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 

Will Gold and Silver Pull Back or March Ahead?

By Stefan Gleason*

Either way, long-term gold bulls shouldn’t sweat this particular technical level. Major bull markets need to pull back and reconsolidate periodically.

Whether that starts happening this week, or later on at higher price levels, a downturn of some magnitude is inevitable.

One indicator that may be pointing toward a pullback sooner rather than later is the negative divergence in gold mining stocks which are often leading indicators for the yellow metal.

Gold Price Chart

Despite gold spot prices rallying along with the broader U.S. equity market last week, the HUI Gold BUGS (Basket of Unhedged Gold Stocks) Index fell by 3.8%. That suggests that some big institutional speculators are turning bearish on gold near term.

If you’re looking to accumulate bullion, a pullback should be welcomed as an opportunity to get in at lower levels. Long-term bulls will not want to see anything as severe as the drawdown that occurred in the second half of 2016, however. They will be looking for any coming correction to bottom out above the $1,125/oz low hit in December.

Higher highs and higher lows characterize a major bull market. The December 2016 low was a higher low than the one from 2015. A higher high will occur when gold prices can move above $1,375. At that point, the public might start taking notice of precious metals markets – which so far this year have been overshadowed by the series of record highs in the U.S. stock market.

President Donald Trump has taken credit for the rally in stocks. His vows to cut taxes and regulations have, no doubt, driven buying by investors.

Over the weekend, Trump sent out this tweet: “Great optimism for future of U.S. business, AND JOBS, with the DOW having an 11th straight record close. Big tax & regulation cuts coming!”

Great optimism for future of U.S. business, AND JOBS, with the DOW having an 11th straight record close. Big tax & regulation cuts coming!

Trump also wants a weaker dollar to help boost U.S. manufacturing. That could put him in conflict with the Janet Yellen Fed if it moves to raise interest rates.

Trump will have the opportunity to appoint multiple new members to the Federal Reserve Board. It’s one of the reasons why top financial and geopolitical analyst Jim Rickards is so bullish on gold.

“If Trump follows through on the logic of the cheaper dollar, he’s going to appoint doves to the Board. The market’s going to get the signal immediately and the price of gold is going to soar,” Rickards said in a recent Money Metals podcast interview. “We’ve got some very short run headwinds, maybe between now and April, but for certainly the second half, even the last three quarters of the year, I’m extremely bullish on gold.”

There will be some bumps along the way. But those who hang on tight for the ride in gold and silver markets stand to be rewarded.

Will Shanghai pull gold price through $1,200?

Gold Today –New York closed at $1,187.20 on the 10th January after closing at $1,182.50 on the 9th January. London opened again at $1,190.40 today.

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

         The $: € was stronger at $1.0554: €1 from $1.0611: €1 yesterday.

         The Dollar index was stronger at 102.09 from 101.66 yesterday. 

         The Yen was weaker at 116.05: $1 from yesterday’s 115.40 against the dollar. 

         The Yuan was stronger at 6.9225: $1, from 6.9244: $1, yesterday. 

         The Pound Sterling was slightly stronger at $1.2156: £1 from yesterday’s $1.2150: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    11

     2016    1    10

      2016  12    9

SHAU

SHAU

SHAU

/

267.22

265.27

/

268.41

265.71

$ equivalent 1oz @  $1: 6.9225

      $1: 6.9244

$1: 6.9329

  /

$1,200.65

$1,191.56

/

$1,205.99

$1,193.53

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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.]

 If Shanghai is leading the way for the gold price, we would expect London and New York to rise too. Consequently, the gold price needs to move to $1,200 for it to be in line with Shanghai now.

Shanghai on Tuesday was $13 higher than the close of New York. This morning London opened only $10.59 lower than yesterday’s Shanghai closing. And this strength in gold is happening while the dollar is rising and the Yuan slipping slightly.

Meanwhile the People’s Bank of China has reported a fall in its gold reserves of in December by 20.98 tonnes. Is this a change in direction of the PBoC? We don’t accept that for a second.  The Chinese authorities are rarely clear on such subjects and often don’t give a full picture of their situation, as it is not in their interests to do so. So this figure could be some sort of window dressing for our benefit. We know they use two agencies to hold gold on their behalf until it suits them to take the gold into reserves. They could easily have handed it back to the non-reporting one on a temporary basis. What we do know is that it is illegal to export gold from China. We also know that the SGE itself can hold gold and does not disclose it.

LBMA price setting:  The LBMA gold price setting was at $1,187.55 this morning against yesterday’s $1,183.20. 

The gold price in the euro was set higher at €1,128.31 after Friday’s €1,117.60 as the dollar strengthened.

Ahead of the opening of New York the gold price was trading at $1,188.15 and in the euro at €1,131.46.  At the same time, the silver price was trading at $16.77. 

Silver Today –Silver closed at $16.79 at New York’s close yesterday from $16.57 on the 9th January. 

Price Drivers

We decided to look at the gold market through the eyes of a non-professional at the gold market. It quickly became clear just how easy it was to be informed in a way that distorted the true picture and confuse investors.

For instance, when you hear that gold rose x% in sterling or y% in the dollar, that ignores the fact that the gold market is a global market where prices reflect the global market demand and supply eventually.

We would prefer to see, “the dollar fell against gold, or sterling fell against gold”, a reflection of currency performance, not gold’s performance.

As you have read in these reports the gold price is rising in all currencies at the moment, with both London and New York trying to catch up to Shanghai prices. New York and London have not moved up because of what Prime Minister May said, but that gold prices in sterling rose because of the pound’s fall.

No event in the U.S. has caused gold to move up this week. It has moved up because of global demand and supply factors. In China demand for gold is robust. In the U.S. there was a very big sale [nearly 9 tonnes] of gold in one day earlier this week, so if the gold price was driven by U.S. factors alone, the gold price would have fallen. It didn’t, it rose!

