Gold needs to break through 200 day MA to make move higher

 Gold Today –New York closed at $1,256.10 yesterday after closing at $1,256.30 Tuesday. London opened at $1,253.65 today. 

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

         The $: € was stronger at $1.0664 after yesterday’s $1.0670: €1.

         The Dollar index was slightly stronger at 100.60 after yesterday’s 100.57

         The Yen was slightly weaker at 110.77 after yesterday’s 110.70:$1. 

         The Yuan was weaker at 6.8995 after yesterday’s 6.8892: $1. 

         The Pound Sterling was stronger at $1.2475 after yesterday’s $1.2428: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4      6

     2017    4      5

     2017    4      4    

SHAU

SHAU

SHAU

/

280.13

/

/

280.03

/

$ equivalent 1oz @    $1: 6.8995

       $1: 6.8892

       $1: 6.8836

      

  /

$1,264.24

/

/

$1,264.28

/

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange reopened today and was trading at 280.6 towards the close.

This translates into $1,264.97. New York is trading at a $3.87 discount to Shanghai and London opened at a $6.32 discount to Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,253.75 from yesterday’s $1,252.50.  

The gold price in the euro was set at €1,174.58 after yesterday’s €1,173.96.

Ahead of the opening of New York the gold price was trading at $1,252.45 and in the euro at €1,173.81. At the same time, the silver price was trading at $18.23. 

Silver Today –Silver closed at $18.30 yesterday after $18.31 at New York’s close Tuesday.

Price Drivers

In the last day, the gold price broke down to $1,244 before recovering back above $1,250. So the support still holds at $1,250, but it has to break through the 200-day moving average of around $1,260 before rushing higher. So we should be ready for a gold price move either way today.

The Fed Minutes stated that, by traditional valuations, the equity markets in the U.S. are too high. So we watch the S&P 500 to see what impact that will have.  They also indicated that they may reduce the Fed’s Balance Sheet later in the year. While two interest rate hikes in the future are already priced in the monetary tightening is not. It may well result in the yield curve rising across its spectrum.

In Europe, Mario Draghi cautiously implied that the fear of inflation has passed and while risks remain to the downside he was more confident that growth across the E.U. economy is becoming positive. To us there are so many continuing risks in Europe that one needs to continue to question the future of the E.U. economy. What we did find somewhat disturbing in what he said, was that the more positive shape of the economy was due to two factors, monetary policy and the oil price fall. Oil market commentators are pointing to rising oil prices [but not back to triple digit levels] If oil prices do rise significantly, [which does seem unlikely as it will unleash more supplies] the fragile E.U. economies will suffer alongside economic recoveries across the globe.

Top of today’s events is the meeting between President’s Xi of China and President Trump. If President Trump’s election promises are to be a guide the meeting should end with potential confrontations and massive tariffs on Chinese imports into the U.S.   A sobering fact on this issue is that 73% of shoes sold in the U.S. are made in China [as an example of what could happen]. Or will we see a dampening of election ardor?

With the Obamacare repeal failing, what will happen to potential tax cuts? If Trump fails to get these through, we are back to the last 8 years of gridlock in government. Unless Trump has a major victory we cannot expect to see the vibrant growth Trump promised. As it is the dollar is expected to decline gently from now on. If his failure on Obamacare is reinforced with more failure, the dollar’s fall will accelerate against gold.

Gold ETFs – Yesterday saw no purchases or sales into or from the SPDR gold ETF but sales of 0.04 from the Gold Trust.  Their respective holdings are now at 836.765 tonnes and 199.81 tonnes. 

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Advertisements

Dollar down against gold; gold up against all currencies

Gold Today –New York closed at $1,190.90 on the 11th January after closing at $1,187.20 on the 10th January. London opened again at $1,204.75 today.

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

         The $: € was weaker at $1.0631: €1 from $1.0554: €1 yesterday.

         The Dollar index was weaker at 101.25 from 102.09 yesterday. 

         The Yen was stronger at 114.52: $1 from yesterday’s 116.05 against the dollar. 

         The Yuan was stronger at 6.9115: $1, from 6.9225: $1, yesterday. 

         The Pound Sterling was stronger at $1.2249: £1 from yesterday’s $1.2156: £1.

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

     2016    1    11

      2016  12    10

SHAU

SHAU

SHAU

/

268.72

267.22

/

269.00

268.41

$ equivalent 1oz @  $1: 6.9115

      $1: 6.9225

$1: 6.9244

  /

$1,209.31

$1,200.65

/

$1,210.57

$1,205.99

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 continues to lead the way for the gold price. And as happened yesterday London and New York rose too. With Shanghai prices continuing to rise we expect London and New York to rise  again too. To catch Shanghai up, prices in New York need to rise another $15. London is now in line with yesterday’s Shanghai gold price.

LBMA price setting:  The LBMA gold price setting was at $1,206.65 this morning against yesterday’s $1,187.55. 

The gold price in the euro was set higher at €1,133.96 after yesterday’s €1,128.31 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,204.20 and in the euro at €1,131.55.  At the same time, the silver price was trading at $16.89. 

Silver Today –Silver closed at $16.73 at New York’s close yesterday from $16.79 on the 10th January. 

 Price Drivers

The dollar is weaker today with the media attributing that to Trump’s failure to describe his financial policies.  What appears to be happening is that the honeymoon with the Trump Presidency is over, before it began. But, as we described yesterday, such temporary news in the U.S. did not cause the buyers of gold to rush out and buy in the U.S. Most of the buying occurred in China yesterday, with no movement whatsoever in the U.S. based gold ETFs.

The rise in the gold price in dollars was in fact the fall of the dollar reflected in a higher dollar gold price together with Chinese demand as reflected in the Yuan gold prices [above].

Should U.S. investors return to the gold market as buyers of physical gold [via gold ETFs in particular], the additional demand from the U.S. will drive gold and silver prices much higher! Should demand from India, once Indians have usable cash again, their additional demand will add to the upward pressures on the gold price. We see Chinese demand driving gold prices higher alongside falling currency values.

Gold ETFs – Yesterday, in New York, there were no sales or purchases from the SPDR gold ETF (GLD) or any from or into the Gold Trust (IAU), 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”.

Since January 4th 2016, 202.416 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust.  We remain at almost at half the total level accumulated in 2016.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance