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

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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 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 

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 

Gold drifting with Shanghai closed for another day

Gold Today –New York closed at $1,267.00 yesterday after closing at $1,256.10 Friday. London opened at $1,264.00 today. 

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

         The $: € was stronger at $1.1157 after Friday’s $1.1227: €1.

         The Dollar index was stronger at 97.50 after Friday’s 97.08

         The Yen was slightly stronger at 111.07 after Friday’s 111.10:$1. 

         The Yuan was much stronger at 6.8546 after Friday’s 6.8615: $1. 

         The Pound Sterling was weaker at $1.2859 after yesterday’s $1.2871: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    30

     2017    5    25

     2017    5    24

SHAU

SHAU

SHAU

 

 

280.35

279.54

On holiday still

280.04

278.55

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8615

       $1: 6.8737

       $1: 6.8906     

 

  /

$1,263.58

$1,261.82

On holiday still

$1,262.18

$1,257.35

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 Shanghai is closed we feel it opportune re-make an important point on what is going on with the authorities in China, with reference to overall markets there. China wants to gain a reputation of being a reliable, reputable source of prices. This, in the first place, means reducing the volatility, on a permanent basis, that characterized its markets. Its people have become deeply untrusting of equity markets due to their past extreme volatility.

This policy has taken priority over the freeing up of Capital Controls despite the desire to be a freely floating currency. Once Chinese markets have the reputation, sufficient to attract foreign investors on a comparable basis to the U.S., the Chinese will be able to open up their borders and, hopefully, be attractive to global investors. Dropping Capital Controls before that would make Chinese markets extremely vulnerable.

In the gold market in Shanghai, since the beginning of this year, we have seen the People’s Bank of China attack speculation. By reducing the size and cost of individual contracts, speculation has become extremely expensive. The result of this is a less volatile market. Because Shanghai’s gold prices are exerting a greater and greater influence on the rest of the world’s gold markets, the entire global gold market is becoming far less volatile than the Technical picture would have forecast.   

Silver Today –Silver closed at $17.32 yesterday after $17.16 at New York’s close Friday.

LBMA price setting:  The LBMA morning gold price was set today at $1,262.80 from Friday’s $1,265.00.  The gold price in the euro was set at €1,131.03 after Friday’s €1,130.37.

Ahead of the opening of New York the gold price was trading at $1,260.50 and in the euro at €1,128.87. At the same time, the silver price was trading at $17.27. 

Price Drivers

With China still closed today, the main influence on the gold price has been the moves of the dollar and euro. The dollar is stronger today after the E.C.B.’s Draghi made it clear that despite the lift in the economic picture, they felt that it could be temporary, so it was too early to contemplate any form of tightening of the easy money picture in the E.U. Certainly, the E.U. economy is not served well by a strong euro.

We do expect the euro to be volatile and vulnerable in the next few months as the Italian elections approach, likely in September.

Once Shanghai is open again [tomorrow] we expect to see stronger moves in the gold prices. It is only then that we will be able to see if demand there is strong enough to make it through what’s left of resistance. Meanwhile, the influence of London and New York will be to make the gold price consolidate with a negative bias.

Gold ETFs – Friday, saw no sales or purchases of gold to or from the SPDR gold ETF and no change in the holdings of the Gold Trust. Their holdings remain at 847.452 tonnes and at 202.82 tonnes respectively.

 

Since January 6th 2017 38.678 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Shanghai definitely now calling the gold tune

Gold Today –New York closed at $1,256.10 yesterday after closing at $1,257.20 Wednesday. London opened at $1,263.10 today. 

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

         The $: € was slightly stronger at $1.1227 after yesterday’s $1.1234: €1.

         The Dollar index was slightly stronger at 97.08 after yesterday’s 97.01

         The Yen was slightly stronger at 111.10 after yesterday’s 111.80:$1. 

         The Yuan was stronger at 6.8615 after yesterday’s 6.8737: $1. 

         The Pound Sterling was weaker at $1.2871 after yesterday’s $1.2973: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    26

     2017    5    25

     2017    5    24

SHAU

SHAU

SHAU

 

 

280.35

279.54

Trading at 280.60

280.04

278.55

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8615

       $1: 6.8737

       $1: 6.8906     

 

  /

$1,263.58

$1,261.82

Trading at $1,266.97

$1,262.18

$1,257.35

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 $6.08 lower than Shanghai’s close yesterday. London opened today at a $3.87 discount to Shanghai.

