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