After all gold is a currency, it is both an asset and cash, globally.  

Relevant factors to the global gold price must not be local factors, unless they globally affect the gold price. Most that are attributed to moving the gold price just aren’t.

That’s why understanding just where gold’s pricing power lies is so important.

That’s why understanding currencies is so critical to understanding the gold price.

Gold ETFs – Yesterday, in New York, there were no sales from the SPDR gold ETF or any from the Gold Trust, leaving their respective holdings at 804.996 tonnes and 198.30 tonnes. 

As we said in an earlier report, “Substantial sales of gold on a daily basis are needed for New York to control the gold price”.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Did sentiment for gold change with the New Year?

Gold Today –New York closed at $1,159.50 on the 3rd January after closing at $1,151.70 on the 30th December. London opened again at $1,166.30 today.

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

         The $: € was weaker at $1.0441: €1 from $1.0310: €1 yesterday.

         The Dollar index was weaker at 102.98 from 103.09 yesterday. 

         The Yen was stronger at 117.56: $1 from yesterday’s 117.92 against the dollar. 

         The Yuan was stronger at 6.9321: $1, from 6.9566: $1, yesterday. 

         The Pound Sterling was slightly weaker at $1.2270: £1 from yesterday’s $1.2280: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    4

     2016    1    3

      2016  12    30

SHAU

SHAU

SHAU

/

264.34

264.16

/

264.30

264.70

$ equivalent 1oz @  $1: 6.9321

      $1: 6.9566

$1: 6.9340

  /

$1,181.88

$1,184.93

/

$1,181.70

$1,187.35

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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 from the above figures [yesterday’s not today’s, as today are only released tomorrow] the discount to Shanghai’s prices is narrowing. Shanghai prices continue to rise showing good demand, but London and New York’s prices are rising faster, despite strong sales from gold ETFs. Against New York’s prices Shanghai was trading $16.38 higher, but against London Shanghai was trading only $10.40 higher. The change in sentiment in the global gold markets is now evidenced by these rising prices.

LBMA price setting:  The LBMA gold price setting was at $1,165.90 this morning against yesterday’s $1,148.65. 

The gold price in the euro was set higher at €1,117.51 after yesterday’s €1,106.01.

Ahead of the opening of New York the gold price was trading at $1,165.15 and in the euro at €1,117.22.  At the same time, the silver price was trading at $.16.42

 Silver Today –Silver closed at $16.29 at New York’s close yesterday from $16.21 on the 30th December. 

Price Drivers

With a weaker dollar today, gold has jumped in the dollar but even more so in the euro.  But what is remarkable is that there was a huge sale of gold from the SPDR gold ETF, which did not move the gold price down. Instead the gold price rose and more so than appeared justified by the fall in the dollar.  We can attribute this to the ongoing pull of Chinese prices and demand in Shanghai. The fact that gold prices went higher in London tells us that the gold sold from the SPDR gold ETF was not sold into London this morning, indicating it is on its way to Shanghai.

It does look like gold prices are no longer headed lower so we do expect a more vigorous response in the gold price as the market is overhung with huge short positions in the Futures and Options markets. Any return of U.S. buyers of the shares in the SPDR gold ETF will act as an accelerant to this rise.

Gold ETFs – Yesterday in New York, there were sales of 8.299 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 813.871 tonnes and 196.20 tonnes. This was a significant tonnage unloaded onto the market and should have knocked the price down. As the Custodian HSBC is the one who either takes this amount onto its books, or usually sells it into London, we did not see any impact on London’s prices.

Since January 4th this year, 209.601 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust.  We are almost at half the level accumulated in 2016.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Big gold sales from GLD Friday but having little price impact

Gold Today –New York closed at $1,133.40 Friday after closing at $1,127.4 on the 15th December. London opened again at $1,140.85 today.

 Overall the dollar is slightly weaker against global currencies today.

         The $: € was weaker at $1.0415: €1 from $1.0441: €1 Friday.

         The Dollar index was stronger at 103.09 from 102.95 Friday. 

         The Yen was stronger at 117.11: $1 from yesterday’s 118.17 against the dollar. 

         The Yuan was much weaker at 6.9510: $1 from 6.9463 $1 yesterday. 

         The Pound Sterling was weaker at $1.2373: £1 from yesterday’s $1.2430: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2016  12    19

      2016  12    16

      2016  12    15

SHAU

SHAU

SHAU

/

261.65

263.55

/

261.75

263.45

$ equivalent 1oz @  $1: 6.9510

      $1: 6.9463

$1: 6.9352

  /

$1,171.59

$1,181.99

/

$1,172.04

$1,181.54

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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 prices were not available when we produced this report.

LBMA price setting:  The LBMA gold price setting was at $1,137.60 this morning against Friday’s $1,134.85. 

The gold price in the euro was set higher at €1,092.11 after Friday’s €1,085.31.

Ahead of the opening of New York the gold price was trading at $1,139.75 and in the euro at €1,093.71.  At the same time, the silver price was trading at $16.10.

 Silver Today –Silver closed at $16.09 at New York’s close Friday from $16.00 on the 15th December. 

 Price Drivers

This week’s performance by gold and silver will be the result of two factors:

  1. The dollar.
  2. Gold ETF sales or purchases.

We feel that the dollar has run too far, for too long on the back of hopes under the Trump administration. It is certainly against the interest of the U.S. to have a strong dollar at this point in the U.S.

With the Yuan continuing to fall we may well see our forecast of 7.00 against the dollar reached by the end of this year. In 2017 we expect more falls in the Chinese currency. Let’s be clear on this, if the dollar continues to strengthen much more, the likelihood of import controls via stringent tariffs increases.

Trump’s rhetoric, via Tweets against China, are not stopping, making the divisions between the U.S. and China ever greater.  While China is pragmatic it also understands the many ways it can retaliate to its advantage.

As such we do expect to see gold demand increase from China and for a strong dollar to be capped in 2017. In a divided world, under tension, gold sees greater demand as history has shown throughout the ages.

2017 will see such tension and happenings that are the unforeseen, unforeseen. It will not be a quiet year. With gold prices at current levels we see gold not being far from its bottom. This next fortnight will confirm this, we think.

Gold ETFs – Friday, there were sales of 5.333 tonnes from the SPDR gold ETF and sales 0f 0.75 of a tonne from the Gold Trust, leaving their respective holdings at 836.991 tonnes and 195.60 tonnes. These sales were again large, but had no impact on the gold price. It would appear that when sales are ONLY as large as this, the buoyancy of the market is stronger than such sales.

The influence of the dollar exchange rate seems greater than physical sales at the moment!

Since January 4th this year, 232.121 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Deliberations on the U.S. Fed rate rise and gold

Two articles published by me on sharpspixley.com in the aftermath of this week’s FOMC meeting announcing a 25 basis point U.S. interest rate rise and looking ahead to three more in 2017.  Despite virtually every analyst and commentator predicting the increase which should have suggested that the rise had already been discounted in the recently weaker gold price the news precipitated a further $20 plus fall despite this.  This totally disregarded the Fed predicting three rate rises in 2016 the last time it increased rates by 25 basis points, exactly a year ago, and then failing to raise rates at all until now.  How short memories are – particularly in the financial world.  And how poor the Fed’s record has been in predicting the path of the U.S. economy.  Perhaps it will be all-change in 2017 under the somewhat unpredictable President-elect Trump, but we see some hopes being damped.  Whether gold will benefit, or continue to weaken, will probably depend on the big money which is likely to continue setting paper gold prices which still dominate, although Shanghai is doing its best to bolster prices – so far to little avail.

The first of the two Sharps Pixley articles written a couple of hours after the rate increase decision was announced, and the accompanying Fed forecast can be read by clicking on this link: Gold hammered on U.S. Fed rate decision.

The second was written the following morning (UK time) as the gold price continued to weaken and the dollar index to strengthen.  Indeed much of gold’s fall could be put down to dollar strength rather than gold weakness, although offloading of gold from the big gold ETFs did continue which will not have helped sentiment.  To read this article click here: Gold and silver dip further as dollar continues on upwards path.

Today the rise in the U.S. dollar index appears to have halted and precious metals prices appear to have stabilised.  Whether that will continue into next week we do not know given the gold bears appear to be in the ascendant, but there is an impression gold has been oversold, the dollar overcooked and maybe, just maybe, something of a precious metals recovery is already under way.

Major divergence between SGE and London gold benchmarks

Readers of lawrieongold will be well aware that I have not been posting articles here during my recent nearly 8-week hospitalisation.  I am happy to say that I am now recuperating at home – still very shaky on my feet so not getting out much, but fully intend to get back writing again, so here is an edited version of an article I published on the Sharps Pixley website yesterday.  To read the original article click here

The principal additional comment I’d like to make here is to note the almost 20 hour time difference between the Shanghai and London PM ‘fixes’.  In a rapidly moving gold market this can account for a significant price change and some days will indeed have seen that, but in general terms this won’t have accounted for nearly all the difference.  There has definitely been a sharp anomaly between Shanghai and London prices as can be noted from the Shanghai fixes and the Western spot prices as noted by sites like kitco.com at the same time, and in all cases the Shanghai price has been significantly higher.  Do read the article bearing this in mind.  It follows below:

Few seem to have commented on what appears to be an increasing trend towards large anomalies appearing between the Shanghai and London gold benchmark prices.  Up until the beginning of November prices were pretty much in sync give or take a few dollars – a variation based on trading activity during the day, and, in some cases due to a difference between the gold tenor quality required under the two systems.  The SGE specification is for 99.99% gold content or better, while London works to LBMA Good Delivery specifications where the requirement is only 99.5%.  But on one ounce of gold this should only make for a maximum difference in price of around $5-6 at around a $1200 gold spot price.

But recently – as the table below comparing SGE and LBMA (London) PM price benchmarks for the past month makes very obvious the price difference – virtually always strongly in favour of the SGE benchmark since early in the month.  This has been consistently $10-20 or more (often $20-30) – even rising as high as $46 on November 23rd, although a significant part of this difference on that day was due to the sharp intra-day fall in the London gold price,  (as noted in the introductory paragraph above) as will also have been the case on November 9th when there was a somewhat similar $45 difference.

Note that this morning the Shanghai set benchmark price at $1,197.17 was around $24 higher than the prevailing spot gold price on the international market at the same time!

SGE and London PM Gold ‘Fixes’ (US$

Date SGE PM Gold Price London PM Gold Price Price diffce. SGE PM over London
Nov 1st 1283.95 1288.45 -4.50
Nov 2nd 1296.08 1303.75 -7.67
Nov 3rd 1306.66 1301.00 +5.66
Nov 4th 1300.75 1302.80 – 2.05
Nov 7th 1293.91 1283.05 +10.86
Nov 8th 1290.17 1282.35 +7.82
Nov 9th 1326.88 1281.40 +45.48
Nov 10th 1293.91 1267.50 +26.41
Nov 11th 1267.47 1236.45 +31.02
Nov 14th 1227.97 1213.60 +14.37
Nov 15th 1236.99 1226.95 +10.04
Nov 16th 1241.65 1229.20 +15.45
Nov 17th 1237.30 1226.75 +10.55
Nov 18th 1219.26 1211.00 +8.26
Nov 21st 1224.54 1214.25 +10.29
Nov 22nd 1235.43 1212.25 +23.18
Nov 23rd 1231.70 1185.35 +46.35
Nov 24th 1212.41 1186.10 +26.31
Nov 25th 1200.91 1187.70 +13.21
Nov 28th 1218.64 1187.00 +31.64
Nov 29th 1216.15 1186.55 +29.60
Nov 30th 1210.24 1178.10 +32.14
Dec 1st 1199.35 1161.85 +37.50