And there you have it. The evidence is clear that Shanghai is pulling both London and New York higher. Shanghai followed New York on the world clocks with London opening after that. While both London and New York are more volatile than Shanghai, Shanghai gold prices in the Yuan have moved steadily higher over the last few days.

This was in the face of the People’s Bank of China trying to control the Yuan and change the formula on which it is permitted to trade.

This year has seen the People’s Bank of China attack speculation. In the gold market rampant speculation has been controlled by putting a ceiling on the amounts traded per contract reducing them in the process. This has made it expensive to speculate in force. We have seen the results of this in a less volatile market there.

Now we have the People’s bank of China not just trying to limit speculative forces but change the orientation of the Yuan exchange rate to a ‘global-centric’ rate from a ‘dollar-centric’ rate. History shows that Chinese markets have lost credibility because of wild speculative forces [particularly the equity markets]. These efforts, while delaying the full lifting of Capital Controls, are stabilizing markets. We foresee that, as a result, we will see Chinese markets reputations improve and gain a stronger foothold in world markets.

In the gold world we foresee more producers and buyers of gold on contract turn to the Shanghai Benchmark prices from the pm London price setting. This is particularly so as the London price setting is different from the ‘spot’ prices at the time of price setting.

We are now convinced that gold’s pricing power has moved to Shanghai.

Silver Today –Silver closed at $17.16 yesterday after $17.19 at New York’s close.

LBMA price setting:  The LBMA morning gold price was set today at $1,265.00 from yesterday’s $1,257.10.  The gold price in the euro was set at €1,130.37 after yesterday’s €1,120.81.

Ahead of the opening of New York the gold price was trading at $1,265.80 and in the euro at €1,130.38. At the same time, the silver price was trading at $17.26 

Price Drivers

Currency markets across the world are relatively steady today as the gold price, once again nudges up against overhead resistance on this, the last and most active day of the week, the last week in May. Will the U.S. be volatile today in the gold market or silver market? We see New York following London higher. With long positions at low levels on COMEX that ‘paper’ market is more likely to go long than short, we feel. Hence we expect a positive day for gold there. Before New York opened gold was already pushing up through resistance, but more is needed before the break is convincing!

Will the present moves bring the long awaited strong move in gold and silver prices? We don’t know for sure, as we are in an important area for both gold & silver from a long term perspective, making any strong move now significant for the long term.

G-20 meeting

The G-20 meeting in Sicily is the center of attention for the media. In the past this has usually turned out to  be a non-event, but with President Trump there already lecturing on NATO allies failure to pay their bills for the protection the U.S. affords them, we expect a far more lively meeting. Of importance is now the huge surplus Germany has on the trade front. This has been apparent from the day the E.U. was formed as it prevented the exchange rate used in global trade by Germany [the euro] from reducing these surpluses, as it rose. If Germany still had the Deutschemark its rate would be so high as to prevent the surplus from happening in the first place. To bleat about it now is a little pointless and non-productive and far too late.

U.S. physical gold investors remain on the sidelines still and will do so until they see a strong rise in the gold price.

Gold ETFs – Yesterday, saw no sales or purchases of gold to or from the SPDR gold ETF and no change in the holdings of the Gold Trust. Their holdings are now at 847.452 tonnes and at 202.82 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold nudging upside resistance

Gold Today –New York closed at $1,260.30 yesterday after closing at $1,255.00 Friday. London opened at $1,260.05 today. 

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

         The $: € was weaker at $1.1252 after yesterday’s $1.1240: €1.

         The Dollar index was slightly weaker at 96.90 after yesterday’s 96.94

         The Yen was slightly stronger at 111.24 after yesterday’s 111.34:$1. 

         The Yuan was barely changed at 6.8901 after yesterday’s 6.8903: $1. 

         The Pound Sterling was weaker at $1.2980 after yesterday’s $1.3018: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    23

     2017    5    22

     2017    5    19

SHAU

SHAU

SHAU

279.59

279.29

Trading unavailable

279.76

279.28

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8901

       $1: 6.8903

       $1: 6.8929     

  /

$1,257.10

$1,255.27

/

$1,257.86

$1,255.22

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 was trading at 281.1 towards the close in Shanghai. Adjusting to the higher quality of gold traded there this price translates into $1,263.95. London opened at a $3.90 discount to Shanghai.

London and New York took gold higher yesterday, but today Shanghai lifted the gold price through resistance with London going higher on the back of Shanghai. All in all, the discounts of London and New York to Shanghai are very small, once again.

One misunderstanding some commentators have is that foreign banks are being forced to use the International Gold Exchange in Shanghai. The fact that many foreign banks have local presences and Chinese banks are Chinese means they can participate alongside the Chinese gold investor on the SGE. This places them in a position to effectively arbitrage western markets and Shanghai, through using currency books, positions in London and Shanghai, only moving gold into Shanghai when  their positions get too large in London. It also allows them to remain opaque in their dealings, while continuing to shift gold bullion into China. This means their positions are much, much bigger than seems to be the case on the International Shanghai Gold Exchange.

The result is far closer prices between the three Exchanges than has been the case in the past.

We note a major bank for the first time [Citibank] is acknowledging that Shanghai’s influence on the gold price will grow. But these analysts state that “Shanghai still holds a prominent position as the largest gold futures market outside of the U.S., despite a reduction in Shanghai Futures Exchange volume for the year to date to around 450 million ounces. By comparison, New-York based COMEX gold volume has grown 15% year-on-year to around 2.1 billion ounces.” We believe this distorts the real gold picture in the two markets.

What is true is that COMEX has a turnover of 2.1 billion ounces of ‘paper gold’ [Gold derivatives – Options and Futures] Of this  between 1% and 5% is actual gold bullion, whereas all of Shanghai’s gold trade is physical gold bullion. i.e. COMEX trades between 653 tonnes and 3,266 tonnes to Shanghai’s  almost 14,000 tonnes annually. COMEX’s turnover is far closer to 653 tonnes of physical gold bullion than 3,000 tonnes. This makes New York only 5% of Shanghai’s physical gold bullion turnover.

This is why we see Shanghai becoming, if not there already, the world’s gold hub for physical gold.

Silver Today –Silver closed at $17.14 yesterday after $16.84 at New York’s close yesterday.

LBMA price setting:  The LBMA am gold price was set today at $1,259.90 from yesterday’s $1,255.25.  The gold price in the euro was set at €1,119.61 after yesterday’s €1,117.17.

Ahead of the opening of New York the gold price was trading at $1,259.65 and in the euro at €1,121.35. At the same time, the silver price was trading at $17.13. 

Price Drivers

The gold price continued to rise in the U.S. dollar but only slowly in the euro. For a convincing breakout in the gold price we need to see it rise strongly in the euro too. With the Chinese Yuan doing its best to stay close to the moves in the dollar, we expect Shanghai to remain stable. The dollar continues to slip albeit at a slower pace. Meanwhile it continues to consolidate, while nudging overhead resistance.

As you can see below U.S. buying of physical gold via the SPDR gold ETF [GLD] resumed gently. This is not enough to move prices heavily, but it is an indication of returning U.S. demand.

Gold ETFs – Yesterday, saw purchases of 1.776 of a tonne into the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 852.483 tonnes and at 202.82 tonnes respectively.

Since January 6th 2017 43.709 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

SGE revises 2017 gold withdrawals downwards

We had previously noted some anomalies in the reported figures for China’s gold withdrawals from the Shanghai Gold Exchange (SGE) and are pleased to note that a recheck has shown that the monthly and cumulative figures as announced by the SGE have been revised and now tally.  Earlier the announced cumulative total appeared to have been substantially adrift from that suggested by the monyh-by-month reported figures.The principal change is a sharp downwards revision of the gold withdrawal figures for February – a month where figures tend to be somewhat anomalous anyway because of the Chinese New Year holiday.  February figures have been revised downwards sharply from 179.24 tonnes to 148.24 tonnes, while the initially reported April figure of 171.17 tonnes has been adjusted downwards to 165.78 tonnes.  This brings the cumulative total for the year to date to 690.68 tonnes –only marginally higher than at the same time a year ago, and well down on the record 2015 figure.

Table: Revised SGE Monthly Gold Withdrawals (Tonnes)

Month 2017 2016 2015 % change 2016-2017 % change 2015-2017
January 184.41 225.08 255.42 – 18.1%  -27.8%
February* 148.24 107.60 156.36 +37.8% -5.2%
March  192.25 183.24 213.35  +4.9%  -9.9%
April  165.78 171.40 195.45  -3.3%  -15.2%
May   147.28 162.15    
June   138.51 195.67    
July   117.58 285.50    
August   144.44 265.27    
September   170.90 259.98    
October    153.25 176.29    
November    214.72 202.71    
December    196.37 228.21    
Year to date 690.68 687.02 820.58 +0.5% – 15.8%
Full Year    1,970.37 2,596.37    

Source: Shanghai Gold Exchange, Lawrieongold.com

For additional comment click on:

China’s SGE revises gold withdrawals lower

Gold part of the fabric of Indian society

 Gold Today –New York closed at $1,248.90 yesterday after closing at $1,258.70 Wednesday. London opened at $1,248.20 today. 

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

         The $: € was slightly stronger at $1.1120 after yesterday’s $1.1131: €1.

         The Dollar index was stronger at 97.73 after yesterday’s 97.57

         The Yen was weaker at 111.25 after yesterday’s 110.77:$1. 

         The Yuan was weaker at 6.8929after yesterday’s 6.8902: $1. 

         The Pound Sterling was weaker at $1.2950 after yesterday’s $1.3036: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    19

     2017    5    18

     2017    5    17

SHAU

SHAU

SHAU

280.67

277.51

Trading at 279.75

280.6

277.63

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8929

       $1: 6.8814

       $1: 6.8919     

  /

$1,263.61

$1,254.33

/

$1,263.29

$1,254.87

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 trading level towards the close translates into $1,257.34. New York closed at a $8.44 discount to Shanghai’s close yesterday. London opened at a discount of $9.14 Shanghai’s close today.

As you can see above, Shanghai did not pull back today as far as New York did.  With Shanghai now proving less volatile than London or New York we expect the pattern being formed now will lead to Shanghai giving a better indication of the direction of the gold price. At the moment that is higher, after this consolidation.

Silver Today –Silver closed at $16.61 yesterday after $16.89 at New York’s close Wednesday.

LBMA price setting:  The LBMA gold price was set today at $1,251.85 from Thursday’s $1,261.35.  The gold price in the euro was set at €1,120.68 after yesterday’s €1,135.02.

Ahead of the opening of New York the gold price was trading at $1,253.00 and in the euro at €1,121.55. At the same time, the silver price was trading at $16.80. 

Price Drivers

With the gold price shrugging off potential falls, we now expect to see it trade in a tightening range until the gold market is in balance, before the next strong move either way.The dollar is slightly stronger today in what is a normal market reaction, but we do not expect this to last for long.

India & GST

While the list of GST levels to be imposed in July has now been issued, the duty to be levied on gold [and services] is still to be finalized.  It is expected to be 3%.

When we look back at the actions of Modi and his government in India and on gold, since he came to power, we see that Indian governments are still unhappy with gold in the country and will always be. This is not a small problem for that government, when you consider that the total gold holdings of the world’s central banks is around 34,000 tonnes, private citizens and institutions in India hold around 24,000 tonnes, an amount that is rising by around 1,000 tonnes a year.

Why their dislike? Because gold lies outside government control, just as it did in the U.S. before it was confiscated in 1933. Thereafter, when all U.S. citizens could only use banknotes and the banking system, the U.S. government completely controlled the financial system. All governments need to do that if they want total control of a nation’s finances, despite any objection from their own people.

Every attempt to pull the Indian gold trade into the Indian banking system [as it is in the west] has failed and will continue to fail because of the financial mistrust between the government and its citizens.

But gold in India is far more to its citizens, than it was to U.S. citizens, prior to 1933. In India, it is tied in with religion, family as well as financial security. It is part of the fabric of society. This is unlikely to change in the future. It is unlikely, that any ban on gold dealing there would work because it didn’t work in the past.

So the expected 3% GST level being mooted in India is simply expected to incite more black market activity including making extremely profitable the business of smuggling of gold into the country

Gold ETFs – Yesterday, saw sales of 1.184 tonnes from the SPDR gold ETF (GLD) but purchases of 0.53 of a tonne into the Gold Trust (IAU). Their holdings are now at 850.891 tonnes and at 202.82 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance