Gold and Silver both showing ‘Desire to Rise’

The New York gold price closed Tuesday at $1,087.20 down $2. In Asia on Wednesday, it was lifted to over $1,094 before London opened and then was set by the LBMA at $1,093.20 up from $1,087.00 with the dollar index lower at 99.03 down from 99.21 on Tuesday. The euro was up at $1.0906 from $1.0867 against the dollar. The gold price in the euro was set at €1,002.38 up from €1,000.28. Ahead of New York’s opening, the gold price was trading at $1,095.15 and in the euro at €1,004.17 moving up nicely towards the $1100 level again.  

The silver price in New York closed at $14.03 up 3 cents at Tuesday’s close.  Ahead of New York’s opening on Monday, the silver price stood at $14.10.

Price Drivers

Yesterday, just ahead of the opening in New York there was an attempt to take gold’s delicate market balance and push gold prices down heavily through to $1,083, but over the day the gold price floated higher ending the day at $1,087.20, the same as it was when the day began. With Asia taking it over $1,090 this morning, the battle over the price in the last day was won by the bulls, perhaps indicating the way forward for the rest of the week. While we expected a strong move either way yesterday, the attempt to break the gold price down was foiled, but with an indication that the gold price would prefer to rise?

Tuesday saw no purchases or sales from either the SPDR gold ETF or the Gold Trust. The holdings of the SPDR gold ETF are now at 657.924 tonnes and at 161.46 tonnes in the Gold Trust.  This showed that the attempt to push gold down again had no physical substance so could not hold prices down.

With China now moving to play such an important role in the future of the gold market and its price, its moves to tighten ties with the Middle East and particularly Saudi Arabia [its largest oil supplier] and other Middle Eastern nations comes under the spotlight. Saudi Arabia has signed important developments contracts with China yesterday, leaving the U.S. out of these particular contracts. Is the hold over Saudi Arabia [and Iran] by the U.S. weakening? China may well do the same with Iran?

The advantage to them of China is that China stays away from politics, leaving them to do their own thing. At the heart of concern over such moves is the use of the dollar in oil transactions. China may be paying in dollars, now, but undoubtedly, will also offer Yuan, eventually. This will directly affect the dollar on foreign exchanges and by extension, the gold price. This could become China’s choice adding to China’s hold over the dollar on foreign exchanges?

The same desire to rise is found in the silver market, which ignored gold’s small fall yesterday before its recovery. Just as with gold, the same conditions apply to the silver price, which as always, will be sure to go. –

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

AIIB Significance for Gold and Silver

Julian Phillips looks at the price drivers currently affecting the precious metals markets

There is nothing new, short-term in the gold and silver markets now as the Saudi incursion into the Yemen has been discounted in the oil and precious metal prices.

Today sees the funding of the Asian Infrastructure Investment Bank (AIIB) with 40 countries now buying into the bank, but with the U.S. and Japan absent from the offering. European and Asian nations make up the majority of the investors. The significance of this for precious metal investors lies in the division of the US/Japan and China as the Chinese presence in the monetary world moves towards centre stage later this year. The division between the US/Japan and Asia augurs volatility in global foreign exchanges, when Capital Controls are lowered in China and the IMF discusses the make-up of the SDR, sometime this year.

Meanwhile, the official volume of gold entering the Chinese economy from outside has to pass through the Shanghai Gold Exchange, which is under the control of the People’s Bank of China (The Chinese Central Bank). The volume for the first quarter of the year has already reached 561 tonnes with perhaps up to another 80 tonnes to come to complete the quarter. (See: China gold flows to hit Q1 record).  This sets a new record for the SGE, higher than the volume seen early in 2013 when the gold price produced the Chinese version of a gold rush on the exchange.

The dollar is grew stronger overnight taking the dollar Index back to 98.46 up from at the end of last week, while the euro is slipping to $1.0741 down from $1.8270 last week. The dollar needs to break up through 100 on the dollar index to show it has higher to go. The gold price remains strong in all currencies except the dollar where it is not tumbling but not rising either. Gold’s strength in other currencies remains convincing.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com