Source: www.Kitco.com

As we pointed out here yesterday a part of the reasoning behind the higher SGE benchmark price levels is something of a squeeze on Chinese gold supply which is local market specific – particularly now that gold traders and fabricators may be looking to build stocks ahead of anticipated additional demand from the Chinese New Year holiday, and a reported reduction in gold import quotas by the Chinese Government to curb capital outflows. But part may also be due to Shanghai looking to establish itself as the true gold price setting exchange and thus usurping the still dominant position of COMEX and the LBMA.  As China is the world’s biggest physical gold market, while COMEX and London are largely paper markets, it is probably only a matter of time before this comes to pass but for the moment the Western markets look to still be calling the tune as far as the accepted global gold price is concerned despite some hugely anomalous movements from time to time which many observers put down to manipulation.  The latest such was only yesterday when a rise in U.S. jobless claims, which might normally be considered gold positive, saw the price marked down sharply after an initial small rise.

Gold back on the Fed Grindstone

Edited version of another of my articles published on the Sharps Pixley website.  To read original click here

Gold followers will hardly be unaware that every time a Fed Open Market Committee Meeting draws near the gold price moves, often  quite sharply, on the will she, won’t she prospect of Janet Yellen announcing that at long last the Fed will start to raise interest rates again.  Now we are coming up to the December FOMC meeting – a full year after the last Fed rate rise.  Well the meeting is due to take place on December 13thand 14th and perhaps there is actually a realistic likelihood that indeed on this occasion it will be a case of ‘she will’.

So the gold price has been moving accordingly, but perhaps not quite in such a volatile manner as on previous occasions when the likelihood of a Fed rate raising decision was rather more uncertain.  During European and North American trading the futures markets have managed to control it in the $1,170s and $1,180s for the most part, with a so far brief foray into the $1.160s but any moves to the higher levels seem to be swiftly capped and brought back down again.  There does seem to have been something of a plethora of adverse gold price comment being released at present and when this has happened in the past it has sometimes been associated with a significant price takedown.  It remains to be seen whether this is a portent of yet another instance of such.

The anomaly here appears to be the Shanghai Gold Exchange Benchmark Pricing which seems to be coming in at levels above $1,200 two or three times this week so far, although these higher levels don’t seem to appear in the Kitco gold price charts.  We do know that Chinese gold prices are running higher at the moment and carrying the highest price premiums over London and New York prices seen for some time.  Some put this down to reports that the Chinese Government is already restricting, or is planning to restrict, the number of gold import licences.  This has been running in parallel to rumours that India, the other major global importer of gold, is planning to ban gold imports altogether, although one suspects that if this were to happen the amount of gold smuggled into the country would soar.  The caution here though is that when Chinese and Indian demand was just about at its strongest back in 2012, the gold price tanked due to heavy withdrawals out of the big gold ETFs and we have again been seeing some major outflows from GLD in particular.

The other reason for the Chinese high premiums – reportedly approaching $30 an ounce on some days – is that traditionally this is the time of year for Chinese fabricators and gold retail outlets to stock up ahead of the Lunar New Year festivities which can create temporary gold shortages, particularly in a year when gold imports have been running at a lower level.  In 2017 the Chinese New Year falls on January 28th, followed by a full week of holidays (The Spring Festival Golden Week) and gold has always played a hugely significant part in gift giving over the period.

It should be noted, though, in respect of something of an anti-gold media campaign that reports are surfacing that a number of major bank analysts are now seeing a period of substantial gold price weakness ahead coupled with the Fed rate rise decision. and more  Whether these analysts should be given any credence or not given most analysts were predicting that a Donald Trump victory in the U.S. Presidential election would see gold surge and the stock market crash, is a moot point.

Perhaps before drawing any conclusions one should wait for the results of this weekend’s Italian constitutional referendum.  A defeat for the Renzi  Government position,  which the opinion polls are suggesting, given the set anti-euro positions of the opposition could put the EU in turmoil again, which could give the gold price a welcome boost.  But then, after the Brexit vote and the U.S. Presidential election result, who believes the opinion polls any more?

In the context of a Fed rate increase those with only a short memory may also recall that after the last rate increase a year ago, gold fell back just a little, and briefly, in a knee-jerk reaction and then set off on a six month bull run!

The past year has seen a number of major destabilising events occurring (the Brexit vote, Trump victory and Indian banknote cancellation fiasco all within the past few months) and with the Italian referendum perhaps adding another.  In the long term such uncertainties have to be gold positive, but  there could well be some negatives in the interim and perhaps the first will be the actuality of a Fed rate increase.  Prepare for a bumpy ride.Gold

Battle reigns in the physical gold markets

Gold TodayNew York closed yesterday at $1,328.90 Friday.  London opened at $1,327.00.

    • The $: € was slightly stronger at $1.1219 down from $1.1271 Friday.
    • The Dollar index was weaker at 94.40 from 94.94 Friday.
    • The Yen was stronger at 102.08 up from 102.12 Friday against the dollar.
    • The Yuan was weaker at 6.6808 from 6.6798 Friday.

 

  • The Pound Sterling was weaker at $1.3297 from Friday’s $1.3297.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  12

     2016  09  9

SHAU

SHAU

285.53

287.79

286.04

287.75

Dollar equivalent @ $1: 6.6808

$1: 6.6798

$1,329.33

$1,340.05

$1,331.70

$1,339.86

Shanghai has always been keen to go higher than London and New York. This is not because there is a shortage of gold, waiting for imports using premiums to attract it to the country. China’s supply from outside describes its huge appetite, which is continuing. Shanghai continues to try to keep its prices in line with other global gold markets.

Physical supplies will continue to flow into the country while New York prices are being held back.

The difference on Friday was that just under 12 tonnes of gold was sold from the SPDR gold ETF which caused the fall in the gold price.  Physical sales of gold such as these do drive the gold price down, just as earlier, 14 tonne purchases drove it up to $1,350. The battle in the physical markets is on!

LBMA price setting:  The LBMA gold price setting on Monday was at $1,327.50. Friday it was at set at $1,335.65.

The gold price in the euro was set on Monday at €1,183.05 against Friday’s 1,185.61.

Ahead of the opening of New York the gold price was trading at $1,327.10 and in the euro at €1,182.38.  At the same time, the silver price was trading at $18.85.

 

Silver Today –The silver price was pulled back to $19.07 at New York’s close on Friday down from $19.62, Thursday.  

Price Drivers

Today, we have a very important question on the shape of the global economy and in particular the U.S. economy. After so much stimuli globally, inflation should have taken off by now. It hasn’t. All it has managed to do is to counter deflation leaving both interests and inflation at extremely low levels.

But something else is happening: Liquidity levels are dropping, as is the velocity of money.

Central bank efforts, via stimuli, appear to be starting to lose the battle against deflation. In the past, when this has happened, the pressure to add more stimuli to the economy to continue to counter deflation grows. But larger and larger amounts also fail and even more stimulus is needed to counter rising deflation. More is added, then more needed and so on. At some point inflation takes off like a rocket but also fails to counter deflation, which also takes off, with an economy now starting to shrink. This is a fact of history and one very much in danger of being repeated!

Are we on the brink of that?

This time round governments will be unable to act strongly, as in many developed countries, they appear to be emasculated having not acted decisively since the ‘credit crunch’. And central banks, which should have been backed by government actions, were left holding the baby, without the full array of tools to even approach the problem. They are looking increasingly exhausted and unable to anything different, only more of the same.

The prime loser will be the value of currencies as they fall in value against gold [and silver].

Gold ETFs – There was a massive sale of 11.871 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 939.940 tonnes and 225.39 tonnes. This sale did not cause the gold price to breakdown convincingly. We expect the next moves by large SPDR gold investors may give the gold price the direction it is looking for.

Silver – The silver price tumbled lower to just above $19.00 showing the typical exaggeration of the moves in the gold price. Silver price volatility will continue.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Could be a volatile long weekend for gold as U.S. holiday kicks in

Gold Today –Gold closed in New York at $1,313.30 on Thursday after Wednesday’s close at $1,308.30.  London opened at $1,310.

–         The $: € was weaker at $1.1182 down from $1.1134 yesterday.

–         The dollar index was weaker at 95.79 from 96.11 yesterday.

–         The Yen was almost unchanged at 103.57 from yesterday’s 103.55 against the dollar.

–         The Yuan was slightly weaker at 6.6823 from 6.6801 yesterday.

–         The Pound Sterling was stronger at $1.3267 from yesterday’s $1.3140.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
      2016  09  2

2016  09 1

SHAU

SHAU

282.69

282.32

282.50

281.63

Dollar equivalent @ $1: 6.6823

$1: 6.6801

  $1,315.81

$1,314.52

$1,314.93

$1,311.31

After New York pulled up from its lows around $1,305 to $1,313 Shanghai stabilized too, following New York, as did London.

The Yuan weakened against the dollar while the dollar weakened against other currencies. It was a day when the U.S. began to wind down ahead of the long weekend.

LBMA price setting:  The LBMA gold price setting on Friday was at $1,311.50. On Thursday it was at set at $1,305.70.

The gold price in the euro was set on Friday at €1,172.34 up slightly on Thursday’s 1,171.45.

Ahead of the opening in New York the gold price was trading at $1,314.05 and in the euro at€1,174.20.  The silver price is trading at $18.87 ahead of New York’s opening. Gold surged in New York following the poorer than expected nonfarm payroll increases in August.  At one time spot gold rose to over $1,130 before coming back down to the mid to low $1320s as trading progressed.

Silver Today –The silver price closed in New York at $18.87 Thursday up from $18.65 Wednesday. 

Price Drivers

Today in New York markets should be quiet as the long weekend has begun for so many. While the trading desks will have few dealers on hand the day is a great opportunity for those large speculators who like to create big movements in prices.

This week alone has seen attempts on COMEX to crush the gold price with High Frequency Trading dumping $1.5 billion worth of Futures contracts onto the market. The day before yesterday and yesterday saw over 17 tonnes of gold dropped into the physical market [which should feed through to London] and yet the gold price in the last day has bounced off $1,306.

With markets now closed from end of business today until Tuesday, there may well be position-squaring to minimize exposure for such a long time [three days in markets is a long time]. Perhaps that is what happened this week, as it is also a week when one month ended and another began.

Nevertheless, the markets are vulnerable to great volatility.

Some may say that it is the dire situation in Venezuela that’s caused the sell-off in gold. We have difficulty with that as this would be seen in London’s market and prices, not in New York, on COMEX or in the SPDR gold ETF. They would be selling directly to willing buyers and more likely to be courted by those looking for large tonnages which would go direct to the sellers and not through the market place.

Gold ETFs – In New York yesterday there was another large sale of 5.342 tonnes from the SPDR gold ETF (GLD)but no change in the holdings of the Gold Trust (IAU). This left their respective holdings at 937.89 tonnes and 225.44 tonnes.

Silver – The silver price was higher at London’s opening, after New York again took it higher. It simply took gold to stabilize at current levels for silver to continue rising. Market stability has certainly made both dealers and buyer feel that the silver price has fallen too far.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold Jumps on Latest U.S. Data

Gold continues to be strongly driven by speculation as to if and when the U.S. Fed will decide to increase interest rates.  But this mood is very much data driven and while some positive figures last week, coupled with what were taken as some potentially hawkish statements by the Fed Chair and Vice Chair, had led to some sharpish falls in the gold price on the expectation that this had put the possibility of an interest rate increase announcement following the FOMC meeting to be held on September 20th and 21stback on the cards.  But data this week in the form of a poor ISM manufacturing figure, and now a considered-weak nonfarm payrolls increase, have reversed the gold price movement as now a September rate hike announcement is seen as unlikely again.

The latest employment figure suggesting the U.S. had added 151,000 jobs during August, as against expectations of 175,000 to 185,000, with a jobless rate of 4.8% saw gold spike by nearly $20 at one time to above $1330, on the publication of the announcement, before starting to slip back a little again.  Traders and analysts now appear to see no Fed rate increase announcement until the December FOMC meeting – to be held on the 13th and 14th of that month – if then.  That will be yet another blow to the Fed’s economic forecasting credibility given that it has consistently over-estimated U.S. growth and had suggested at the end of last year there would be three or four rate increases this as it moved to ‘normalize’ rates, while so far there have been none.

It is actually a moot point as to whether the U.S. economy is actually in recession or not.  The stock market certainly suggests otherwise but this is buoyed up by low interest rates and Fed monetary policy, whereas some other key indicators make more negative reading.  Apart from the slower than anticipated job growth and the Chicago PMI downturn to below 50, it is apparent that the stronger dollar is impacting manufacturers who export adversely, while the latest domestic news from the auto industry in that sales turned down 4.2% in August.  Reuters reports that some carmakers say the industry has peaked and that a long-expected decline due to softer consumer demand had begun.  All is not well in the world’s largest economy!

Gold only sensitive to exchange rates and ETF movements for now

Gold TodayGold closed in New York at $1,343.40 on Monday after Friday’s close at $1,341.00.  London opened at $1,341 again.

    • The $: € was at $1.1335 with a wide spread, from $1.1305.
    • The dollar index was at 94.39 from 94.64 Monday.
    • The Yen was at 100.15 from Monday’s 100.48 against the dollar.
    • The Yuan was weaker at 6.6447 from 6.6540 Monday.

 

  • The Pound Sterling was at $1.3184 from Monday’s $1.3144.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  23

2016  08  22

SHAU

SHAU

286.47

286.54

286.56

/

Dollar equivalent @ $1: 6.6447

$1: 6.6540

$1,340.96

$1,339.40

$1,341.37

$1,354.55

All global gold markets, together with global currencies seem to be moving sideways today.

The Yuan is trying to hold onto the 6.65 area, we presume because we are about to enter the month in which if finally becomes one of the currencies making up the S.D.R.  Thereafter we expect any restraint on the Yuan going weaker [gently] will be lifted.

The dollar, at the same time, continues to show a slightly weakening trend holding at lower levels.

LBMA price setting:  $1,338.50 after Monday 22nd August’s $1,334.30.

The gold price in the euro was set at €1,181.69 down €7.51 from Friday’s €1,189.80.

Ahead of the opening in New York the gold price stood at $1,341.65 and in the euro at €1,183.17.  

Silver Today –The silver price closed in New York at $18.99 on Monday down from $19.75 on Friday.  Ahead of New York’s opening the price was trading at $19.03.

Price Drivers

The market in gold remains sensitive to exchange rate moves and to purchases and sales in the gold ETFs There is little else of substance to move these prices currently.

Janet Yellen is due to speak today, but is expected to remain dovish on rate hikes. Hence the better tone in the gold market.

China has been given the OK to issue an S.D.R. bond, purchasable in Renminbi only, by the World Bank. This new bond issuance is 2 billion SDRs which is equivalent to $2.8 billion.

The precise timing of issue and individual bond terms will be based on favorable market conditions, at the time of issuance.

This is a bold move and one aimed at further internationalization of the Yuan.  It will also make the IMF very happy as the S.D.R. has not been credible money in use widely, itself. By issuing only in the Renminbi any international investor must purchase the Yuan. And this is China’s aim, to widen the use of the Chinese currency as far as possible.

Gold ETFs – In New York on Monday there were purchases of 2.375 tonnes into the SPDR gold ETF (GLD) but no change in the holdings of the iShares Gold Trust (IAU). This left their respective holdings at 958.369 tonnes and 223.85 tonnes.

Silver –Silver prices now holding around $19.00 and will remain sensitive to even small moves in the gold price.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Fundamental change in gold price structure under way

Gold TodayGold closed in New York at $1,352.70 on Thursday after Wednesday’s close at $1,346.50.  London opened at $1,341 but immediately recovered to $1,346 before rising further.

    • The $: € was correcting at $1.1307 from $1.1329.
    • The dollar index was correcting at 94.52 from 94.35 Thursday.
    • The Yen was correcting slightly at 100.20 from Thursday’s 100.08 against the dollar.
    • The Yuan was weaker at 6.6517 from 6.6324 Thursday.

 

  • The Pound Sterling was slightly weaker at $1.3122 down from Thursday’s $1.3144.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  19

2016  08  18

SHAU

SHAU

288.02

288.80

288.68

288.84

Dollar equivalent @ $1: 6.6517

$1: 6.6324

$1,346.79

$1,354.36

$1,349.87

$1,354.55

New York closed higher than Shanghai’s whole day as Shanghai gold prices remain steady in Yuan!

It was a rapidly weakening Yuan exchange rate against the dollar that was responsible for dollar gold prices to fall. The combination of the Yuan price of gold and the move in the Yuan exchange rate affecting dollar gold prices this way, is just what the Shanghai Gold Exchange wanted. When they established the Fix an accompanying statement made it clear that it was not just to give SGE gold prices but to promote the use of the Yuan in such dealings. Here it is!

The Yuan throughout the week has being doing just that as it gyrated up and down.  The dollar, at the same time, while showing a weakening trend, has been comparatively steady.

We will watch this feature going forward as it indicates where pricing power lies.

LBMA price setting:  $1,346.85 after Thursday 18th August’s $1,347.10.

The gold price in the euro was set at €1,189.80 up €1.20 from Thursday’s €1,188.60.

Ahead of the opening in New York the gold price stood at $1,345.20 and in the euro at €1,187.55.  

Silver Today –The silver price closed in New York at $19.75 on Thursday down from $19.66 on Wednesday.  Ahead of New York’s opening the price was trading at $19.45.

Price Drivers

Long time readers of this daily report will know that we believe a fundamental change in the structure of the gold price is underway with pricing power slowly but surely headed eastwards to Shanghai.

With COMEX, a ‘paper gold’ market with the exception of between 1 & 5% physical dealings, yet controlling the dollar gold price and London, a secondary influence, despite it having a considerably larger measure of physical dealing in its midst, the fundamentals of gold demand and supply have become secondary to the influences of economic events on the gold price.

With China the largest physical gold market in the world and dealings based on physical content it overshadows the rest of the world’s gold markets already and yet this is not apparent. We know it will happen, so we follow the Shanghai Gold Fixings carefully to see the change in influence over the gold price come through and show itself in the price. What we have seen this week, in Shanghai and the Yuan gold price, is a shift away from the dollar in establishing the gold price. If the Chinese get what they want the main gold price will be a Yuan price and not a dollar price!

Gold ETFs – In New York on Tuesday there were sales of 1.781 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust. This left their respective holdings at 955.994 tonnes and 223.85 tonnes.

Silver –Silver prices are dropping as they exaggerate gold’s small slippage, but, as always, will turn if gold breaks through resistance. If gold does not, we expect to see silver hold around these levels as they have already discounted a fall in the gold price.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver prices steady in the euro weak in the dollar  

Gold TodayGold closed in New York at $1,346.10 on Tuesday after Monday’s close at $1,339.40.  London opened at $1,341.

    • The $: € was almost unchanged at $1.1262 from $1.1268.
    • The dollar index was almost unchanged at 94.96 from 94.94 Tuesday.
    • The Yen was slightly weaker at 100.76 from Tuesday’s 100.25 against the dollar.
    • The Yuan was weaker at 6.6330 from 6.6270 Tuesday.
  • The Pound Sterling was slightly stronger at $1.3014 up from Tuesday’s $1.2934.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  17

2016  08  16

SHAU

SHAU

287.60

287.48

287.39

288.47

Dollar equivalent @ $1: 6.6330

$1: 6.6270

$1,348.61

$1,349.27

$1,347.63

$1,353.92

Again Shanghai was higher than New York’s closing but London decided to walk its own road at the opening, opening lower at $1,341. The reason London pulled gold prices down before the opening in London was the continuing ‘strength of the euro/weakness of the dollar, as you can see in the euro gold prices below.

LBMA price setting:  $1,342.75 after Tuesday 16th August’s $1,349.10.

The gold price in the euro was set at €1,191.65 down €5.32 from Tuesday’s €1,196.97.

Ahead of the opening in New York the gold price stood at $1,343.75 and in the euro at €1,197.42.  

Silver Today –The silver price closed in New York at $19.80 on Tuesday down from $19.81 on Monday.  Ahead of New York’s opening the price was trading at $19.68.

Price Drivers

Yesterday saw more tonnage bought into the U.S. gold ETFs, but this had no effect on gold prices.  Gold had hit $1,354 during the day in both London and New York, but pulled back on little to no selling volume thereafter. It is reported that Stanley Drukenmiller has sold his holdings of SPDR gold ETF Call Options and this after his condemnation of the actions of central banks, justifying holding gold in May, not so long ago. We doubt he would have exited gold after that position statement.  More likely he would have found another way to hold gold. We would have expected him to change to allocated gold in physical form, if he was a serious long-term holder.

After all the SPDR gold ETF shareholders [which is what you buy when you buy into the ETFs] don’t own gold, the company owning SPDR does. And that rather defeats the purpose of owning such holdings. After all if central banks get into trouble one of the most likely sources of gold for them lies in SPDR gold holdings. So, it makes far more sense to own the gold directly out of reach of central banks in an allocated form [just holding it outside the country is insufficient to protect from confiscation] as no doubt Mr. Drukenmiller knows.

The market appears to be holding back ahead of the publication of the Minutes from the last Fed meeting for signs that a rate hike is in prospect. The markets have indicated that there is a 50% chance of a rate hike in December, not September, this year. But productivity in the U.S., a major factor in the decision remains at low levels and current data has been weak. As we said last yesterday, “On several fronts, developed world and emerging world bonds, equity markets and on the currency front, any lifting of U.S. interest rates would catapult these markets down, while the dollar would be catapulted higher. So the weight of responsibility on the U.S. Fed grows by the day. We at Gold Forecaster do not expect such a rise in rates for a long, long time because of this risk.”

Gold ETFs – In New York on Tuesday there were purchases of 1.781 tonnes into the SPDR gold ETF (GLD) and 0.96 of a tonne into the Gold Trust (IAU). This left their respective holdings at 962.228 tonnes and 223.85 tonnes.

Silver –Silver prices stumbled heavily pulling back from $20 to the mid-$19. Should gold rise through $1,360 you will see silver run ahead well over $20.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Weaker dollar boosts gold and silver prices

 Gold TodayGold closed in New York at $1,339.40 on Monday after Friday’s close at $1,334.60.  London opened at $1,350.75.

    • The $: € was heavily weaker at $1.1268 from $1.1168.
    • The dollar index fell to 94.94 from 95.65 Monday.
    • The Yen was stronger at 100.25 from Monday’s 101.07 against the dollar.
    • The Yuan was stronger at 6.6270 from 6.6459 Monday.

 

  • The Pound Sterling was slightly stronger at $1.2934 up from Monday’s $1.2924.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  16

2016  08  15

SHAU

SHAU

287.48

286.66

288.47

286.97

Dollar equivalent @ $1: 6.6270

$1: 6.6459

$1,349.27

$1,341.60

$1,353.92

$1,343.05

Shanghai was higher than London’s opening and much higher than New York’s close. London opened at $1,350 whereas as you can see, the p.m. Fix in Shanghai was at nearly $1,354. Shanghai’s physical demand is greater than New York’s paper demand today. U.S. physical demand via the gold ETFs was absent yesterday.

The rise in Yuan prices was against a backdrop of a stronger Yuan, which was in the face of a weak dollar. The Yuan has shown strength in the last few days despite good reasons to weaken against the dollar. We expect that this is because of the impending ‘Go!” signal for the Yuan to be ‘officially’ designated one of the world’s hard currencies. Once that IMF confirmation is published, we expect to see the Yuan decline steadily.

LBMA price setting:  $1,349.10 after Monday 15th August’s $1,339.20.

The gold price in the euro was set at €1,196.97 down €1.93 from Monday’s €1,198.90 due to the weaker dollar.

Ahead of the opening in New York the gold price stood at $1,353.70 and in the euro at €1,198.76.  

Silver Today –The silver price closed in New York at $19.81 on Monday down from $19.69 on Friday.  Ahead of New York’s opening the price was trading at $20.08.

Price Drivers

After many institutions forecast a stronger dollar it continues to weaken against reason, or so it seems. Emerging market currencies and bonds are doing well as they offer much higher yields. Once the Fed, eventually, does lift interest rates, we expect a huge unwinding of these positions.

On several fronts, developed world and emerging world bonds, equity markets and on the currency front, any lifting of U.S. interest rates would catapult these markets down, while the dollar would be catapulted higher. So the weight of responsibility on the U.S. Fed grows by the day. We at Gold Forecaster do not expect such a rise in rates for a long, long time because of this risk.

This is very positive for gold and silver, because such dramatically heightened risks for world markets makes gold and silver a haven set apart from these markets and a port in the coming storms.

Gold ETFs – In New York on Monday there were no sales or purchases from or into the SPDR gold ETF (GLD) or the Gold Trust (IAU). This left their respective holdings at 960.447 tonnes and 222.89 tonnes.

 

Silver –Silver prices are above $20 at the moment as gold rises to the midpoint in its trading range again. Should gold rise further even to $1,360 you will see silver run ahead.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Big sale out of GLD on Friday dented gold price – but not for long.

Gold TodayGold closed in New York at $1,334.60 on Friday after Thursday’s close at $1,337.90.  London opened at $1,341.80.

    • The $: € was slightly weaker at $1.1168 from $1.1156.
    • The dollar index fell slightly to 95.65 from 95.83 Friday.
    • The Yen was slightly weaker at 101.07 from Friday’s 101.04 against the dollar.
    • The Yuan was weaker at 6.6459 from 6.6440 Friday.

 

  • The Pound Sterling was weaker at $1.2924 down from Friday’s $1.2956.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  15

2016  08  12

SHAU

SHAU

286.66

286.86

286.97

286.95

Dollar equivalent @ $1: 6.6459

$1: 6.6440

$1,341.60

$1,342.92

$1,343.05

$1,343.34

Shanghai again turned out to be higher than New York’s close but this time without any exchange rate influence as the Yuan was relatively steady. London followed Shanghai this time too, opening just slightly lower than Shanghai’s close.

As the time approaches when the Yuan becomes one of the world’s ‘hard’ currencies it is meeting the definition of being widely traded in the global monetary system. Just to what extent remains to be publicized. Certain Capital Controls still persist but the silence on this ahead of the incorporation of the Yuan in the IMF’ Special Drawing Rights is deafening.

At the same time the discussions over the type of gold trading London will see in the future has, on one side, Goldman Sachs and the Chinese ICBC who are pressing for a more transparent system. No doubt if precise numbers were published on London’s gold trade, they would influence just where gold’s pricing power resides.

LBMA price setting:  $1,339.20 after Friday 12th August’s $1,336.70.

The gold price in the euro was set at €1,198.90 up €0.50 from Friday’s €1,198.40.

Ahead of the opening in New York the gold price stood at $1,337.25 and in the euro at €1,196.32.  

Silver Today –The silver price closed in New York at $19.69 on Friday down from $19.95 on Thursday.  Ahead of today’s New York’s opening the price was trading at $19.77.

Price Drivers

On Friday in New York there was a very big sale of gold from the SPDR gold ETF of over 12 tonnes. This prompts the question, “Has U.S. demand for the shares of the gold ETFs fallen away?’  The data out of the U.S. on the economy is weak telling us that while the economy is OK, it is not as strong as it needs be to invigorate growth. The rest of the world [with the exception of China] is also giving a poor showing. Against the backdrop of globally burgeoning debt, the conditions where even the U.S. investor discards his gold do not exist at present. Add to that the approaching ‘gold season’ and we do not expect to see the thundering herd leave its gold positions. Indeed demand from gold from the U.S. has not reached the point where it is a ‘thundering herd’. It has a long way to go before U.S. investors are well stocked with gold in their portfolios.

We have a couple or more weeks before the ‘gold season’ comes into play so the gold price will continue to consolidate.

Gold ETFs – In New York on Friday there were very large sales of 12.171 tonnes from the SPDR gold ETF (GLD) but purchases of 1.65 tonnes into the Gold Trust (IAU). This left their respective holdings at 960.447 tonnes and 222.89 tonnes.  Undoubtedly the big GLD sale coincided with the sharp mid-session drop in the gold price on Friday, from which its appears to have been recovering gradually today.

Since January 4th this year, the holdings of these two gold ETFs have risen by 385.722 tonnes.

Silver –Silver prices were pulled back below $20 in line with the fall in gold prices after the heavy sale from the SPDR gold ETF.  We wait to see whether New York will counter this as bargain hunters move in.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]