gold Today –New York closed at $1,278.20 Friday after closing at $1,270.10 Thursday. London opened at $1,281.00 today. 

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

         The $: € was weaker at $1.1264 after Friday’s $1.1222: €1.

         The Dollar index was weaker at 96.77 after yesterday’s 97.20

         The Yen was stronger at 110.51 after Friday’s 111.51:$1. 

         The Yuan was stronger at 6.8036 after Friday’s 6.8153: $1. 

         The Pound Sterling was stronger at $1.2905 after yesterday’s $1.2875: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    5

     2017    5    2

     2017    5    1

SHAU

SHAU

SHAU

 

 

278.34

278.93

 

Trading at 281.60

277.96

278.63

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8036

       $1: 6.8153

       $1: 6.8062     

 

   

 

$1,265.28

$1,269.67

 

Trading at $1,282.37

$1,263.55

$1,268.30

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 $4.17 lower on Friday than the Shanghai Gold Exchange was trading at today ahead of Monday’s opening. London opened at around $1 lower than Shanghai was trading earlier today. These are very small price differences evidencing arbitrage operations at very professional levels [likely banking operations]. We have been watching these markets, as you know, very carefully over the last year. Our conclusion is that we are watching global gold market developments that are much more significant than the 2005 ‘de-hedging’ operations by gold mining companies and the establishment of gold ETFs by the World Gold Council. These changes not only bring structural changes to the global gold market but demonstrate where gold is going in the future. As China has integrated gold into its financial system, the weight of physical gold trading is being brought to bear on global gold prices. As the  emphasis moves to physical dealing in gold, so its importance as an international reserve asset as well as an asset in support of global finances will increase in the months and years to come.

We are now watching a three sides of the global gold market that is just about in sync. Shanghai is the most influential on gold prices as it is the physical, global gold bullion hub now.

Silver Today –Silver closed at $17.52 Friday after $17.28 at New York’s close Thursday.

We expect to see silver outperform gold as it rises solidly. The Technical picture for silver will become dramatic if the gold price rises further.

LBMA price setting:  The LBMA morning gold price was set today at $1,280.70 from Friday’s $1,260.95.  The gold price in the euro was set at €1,137.04 after Friday’s €1,121.09.

Ahead of the opening of New York the gold price was trading at $1,280.80 and in the euro at €1,139.60. At the same time, the silver price was trading at $17.56. 

Price Drivers

The U.S. Friday’s jobs data disappointed markets, which were expecting much higher numbers. The figures imply that the momentum of jobs creation in the U.S. is waning. But the more important figure was the one giving the inflation picture which showed it was decreasing, a factor likely to influence the Fed’s decision to raise rates this month. We ask, “Will they?” Markets are telling us that they will, but the Fed will be considering the impact on financial markets if they go ahead and raise rates. They will be keen to ensure nothing interferes with the moderate growth the U.S. in experiencing right now. As a result the U.S. SPDR gold ETF and other gold ETFs saw an inflow of funds which pushes them into the market to buy physical gold. This return of demand may well continue to push prices higher.

Indian GST on Gold

At last, the Indian government has issued the level of General Services Tax to be levied on gold inside the country. It will be at 3% and was announced on Saturday by the Indian government [and is lower than industry expectations of around 5%] which will come into effect on July 1 and will replace a number of federal and state levies. The net effect is to raise taxes by around 0.5%, a figure that is going to make little difference to demand in the country. They are currently paying 1% excise duty and 1.5% VAT on gold.

But the net figure paid by Indians for gold is to be 13%, when one adds the Customs Duty of 10%. There is talk that the government will reduce Customs duty, but that talk has been around for well over a year already. We cannot see that happening soon.

As a result, India has a thriving gold smuggling industry that is now that little bit more profitable now. Two years ago the WGC guesstimated that that was 250 tonnes then. With its profitability even higher now, this well-established industry will undoubtedly be bringing in greater volumes. But that demand will not be registered in official figures, but analysts should add that sum to official numbers.

Gold ETFs – Friday, saw purchases of 3.551 tonnes of gold into the SPDR gold ETF (GLD). There were purchases of 1.37 tonnes of gold into the Gold Trust (IAU) since their internet page went down. It has now been corrected. Their holdings are now at 851.003 tonnes and we presume, at 204.34 tonnes respectively.

Since January 6th 2017 43.759 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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

SHAU

SHAU

SHAU

 

 

278.93

279.65

 

Trading at 278.70

278.63

278.9

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8153

       $1: 6.8062

       $1: 6.8180     

 

   

 

$1,269.67

$1,270.75

 

Trading at $1,266.92

$1,268.30

$1,267.33

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 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Gold and the dollar: Plodding along

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

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

         The $: € was weaker at $1.1222 after yesterday’s $1.1179: €1.

         The Dollar index was weaker at 97.17 after yesterday’s 97.40

         The Yen was weaker at 111.15 after yesterday’s 110.84:$1. 

         The Yuan was much stronger at 6.8062 after yesterday’s 6.8180: $1. 

         The Pound Sterling was stronger at $1.2855 after yesterday’s $1.2791: £1.

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

     2017    5    31

     2017    5    30

SHAU

SHAU

SHAU

 

 

279.65

On holiday

 

Trading at 279.0

278.9

On holiday

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8062

       $1: 6.8180

       $1: 6.8615     

 

   

 

$1,270.75

On holiday

 

 

Trading at $1,266.76

$1,267.33

On holiday

 

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.]

 While the Yuan price of gold continues to dip a little and the Yuan continues to strengthen, Shanghai is now leading the gold price, in New York and London a little weaker, alongside a weaker dollar.

The pattern usually seen in London and New York is for the gold price to go in the opposite direction to the dollar. Because of Shanghai’s influence this pattern is being broken, at the moment.  But we do not read too much into this as the moves in the gold price are too small to be conclusive.

Shanghai was trading today at slightly less than a $1 below New York’s close and London’s opening.

Global currency and gold markets continue relatively calm, with the exception of the Yuan which continues to go much stronger as the People’s Bank of China intervenes in the market place.

Silver Today –Silver closed at $17.32 yesterday after $17.41 at New York’s close.

LBMA price setting:  The LBMA gold price was set this morning at $1,266.15 from yesterday’s $1,263.80.  The gold price in the euro was set at €1,128.58 after yesterday’s €1,127.08.

Ahead of the opening of New York the gold price was trading at $1,266.45 and in the euro at €1,128.64. At the same time, the silver price was trading at $17.14. 

Price Drivers

The dollar continues to weaken slightly and the gold price in the dollar to rise, as it is doing in all currencies except the Yuan. The Technical picture shows that it is above resistance but has not yet run as it would have done in the past. Instead it is showing a steady plod with higher lows and higher highs. As we have been pointing out in the Shanghai section above, the influence of Shanghai on the gold price is visible. Its slow plod higher, we see, as evidence of Chinese price dominance at the moment.

If this is correct, we expect the steady plodding of the gold price to continue without those steep spikes much higher or lower. Instead, we expect to see the gold price show lower volatility going forward but a solid direction to be confirmed by such price action.

Stronger than expected U.S. jobs figures released today brought gold and silver prices down a few notches.

Gold ETFs – Yesterday, saw no sales or purchases of gold to or from the SPDR gold ETF. 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 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Is silver leading the way forward for gold?

Gold Today –New York closed at $1,267.00 yesterday after closing at $1,256.10 yesterday. London opened at $1,263.00 today. 

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

         The $: € was weaker at $1.1179 after yesterday’s $1.1157: €1.

         The Dollar index was weaker at 97.40 after yesterday’s 97.50

         The Yen was slightly stronger at 110.84 after yesterday’s 111.07:$1. 

         The Yuan was much stronger at 6.8180 after yesterday’s 6.8546: $1. 

         The Pound Sterling was weaker at $1.2791 after yesterday’s $1.2859: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    31

     2017    5    30

     2017    5    26

SHAU

SHAU

SHAU

 

 

On holiday

279.25

279.4

On holiday

279.60

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8180

       $1: 6.8615

       $1: 6.8737     

 

   

 

On holiday

$1,265.85

 

 

$1,274.61

On holiday

$1,267.44

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.]

 While the Yuan price of gold has dipped a little, the rise in the Yuan has lifted the dollar price of gold there. Shanghai was trading today at just $2.61 above New York while London opened at $6.61 below Shanghai.

Global currency and gold markets are relatively calm, with the exception of the Yuan which has gone much stronger [over 1% stronger in the last two days] as the People’s Bank of China intervenes in the market place. We see this as a continued attack on speculation and the  efforts to improve the reputation of all Chinese financial markets.

Silver Today –Silver closed at $17.41yesterday after $17.32 at New York’s close. A glance back over the last couple of weeks shows that the silver price pointed the way for gold. It fell just ahead of the fall in the gold price and is now rising as the gold price consolidates at lower levels. Is it leading the way for gold?

LBMA price setting:  The LBMA gold price was set today at $1,263.80 from yesterday’s $1,262.80.  The gold price in the euro was set at €1,127.08 after yesterday’s €1,131.03.

Ahead of the opening of New York the gold price was trading at $1,264.65 and in the euro at €1,127.89. At the same time, the silver price was trading at $17.33. 

Price Drivers

The gold price is consolidating in a tightening range heading towards that strong move that we have been waiting for, for some time now. We do see the 50-day average above the 200-day average now, but more importantly the Technical picture is indicating that the next strong move will be seen short, medium and long term.

Leading Fund Managers are stating that the 2%+ growth in the U.S. is not evident, placing a large question mark over whether last quarter’s lower growth is temporary. They are also saying that E.U. growth is likely to be stronger than U.S. growth. Alongside this, Fed Officials are stating that a correction in the equity markets would be healthy. Add the two factors together and we see a downturn in markets and likely a fall in the dollar.

If we don’t see a rate hike in June we would expect to see the gold price rise and potentially strongly as U.S. investors switch into the gold market there.  

Please bear in mind that many equity investors hold them as they yield more than fixed interest rate securities. If there is a rate hike that difference will narrow causing many shares to adjust downwards until they, once again, yield more than Treasuries.

Gold ETFs – Yesterday, saw no sales or purchases of gold to or from the SPDR gold ETF (GLD) but a purchase of 0.15 of a tonne into the Gold Trust (IAU). Their holdings are now at 847.452 tonnes and at 202.97 tonnes respectively.

Since January 6th 2017 38.838 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance