Gold breaks through overhead resistance.  Dollar still weakening

Gold TodayGold closed in New York at $1,256.10 up from $1,247.25 on Monday. On Tuesday morning in Asia, it jumped to $1,259. London took it up to $1,260 to see the LBMA price setting at $1,259.20 up from $1,247.25 on Monday.

The dollar index is lower at 93.85 down from 94.22 Monday. The dollar is weaker against the euro at $1.1419 up from $1.1391 on yesterday.

The gold price in the euro was set at €1,102.72 up from €1,095.23 Monday.

Ahead of New York’s opening, the gold price was trading at $1,261.65 and in the euro at €1,106.90.  

Silver Today –The silver price closed in New York at $15.90 up from $15.34 on Monday. Ahead of New York’s opening the silver price stood at $16.12.

Price Drivers

And so we have broken through overhead resistance, so where next?

Surprisingly, the rise was not driven by U.S. ETF shares buying, but prompted by dollar weakness which now continues across the currency board. Against the euro $1.15 appears to be an initial target.

Once again most investors appear to be surprised and expect a rally in the dollar. Many rely on the potential two interest rate hikes expected this year [despite the possibility of no interest rate hikes at all] to take the dollar higher in the belief this will give value to the dollar. Those in the ‘carry’ trade may well disagree strongly with this. After all when you look at the peak in the dollar of 100 and at current levels, what benefit in getting an annual extra half a percent if you lose 8% of your capital at least?

Exchange rates are key to the financial world this year, as the dollar retreats from hegemony into one of five key global currencies in a multi currency system. Of these the Yuan has the advantage, as it is starting off with only a small presence but one that is set to rise to profound significance in the year and years to come. This rise will be at the expense of the dollar and the euro primarily. The Fed fully understands this.

It is the change in the composition of central bank currency reserves that will ruffle the feathers of global financial markets in the future. This has not been factored into these markets even now.

Gold and silver will surprise everyone this year!

Gold ETFs – We saw no sales or purchases into or from the SPDR gold ETF but a purchase of 0.48 of a tonne into the Gold Trust on Monday. This leaves their holdings at 817.813 and 187.74 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price is running full pelt ahead of gold and should continue to do so as gold rises.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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Gold testing overhead resistance, silver running ahead of gold

Gold TodayGold closed in New York at $1,240.30 up from $1,240.30 on Friday. On Monday morning in Asia, it jumped to $1,253. London pulled it back to $1,247.35 to see the LBMA price setting at $1,247.25 up from $1,235.00 on Friday.

The dollar index is slightly lower at 94.22 down from 94.36 Friday. The dollar is almost the same against the euro at $1.1391 up from $1.1390 on Friday.

The gold price in the euro was set at €1,095.23 up from €1,084.28 Friday.

Ahead of New York’s opening, the gold price moved back up to over $1,250 again and in the euro at around €1,097  

Silver Today –The silver price closed in New York at $15.34 up from $15.21 up from on Friday. Ahead of New York’s opening the silver price stood at $15.77.

Price Drivers

The undertone in the gold market is strong and pushing higher. Asian prices saw a jump this morning of over $10 and the jump mostly held in London as the dollar continued to slowly but surely weaken.  Janet Yellen’s comments continue to be digested as many institutions and commentators are having difficulty in accepting that the dollar will not strengthen and that two or less interest rate hikes are coming out of the U.S. What Mrs Yellen and the Fed have done which is also finding difficulty in being absorbed is the recognition that the U.S. economic recovery is vulnerable to outside influences including a strong dollar. It’s a culture shock to dollar hegemony and the U.S. leading the way economically around the globe.

The trading range of both gold and silver tells us a strong move is imminent as it breaks up out of the pennant it has been in for some time. Now overhead resistance will be tested still further in the days to come.

India – The government of India has formed a sub-committee under former Chief Economic Advisor Ashok Lahiri to study the imposition of the 1% sales tax on gold and silver in addition to the existing 10% already imposed and come up with suggestions. The jeweler’s strike is now completing its first month with no sign of respite.  We don’t think anything will change because now, the Central Board of Excise and Customs (CBEC), has imposed 15% ad valorem duty on several items including gold and silver that are brought into the country by travellers.

Consequently, both demand and the price of jewelry are soaring as the wedding season approaches. In the unique Indian way the business will go on, government or no government. Work has gone underground to meet the lucrative wedding season demand, with the wedding season ‘mahurat Sawas’ arriving at the end of this month. Officially, the strike continues. Gold is being sold in the market without the customs duty. Traders added are making jewellery at Rs 28,500 per 10 grams [which equates to $1,380].  No doubt supplies are actually freely available from smugglers, who supply a significant proportion of gold imported into India.

Repeat: As we said yesterday, in our opinion the markets in gold and silver are rather like a cat getting ready to pounce. We expect the moves to be higher, but it could need more days of consolidation such as we have seen in the last week.

Gold ETFs – We saw sales of 1.783 tonnes from the SPDR gold ETF but no change in the Gold Trust on Friday. This leaves their holdings at 817.813 and 187.26 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price is now beginning to run ahead of gold and should do so as gold rises.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold bought into GLD again. Price moves upwards

Gold TodayGold closed in New York at $1,223.30 down from $1,230.20 on Wednesday. On Thursday morning in Asia, it rose to $1,230. London lifted it higher to see the LBMA price setting at $1,237.50 up from $1,225.75 on Wednesday.

The dollar index is slightly lower at 94.38 down from 94.93 yesterday. The dollar is stronger against the euro at $1.1391 up from $1.1345 on Wednesday.

The gold price in the euro was set at €1,086.38 up from €1,080.43 on Wednesday.

Ahead of New York’s opening, the gold price was trading at $1,237.10 and in the euro at €1,085.99.  

Silver Today –The silver price closed in New York at $15.07 down from $15.13, down 6 cents yesterday. Ahead of New York’s opening the silver price stood at $15.22.

Price Drivers

With the arrival of new large volume purchases into the gold ETFs in the U.S. we should see the price respond as liquidity levels of physical gold are dropping. Likewise the trading pattern of both gold and silver continue to tighten, particularly in gold. We continue to be braced for a strong move, in the near future.

Dollar weakness continues

The Fed in its minutes of the latest FOMC meeting confirmed its concern over the global economy and the strong dollar. This weakened the dollar against world currencies and to us confirmed the dollar faces a future of either sideways movements or of falling lower against other leading currencies. We cannot emphasize enough the importance of a weak dollar on global financial markets and the monetary system itself in future market action globally.

Because U.S. markets tend to move gold in the opposite direction to the dollar, we see a positive long-term future for gold. This may well reflect in the short-term too.

The Yen & Yuan

The dollar index continues to fall steadily, but the big feature of the morning is Yen ‘strength’ now at 108.44 against the dollar. This is just what Japan does not want. The economic problems of Japan are chronic and fundamental, with no easy solution [as Abenomics suggested there would be]. Without a weakening Yen, Japan is in recession, with little chance of it coming out of it in the foreseeable future. We emphasize that this is a weakening dollar and not a strengthening Yen.

A ‘stronger’ Yen confirms that. It makes Japan’s exports less competitive.

Having said that, the Chinese Yuan is also strong against a weakening dollar. But China is allowing that to be so, as they focus on the September activation of the Yuan as part of the IMF’s SDR.

Gold ETFs – We saw purchases of 4.16 tonnes of gold bought into the SPDR gold ETF on Wednesday. There were no sales or purchases into or from the Gold Trust yesterday. This leaves their holdings at 819.596 and 186.96 tonnes in the SPDR & Gold Trust respectively.  

These renewed large purchases into GLD are consistent with the buying pattern of the buyer who started buying large volumes of gold when the gold price turned at $1,150. The timing appears to be just ahead of more large rises in the gold price. We expect to see gold prices respond strongly to such buying, now that the market is looking ‘in balance’.

Silver – The silver price continues to be consolidating around $15 still, ahead of a strong move.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and Silver bounce most likely!

Gold TodayGold closed in New York at $1,214.90 down from $1,223.20 on Monday. On Tuesday morning in Asia, it rose to $1,226. London lifted it up to see the LBMA price setting at $1,231.50 up from $1,215.00 on Monday.

The dollar index is slightly higher at 94.72 up from 94.59 yesterday. The dollar is stronger against the euro at $1.1370 up from $1.1386 on Monday.

The gold price in the euro was set at €1,083.11 up from €1,067.19 on Monday.

Ahead of New York’s opening, the gold price was trading at $1,231.90 and in the euro at €1,083.32.  

Silver Today –The silver price closed in New York at $14.92 down from $15.05 down 13 cents on Monday. Ahead of New York’s opening the silver price stood at $15.15.

Price Drivers

While sales from the SPDR gold ETF continued but purchases into the Gold Trust resumed, we appear to be seeing a bottoming in U.S. investor physical activity in the U.S. based gold ETFs.

Nevertheless, with it becoming clear that the dollar is no longer going to rise to new highs, COMEX is becoming cautious over moving gold and silver prices down at these levels.

It does appear that $1,200 and $15 on gold and silver respectively are strong support levels and ones from which both seem about to bounce.

Dollar consolidating After a period of weakness, the dollar is now consolidating at close to its lows. With the oil price falling again, the need for U.S. dollars is once again diminishing. All in all, the need for dollars has diminished considerably over the last couple of years.

With the international aggressiveness of the U.S. IRS chasing U.S. citizens across the world, some European nations have not only rejected U.S. clients but the use of the dollar in precious metal dealing, as well as in other transactions. So, when we said yesterday that “It does mean that the dollar has seen its peak against other currencies” we add to that the use of the dollar in international trade has also peaked.

The awareness of the global economy, oil factors and their state has impacted on Fed [and Treasury] policy and is feeding through to the dollar in amongst global currencies. Dollar hegemony is fading. The consequential impact on gold and, by extension, silver, will increase in favor of gold and silver prices over time.

Gold ETFs – We saw sales of 2.378 tonnes of gold from the SPDR gold ETF on Monday. There were purchases of 0.91 of a tonne of gold into the Gold Trust on Monday. This leaves their holdings at 815.715 and 187.24 tonnes in the SPDR & Gold Trust respectively.  

It seems more than improbable that investors that have bought over 200 tonnes into these two gold ETFs would suddenly want to get out. Their moves into the market, at much lower prices, were clearly strategic positioning ahead of rises in the future. We would go as far as to say that their investments signaled a change of trend to the upside.

Silver – The silver price, as with gold is consolidating around $15 signaling that a bounce is most likely.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Yellen sticks to the gold script

Gold TodayGold closed in New York at $1,241.30 up $23.10 from $1,217.20 Tuesday. On Tuesday morning in Asia, it held that level. London pulled it back to see the LBMA price setting at $1,238.30 although still well up on the previous day’s $1,216.45.

The dollar index held at 95.84 today the same as Tuesday. The dollar is weaker against the euro at $1,1330 after yesterday’s $1.1213.

The gold price in the euro was set at €1,092.94 up from €1,084.86 on Tuesday.

Ahead of New York’s opening, the gold price was trading at $1,234.75 and in the euro at €1,090.00.  

Silver Today –The silver price closed in New York at $15.33 up 16 cents on Tuesday. Ahead of New York’s opening the silver price stood at $15.35.

Price Drivers

The Technical picture remains negative but, as we said yesterday, this could change quickly because of the two-day nature of the fall from the uptrend. We continue to expect a volatile market. Having said that, we continue to expect to see U.S. investors buying the shares of the gold ETFs.

Janet Yellen’s comments were as we expected, with her reiterating Fed fears emanating from the global economy, particularly oil and China. The Fed remains data led and will ‘proceed cautiously’. Observers keep pushing, as always, for a hike in interest rates and keep being disappointed, despite the Fed making it clear that they are following the data not leading it.

For gold investors, the relevance of her comments lies in the dollar’s exchange rate. This continues to weaken with the dollar falling to more than $1.13 against the euro and to 94.96 on the dollar index. This is yet another expression that the U.S. Monetary Authorities do not want a strong dollar.

Gold ETFs For the first time in a long time we saw sales of 3.271 tonnes of gold from the SPDR gold ETF and a remarkable 7.14 tonnes from the gold Trust, yesterday. This leaves their holdings at 820.471 and 185.88 tonnes in the SPDR & Gold Trust respectively. These tonnages were more than enough to push prices down, but they didn’t. Instead the comments by Janet Yellen saw gold prices rise. Such is the power of COMEX over physical features of the gold market.

We suspect the sales were made before Janet Yellen spoke. We expect some tonnage to be re-bought soon, in the light of what she said.

Silver – The silver price began its recovery yesterday and saw 46 tonnes of silver bought into the Silver Trust. It must be noted that investors into the Silver Trust rarely influence the price as the silver price is priced as a monetary metal alongside gold.

These investments were very different from the gold ETFs, but we suspect that we will see more additions to both the Gold ETFs and the Silver Trust.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Are gold and silver breaking down?

Gold Today –Gold closed in New York at $1,217.20 down from $1,220.10 on Thursday. On Tuesday morning in Asia, ahead of London’s opening it was lifted back to $1,219.45 up $3.00. London pulled it back to see the LBMA price setting at $1,216.45 the same as Thursday of last week.

The dollar index rose today to 95.84 after Thursday’s 95.61. More institutions are now accepting that the dollar’s bull run is over. The dollar is weaker against the euro at $1.1213.

The gold price in the euro was set at €1,084.86 up from €1,116.88 on Thursday.

Ahead of New York’s opening, the gold price  had moved up fairly sharply and was trading at $1,226.75 and in the euro at €1,094.04.

Silver Today –The silver price closed in New York at $15.17 down 8 cents on Thursday. Ahead of New York’s opening the silver price stood at $15.27.

Price Drivers

While the precipitous fall in gold and silver was harsh, we see the gold and silver prices having limited downsides.

The Technical picture has registered serious changes, but we question whether a couple of days selling on tiny volumes is sufficient to change the trend.  This points to a volatile market ahead, with the upside favored. Having said that, we need to see U.S. investors into gold ETFs return with buying orders in large amounts, as we have seen in the last few weeks.

After a holiday weekend we expect to see activity pick up today and may well bring a few surprises.

Initial reports blamed the report that Venezuela had been selling its gold reserves aggressively over the last few months on the fall in the gold price. But at around 12.5 tonnes a month these amounts have already been absorbed with the gold price rising higher at the same time. Such sales are not hurting the gold price.

But the U.S. media attributes it to talk of a potential Fed hike. When we look at the data coming out of the U.S. we see it as mixed and certainly not sufficient to warrant a Fed hike.

What we saw last week was prices falling in Asia and the falls continuing in New York, with sales on COMEX but little, if any, physical sales. This implies that should the gold ETF buyers re-emerge, we will see prices rebound strongly.

Gold ETFs There were purchases of 2.081 tonnes into the SPDR gold ETF 0.3 of a tonne into the Gold Trust last Thursday.  The holdings of the SPDR gold ETF are now at 823.742 tonnes and at 193.02 in the Gold Trust. But COMEX and dealers held sway with little to no physical sales in sight and marked prices down, last week. Will this change after April 19th?

Silver – The silver price was hammered heavily last week’s end dropping from a peak of $15.96 to $15.11 a fall of over 5% while its fundamentals continue to improve and investment buyers come into the market. We continue to believe silver is priced as a monetary metal, not on its fundamentals.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

If government trusts gold so much, shouldn’t you?

Gold TodayGold closed in New York at $1,244.10 down from $1,256.00 on Monday. On Tuesday morning in Asia, ahead of London’s opening it was pushed higher to $1,258.00. London pulled it back to see the LBMA price setting at $1,251.80 up from $1,244.25 yesterday.

The dollar index rose today to 95.61 after yesterday’s 95.12. More institutions are now accepting that the dollar’s bull run is over.

The dollar is stronger against the euro at $1.208 up from yesterday’s $1.1277.

The gold price in the euro was set at €1,116.88 up from €1,103.30 yesterday. Now the gold price is rising with the dollar again, contrary to ‘normal’ behavior.

Ahead of New York’s opening, the gold price was trading at $1,254.00 and in the euro at €1,116.95.

Silver Today –The silver price closed in New York at $15.86 up 4 cents on yesterday. Ahead of New York’s opening the silver price stood at $15.90.

Price Drivers

The gold price jumped $14 this morning as the dollar strengthened slightly. ETF buying is still underpinning prices in this volatile U.S. gold market. This is expected to be an ongoing pattern in the days ahead.

We usually hear two criticisms of gold, first that it gives no yield and second that it is bought in times of uncertainty.

As we see negative yields popping up in several countries and likely more to come, gold is now ‘yielding’ more than such currencies. Mervyn King, ex-Governor of the Bank of England, pointed out yesterday that interest rates are now a central bank tool to lower exchange rates. It is traditional thinking to believe that yield is very important and they will run to deposits as low-risk places to park savings. Today, such thinking is almost irresponsible, because you could deposit your money in the U.S. dollar, say, a month ago, to get a miniscule annual yield [before fees] and see it fall 4%+ within just a month! It’s worse in most other currencies! Gold, meanwhile, is an anchor to value.

As to gold being bought in times of uncertainty, what uncertainty? Economic uncertainty, or currency uncertainty? We suggest that it is currency uncertainty, which reflects central bank handling of currencies and their values. In each country this is different. With the dollar bull market now over, other currencies are going to struggle to fall, but all are likely to fall against gold as global currencies continue to fall, but not so much against each other, but in credibility.

In the developed world, there is a point at which investors will want to turn to gold heavily, but likely it will be too late to get low prices, as Asia has been sucking up available supplies for years now.

The classic example of distrust in a government controlled financial system is India, where distrust of government and banking has led to the population having an alternative financial system based on property and gold, usually out of sight of the government, because of the corrupt system of financial policing and bureaucratic interference.

In the developed world, trust in government and the banking system is complete, with the banking system essentially controlling all our transactions and taking fees from them. Until 1933 gold was an alternative, but this was removed as such, by confiscation. What happened to that gold? Government in the U.S. banned its use by individuals for 41 years and placed it in their reserves. Why? Governments needs that gold as insurance against their potential failure in managing currencies. If government trusts gold so much, shouldn’t you?

Gold ETFs There were purchases of 2.676 tonnes of gold into the SPDR gold ETF yesterday but no change in the Gold Trust. The holdings of the SPDR gold ETF are now at 821.661 tonnes and at 192.72 in the Gold Trust. While the purchase of gold into the SPDR gold ETF was significant it was not a huge amount relative to recent purchases. What is significant is that these sales did not touch gold prices until this morning in Asia.

Silver – The silver price continues to run ahead of gold and is showing a sterling performance today. It hasn’t broken away from gold yet and remains reliant on gold to give it direction. We continue to believe it is priced as a monetary metal, not on its fundamentals.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold consolidating, silver rising!

Gold TodayGold closed in New York at $1,256.00 on Friday not far different from a week ago. On Monday morning in Asia, ahead of London’s opening it was pushed down to $1,244.00. London then held it there until the LBMA price setting was set at $1,244.25 down from a week ago where it was set at $1,262.25.

The dollar index continues to see new low levels and this morning stood at 95.12 down from a week ago at 96.56. We continue to hold the view that the Dollar Index goes whichever way the Treasury wants and that’s not higher!

The dollar is down against the euro at $1.1277 from last week’s$1.1106.

The gold price in the euro was set at €1,103.30 down from €1,136.50 last week. Please note that the dollar is falling at the same time as gold is, contrary to ‘normal’ behavior.

Ahead of New York’s opening, the gold price was trading at $1,247.30 and in the euro at €1,106.06.  

Silver Today –The silver price closed in New York at $15.82 up over 26 cents on the week before. Ahead of New York’s opening the silver price stood at $15.85.

Price Drivers

We had a week away on holiday near the Mozambique islands, an ideal place to be cut off from the world and re-tune our perspectives. It allowed us to see just how diverse and inefficient the gold market is when assessing the validity of the gold and silver prices.

In the U.S. we see institutions and their clients, such as Goldman Sachs holding hard to their bearish view of the gold price, based entirely on the state of the U.S. economy and the number [3] rate hikes they expect from the Fed this year. They themselves are short as are their clients, so they are ‘talking their book’.

This view is entirely U.S. oriented and places its main emphasis on a stronger dollar and its past relationship with the euro. Of course the gold market is bigger than the U.S. demand levels, but due to market structure, U.S. gold markets continue to dominate the gold price, for now! On the other hand there are major developed world institutions [e.g. JP Morgan Chase that  favor gold’s rise, that have taken a bullish stance on the gold price for similar reasons, believing there will be only one or two rate hikes and a neutral to weaker dollar. Both these views expect the U.S. gold price to continue to dominate the global gold price and for the fundamentals on gold and silver to be sidelined and almost irrelevant to their prices.

We on the other hand do see the power of gold’s fundamentals coming through to the gold price once Chinese gold market moves come to fruition, post April 19thover time. We appear to be virtually the only commentators to add impact to their moves [we discuss these in depth in our newsletters [see below for addresses].

Gold ETFs There were purchases of 20.218 tonnes of gold into the SPDR gold ETF over the last week and purchases of 1.2 tonnes into the Gold Trust over the last week. The holdings of the SPDR gold ETF are now at 818.985 tonnes and at 192.72 in the Gold Trust. These now total over 1,000 tonnes between the two. This remains well below past peaks.

We are seeing large purchases spread over time, so as not to let the gold price run ahead of itself! This leaves dealers uncertain as to whether they are going to be caught wrong-footed when prices are marked up and they attract sellers or short-sellers. This continues to allow buyers to buy the tonnages they want at lower prices. We expect this policy to continue until another source of demand in the U.S. is found. We believe that it is these purchases that are keeping prices at these levels in the U.S. We remind readers that prices are made in the U.S. for gold and silver and do not reflect the global market’s demand and supply levels.

Hence we see prices low before the U.S. opens and high in the U.S. day.

Silver – The silver price is running ahead of gold as it rises then holds its gains while gold pulls back then runs when gold rises slightly. If this trend continues, silver will continue to outperform gold, for sure.

It is clearly visible that the usual source of silver [as a by-product of base metals] is falling, so supplies are dropping. But it the silver-gold ratio that is attracting market attention as it makes silver historically ‘cheap’.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold volatile on ECB statement: SPDR gold buying recommences

Gold TodayGold closed in New York at $1,253.90 down from $1,261.40 Wednesday. In Asia this morning, it moved lower to $1,245 and then held there  in London until the LBMA price setting was set at $1,247.25 down from $1,258.25. The dollar index is slightly higher at 97.37 down from 97.17 on Tuesday.

The dollar is up against the euro at $1.0972 from $1.0963 on Wednesday. The gold price in the euro was set at €1,136.76 down from €1,143.83.

Ahead of New York’s opening, the gold price was trading at $1,248.00 and in the euro at €1,137.44.  

Silver Today –The silver price closed in New York at $15.31 down 5 cents.  Ahead of New York’s opening the silver price stood at $15.27.

Price Drivers

E.U. Today at 12.45 European time Draghi of the E.C.B. announced more stimulus measures, including a further lowering of interest rates and a boost to the amounts of QE. This has been discounted in the gold price already, with gold’s price threatening the Technical picture now.

But the broad opinion is now that his stimuli will have little impact. We are watching the exchange rate of the euro to the dollar in particular. We have said before that the U.S. does not want to see a strong dollar, particularly against the euro and will not want the dollar index over 100 or the euro lower than $1.05 to $1.07.  Gold slipped sharply on the news, but then picked up again even more strongly.

With governments in the E.U. having done too little, we expected Draghi to give them a mild castigation once more, but it is difficult to see if it is either possible or reasonable to expect him to do much more than he has. Hence we do expect to see the E.U. growth coming under pressure alongside the global economy, which is now in recession. Will we see the “derailment” the IMF has warned about? Standing back and gazing at the big picture, we see little reason to expect growth to be lifted no matter what Draghi does. If he disappoints then we may see the ‘derailment’ soon. The scene remains gold positive!

Gold ETFs There were purchases of 2.081 tonnes of gold into the SPDR gold ETF and purchases of 0.45 of a tonne into the Gold Trust yesterday. The holdings of the SPDR gold ETF are now at 792.820 tonnes and at 191.52 in the Gold Trust. While this was a reasonable level of buying into the two gold ETFs in the U.S. fears of what the market will do after Draghi’s announcement caused dealers to pull prices back.

Because, once again, physical sales were not a feature, we expect the gold price to be volatile today. If the euro does not fall strongly, we expect physical gold buyers to rush back in.

What is clear is that today will become a higher risk day than most.

Silver – The silver price remains on the back foot waiting for gold to go higher.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

First significant sale from GLD for several weeks. Price falters.

Gold Today –Gold closed in New York at $1,261.40 down from $1,268.00 on Tuesday. In Asia this morning, it moved lower to $1,257 at one point and then in London until the LBMA price setting was set at $1,258.25 down from yesterday’s $1,274.10. The dollar index is slightly higher at 97.37 down from 97.17 on Tuesday.

The dollar is up against the euro at $1.0963 from $1.1009 on Tuesday. The gold price in the euro was set at €1,143.83 down from €1,157.33.

Ahead of New York’s opening, the gold price was trading at $1,254.1 and in the euro at €1,143.78.  

Silver Today –The silver price closed in New York at $15.36 down 29 cents.  Ahead of New York’s opening the silver price stood at $15.30.

Price Drivers

E.U. With Draghi of the E.C.B. shortly to announce more stimulus measures, skeptics are having their day. After all this time and after so much monetary stimuli has been injected into the Eurozone the results have been disappointing, so will larger negative interest rates and more QE do any better? What have been the results to date? Even after the central bank pumped about €720 billion into the region, manufacturing dropped to its lowest level since 2013, the inflation rate turned negative, and consumer confidence worsened.

With debt to GDP levels rising, the warnings from the BIS & IMF about the storms coming are on the brink of coming to pass.

Gold ETFs There were sales of 2.378 tonnes of gold from the SPDR gold ETF (GLD) but purchases of 0.45 of a tonne into the Gold Trust (IAU) yesterday. This is the first time in recent weeks we have seen sales of size from the SPDR gold ETF. It certainly helped the gold price to slip down.

What happen when such sales takes place is that HSBC, the Custodian of the Fund, can then sell that into China straight away and yet it won’t impact on London or New York prices. But HSBC cannot do the reverse by taking gold from China and selling it in London as it is illegal to export gold from China. And this is why selling in a market where globally, buying far outweighs selling, prices can be made to fall. It continues to favor buying in Asia when this happens.

So while there are cries of “manipulation” to hold prices down, the evidence is that the structure of the gold market globally favors Asia continuing to buy gold at very low prices. While the banking and currency systems favor gold remaining out of favor, what is happening now is a ticking time bomb, taking us to the point where Asia controls the gold market and soon the gold price.

We continue to see gold and silver markets remaining very volatile in New York in the coming days as liquidity levels remain under visible pressure. However, after yesterday, we expect the volatility to come in, taking gold higher. Bear in mind, please, that physical gold buying in these markets does not create ‘spikes’. We expect COMEX to cause volatility as liquidity pressures continue, while London calms the market.

Silver – The silver price is on the back foot now waiting for gold to go higher.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold keeps pushing higher – slowly but surely

Gold TodayGold closed in New York at $1,268.00 up from $1,260.80 in New York on Monday. In Asia on Tuesday, it moved higher to $1,274 and then in London until the LBMA price setting was set at $1,274.10 up from $1,267.60 yesterday. The dollar index is slightly lower at 97.17 down from 97.61 on Monday.

The dollar is down against the euro at $1.1009 from $1.0963 Monday. The gold price in the euro was set at €1,157.33 down from €1,156.25.

Ahead of New York’s opening, the gold price was trading at $1,277.70 and in the euro at €1,159.86.  

Silver Today –The silver price closed in New York at $15.65 up 16 cents.  Ahead of New York’s opening the silver price stood at $15.67.

Price Drivers

China saw 25% lower exports last month, but that month included the week long Chinese Lunar New Year, so a lower figure was expected. Likewise imports dropped 13%+. Because of that the falls should not be taken as a ‘hard landing’ for China. But it is clear that global growth is declining steadily. Monetary policy certainly won’t reverse this. Therefore the environment for gold remains positive and will do until governments across the world take effective action to promote growth.

Gold ETFs The holdings of both the SPDR gold ETF and the Gold Trust remained the same yesterday. This is the second day running that the holdings were barely changed and yet the gold price keeps pushing higher, slowly, but surely. This certainly does not have the appearance of a ‘spike’ but a steady solid set of rises.

COMEX  is seeing short covering and increases in long positions. A look at today and yesterday’s gold price shows that COMEX is no longer leading the way, but following prices as they rise now. Dealers too are getting more confidence in the gold price holding these levels.

We do see gold and silver markets remaining very volatile in New York in the coming days as liquidity levels remain under visible pressure. However, after yesterday, we expect the volatility to come in taking gold higher. Bear in mind, please, that physical gold buying in these markets does not create ‘spikes’. We expect COMEX to cause volatility as liquidity pressures continue, while London calms the market.

Silver – The silver price looks like it will hold its gains and move higher with gold.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold vaulting upwards as U.S. physical demand continues

Gold TodayGold closed in New York at $1,262.20 up from $1,240.90. In Asia on Friday, it moved higher to $1,266 ahead of London’s opening. In London it moved higher, but at the LBMA price setting it jumped to be set at $1,271.50 up from $1,241.95 yesterday. The dollar index is lower at 97.52.

The dollar is down against the euro at $1.0981 from $1.0879 yesterday. The gold price in the euro was set at €1,157.91 up from €1,141.60.

Ahead of New York’s opening, the gold price was trading at $1,264.00 and in the euro at €1,152.23.  

Silver Today –The silver price closed in New York at $15.22 up 27 cents.  Ahead of New York’s opening the silver price stood at $15.32.

Price Drivers

Global Equity markets continue to rally today. Is this because the future is much brighter or are the falls overdone?  Whatever it is, we can’t see an alteration in the longer term picture when the falls began [leaving dark clouds on the horizon].  When gold and equities move up together we do not read a great deal into it as the relationship between the two is a long term one. We see the weakening dollar having more impact on gold and it is now nearly a cent weaker than yesterday. So the reason that gold rose on the day was the change in direction of the dollar a U.S. factor, which again we forecast.

Gold is now seeing the strong move we forecast.

Gold ETFs An amount of 4.758 tonnes of gold was bought into the SPDR gold ETF and a purchase of 0.63 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 793.332 tonnes and at 190.77 tonnes in the Gold Trust.   The weight of physical gold buying via the States into the London gold market is now heavy. It is even heavier than the tonnage withdrawn from the Shanghai Gold Exchange on a daily basis.  Such weight of buying, points to institutional buying on a persistent basis.

With so much gold having been absorbed into Asia and India supplies are short in the developed world. So if there is a body determined to hold prices down, they are paying a very heavy price in terms of market liquidity, in London, in particular. Now, U.S. investors will have to pay up to get supplies. Asia does not like rapidly rising prices so holds back when they go that way, leaving space for U.S. buyers to move in. U.S. buyers like to buy on a rising market.

Those gold investors calling for gold to be sold are being bitten hard, so today may well see short covering and then taking long positions, but at a price!

Silver – The silver price is well back over $15.00 and is racing to catch gold up as we said it would yesterday.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold falls despite big continuing physical buying in the U.S.

Gold Today Gold closed in New York at $1,232.70 down from $1,234.00. In Asia on Wednesday, it fell to $1,224 ahead of London’s opening. It then rose further to be set by the LBMA at $1,229.35 down from $1,240.00. The dollar index is slightly higher at 98.45.

The dollar is up against the euro at $1.0853 up from $1.0857 on Wednesday. The gold price in the euro was set at €1,132.78 down from €1,140.44.

Ahead of New York’s opening, the gold price was trading at $1,231.00 and in the euro at €1,134.25.  

Silver Today –The silver price closed in New York at $14.84 up 4 cents.  Ahead of New York’s opening the silver price stood at $14.85.

Price Drivers

Equity markets have been rallying this week and may well continue to do so today. Dealers continue to pull gold and silver prices back in expectation of price falls while these equity rallies continue across the world. But this is not warranted in terms of the demand and supply of gold.

Dealers do not respond to physical buying as we explain below [ETFs], the Technical picture continues to describe a tightening of the trading range. We were premature in calling for a big price move either way coming, but the Technical picture continues to support our view that we are getting closer to that move.

Gold ETFs In yet another amazing week for gold demand in the U.S. and after Monday’s huge purchase of gold into the SPDR gold ETF of 14.869 tonnes we see another 8.921 tonnes bought yesterday and a purchase of 0.450 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 786.195 tonnes and at 189.87 tonnes in the Gold Trust.   And yet because of better data out of the States and an equity market rally, gold fell.

Readers may feel that when there are such purchases the U.S. price of gold should rise automatically. But that’s not the way it works. HSBC is the Custodian of SPDR gold, so when the SPDR asks it to acquire gold for the company, HSBC must go into the physical market to buy it. It goes primarily into the physical market, most likely in London [if not from its own sources] to get it – not into the U.S. to get it. As a result, such demand does not impact the U.S. price of gold, initially. Now you have a situation where the supply and demand picture in gold is not reflected in the U.S. gold price, despite the fact that it is U.S. buyers of physical gold that are buying so much. Yes, it is inevitable that at some point their buying will reflect in the gold price.

This makes the establishment of the Yuan gold price “Fixing” in Shanghai after April 19th so important to the future gold price.

Silver – While the silver price has re-affirmed its relationship with the gold price, it remains more volatile than gold both ways. Clearly, for short term trading silver can be more rewarding or damaging, than gold, but we bear in mind that long-term it continues to be treated as a monetary metal.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold ETFs continue building; Silver decouples downwards

Gold TodayGold closed in New York at $1,222.80 down from $1,233.00. In Asia on Monday, it rose to $1,231.25 ahead of London’s opening. It then rose further to be set by the LBMA at $1,234.15 up from $1,231.00.  Since Friday’s setting, gold fell to $1,212 but not on physical selling. The dollar index is stronger at 98.25 up from 97.39 on Friday.

The dollar is up against the euro at $1.0895 up from $1.10248 on Friday. The gold price in the euro was set at €1,132.77 up from €1,116.65.

Ahead of New York’s opening, the gold price was trading at $1,232.00 and in the euro at €1,131.05.  

Silver Today –The silver price closed in New York at $14.65 down 48 cents.  Ahead of New York’s opening the silver price stood at $14.80.

Price Drivers

The result of the G-20 meetings, as usual, were disappointing. There was no real consensus on government support for solid growth and a warning was given by Mark Carney of the Bank of England that monetary policy was not sufficient to stimulate growth and that negative interest rates directly weaken exchange rates, eventually to no avail. The E.U. and Japan were the targets of this statement.

More importantly it is clear that if such policies were not halted it will be ‘every man for himself’ in a currency ‘war’! The euro went much weaker this morning as perhaps more negative interest rates were on the way. The Yen remains strong, still attracting capital.

Gold ETFs On Friday there were purchases of 2.82 tonnes into the SPDR gold ETF and purchases of 0.27 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 762.405 tonnes and at 188.52 tonnes in the Gold Trust.   While Friday saw smaller but continuous purchases they were not heavy enough to have a forceful effect on the gold price. Please note that the price remains in the hands of U.S. investors.

Indian demand remains on the sidelines until the Indian budget details are out, today. Demand was held back hoping for a cut in duties in the last week. If duties are cut then the demand will jump as buyers see up to a 10% cheaper price there. That brings prices down from [see below] nearly Rs.85,000 an ounce to Rs.76,500. That will draw out new Indian demand. It will also make it much more attractive for Indian investors as the ‘spread’ on prices will narrow significantly, making both trading and investment more attractive.

It is feasible that the Indian government will drop duties, because the Trade Balance of Payments has improved significantly because of the plunge in oil prices, giving space for a popular decision such as the lowering of duties on gold.

Silver – For the first time in years the silver price broke away from the gold price and fell heavily. Yes, the gold price did fall and attempted to threaten the Technical picture for gold, but has started the week higher in a much better Technical picture. So we have to watch to see if silver will bounce back, like gold or has it really broken away. How it performs today will guide us on this. So today is a day for gamblers while professionals gauge the picture carefully.  

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold bears fighting a losing battle!  

Gold Today –Gold closed in New York at $1.229.20 up from $1,225.00 on Wednesday. In Asia, it rose to $1,241 ahead of London’s opening. It then pulled back during the morning to be set by the LBMA at $1,235.40 up from yesterday’s $1,232.25. The dollar index is slightly weaker at 97.44 up from 97.77 on Wednesday.

The dollar is weaker against the euro at $1.1028 up from $1.0978 on Wednesday. The gold price in the euro was set at €1,120.24 up from €1,122.47.

Ahead of New York’s opening, the gold price was trading at $1,236.55 and in the euro at €1,120.62.  

Silver Today –The silver price closed in New York at $15.24 down 2 cents.  Ahead of New York’s opening the silver price stood at $15.20.

Price Drivers

Wednesday saw a purchase of 8.029 tonnes into the SPDR gold ETF and a purchase of 0.75 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 760.323 tonnes and at 188.25 tonnes in the Gold Trust.  In the week to date, we now see a total of 55.379 tonnes of gold bought into the two gold ETFs we follow.

The technical picture did as we forecast and broke out convincingly.

The gold price hit $1,250 at one point before being dragged down to $1,229, yesterday.

Let’s assume that this was due to physical selling by U.S. bullion banks. The tonnage bought this week must have put a serious dent in the gold holdings that can be used for trading. Should the buying continue at anywhere near these levels, we would question the wisdom of using such amounts of gold simply to hold the price down. The evidence in the physical markets is that Asian demand is so large that such a policy is doomed to fail.

If however, the price of gold yesterday was simply a function of the COMEX futures and Options contracts then physical gold was not involved. The achievement of holding gold prices back would then be to encourage more physical buying of gold globally, both in the developed world markets and off-market where the bulk of physical gold is traded. The price off-market is referenced to London and COMEX prices. By holding prices down [with the fall from $1,250 to $1,229] would simply incite more buying!

While global growth continues to slow, we note that the Services sector in China is still growing fast. This is directly helping to create more middle class Chinese citizens. These continue to love gold as a fundamental investment. The performance of the Shanghai Composite index remains uninspiring, so solid, safe gold that the older people promote, holds a fundamental position in middle class wealth. The slowing GDP numbers from China belie such growth, but this is and will be a fundamental driver for gold for many years ahead.

Silver – While the silver price was restrained overall yesterday, gold’s breakout will positively affect silver’s performance from now on.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold looks ready for strong move higher

Gold TodayGold closed in New York at $1,225.00 up from $1,207.50 on Tuesday. In Asia, it rose to $1,226 ahead of London’s opening. It steady in London then jumped at the LBMA price setting where it was set at $1,232.25 up from $1,218.75 yesterday. The dollar index is slightly stronger at 97.77 up from 97.42 on Tuesday.

The dollar is stronger against the euro again at $1.0978 up from $1.1003 on Tuesday. The gold price in the euro was set at €1,122.47 up from €1,106.97.

Ahead of New York’s opening, the gold price was trading at $1,235.45 and in the euro at €1,125.85 but then powered upwards through the $1,250 mark in morning trading in New York.  

Silver Today –The silver price closed in New York at $15.26 up 10 cents.  Ahead of New York’s opening the silver price stood at $15.33 moving up above the $15.50 level when the New York market got under way.

Price Drivers

Tuesday saw no purchases or sales from the SPDR gold ETF 0r the Gold Trust. The holdings of the SPDR gold ETF are thus still at 752.294 tonnes and at 187.50 tonnes in the Gold Trust.

In the SPDR [GLD] gold ETF we suspect that the institution which bought 18 tonnes of gold at $1,050 is the same one that bought 45.663 tonnes at the beginning of this week. The very nature of the purchases implies not just that the institution is huge but should continue to buy at opportune times and prices. The purchases are so large that it undoubtedly is frightening off any institution that was contemplating that both it and its clients should ‘short’ the gold market.

The gold price made a surge at the LBMA price setting and appears to have started a strong move upwards. If this continues we could see it go much higher. The Technical picture has moved to the critical point where one expected a strong move, either way! Because the surge was at the LBMA price setting, where we expect the largest volumes of the day to be traded, it does appear that a strong move higher is underway.

When we look at oil, we don’t just see falling prices [which we feel will continue to fall once storage capacity is used up] we see falling government revenue too. This places more strain on sovereign debt servicing.

So when the Saudi Oil Minister states that high cost producers must cut costs or go out of business it is emphasizing its objective that was set when it refused to cut production when U.S. production surged as ‘fracking’ production came to the market. We think the objective from the start was to put shale producers in the U.S. out of business. The entire exercise, long-term, is good for gold because of the increased levels of uncertainty across the world. Add this to the fall in global growth and shift in wealth to the east and we see fertile ground for higher gold prices.

Silver – The silver price is starting to run with gold. Today will be a high risk day but positive in the silver market.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance