Gold Today –New York closed yesterday at $1,260.00. London opened at $1,260.00 today. 

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

-         The $: € was stronger at $1.1709 after the yesterday’s $1.1728: €1.

-         The Dollar index was stronger at 93.71 after yesterday’s 93.50. 

-         The Yen was almost unchanged at 111.23 after yesterday’s 111.25:$1. 

-         The Yuan was weaker at 6.7415 after yesterday’s 6.7377: $1. 

-         The Pound Sterling was weaker at $1.3090 after yesterday’s $1.3138: £1.

Yuan Gold Fix

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.]

We cannot establish the price at which Shanghai was trading today. New York $3 lower than Shanghai yesterday, with London closing at a level that is closer to Shanghai’s price than we have seen until yesterday, when it opened at just $2.50 below Shanghai’s trading level yesterday. Shanghai continues to lead the way higher and to import as much gold as it can to meet Chinese demand.

Silver Today –Silver closed at $16.57 yesterday after $16.45 at New York’s close Tuesday.

LBMA price setting:  The LBMA gold price was set today at $1,259.60 from yesterday’s $1,262.05.  The gold price in the euro was set at €1,075.20 after yesterday’s €1.077.11.

Just after the opening of New York the gold price was trading at $1,263.25 and in the euro at €1,075.41. At the same time, the silver price was trading at $16.73. 

Gold _{(very short-term)} 

The gold price should consolidate, in New York today.      

Silver _{(very short-term)}

 The silver price should consolidate, in New York today.      

Price Drivers

On what is usually the busiest day of the week, with two days of no markets at the weekend, the gold price has held the $1,260 level. Will it rise from here? We will have to wait and see.

The main event in the gold market yesterday was the return of U.S. investors to physical buying of gold. As you have seen, the selloff of over 71 tonnes of gold recently from the SPDR gold ETF, while the gold price was rising was a failed exercise, as it did not lower the gold price. Indeed we are certain that the gold sold is now on its way to Shanghai via Switzerland. It is in the nature of U.S. investors to  ‘buy on the rise’, so we are watching to  see if the U.S. bears attack again, or has their ammunition been spent and they are turning long of physical gold. We do expect their actions now to have a direct bearing on the gold price. If they attack we expect to see a pattern similar to the last few weeks seen in gold. If they are ongoing buyers we expect the gold price to rise accordingly.

With all the chatter about the timing of rate hikes or trimming the Fed’s Balance Sheet, one very, very important factor is being overlooked in the U.S. If inflation continues at lower or lowering levels and the recovery stalls followed by a downturn, the Fed has almost no more tools with which to combat the falls. As it is rates continue to be so low that any lowering will have little to no impact [unless they go negative] on stimulating the U.S. economy. Likewise, trimming the Fed’s Balance Sheet, we feel, will have little to no impact on the U.S. financial world. If they go that road and there is a downturn in the U.S. further stimulation is likely to crack confidence in the dollar, something that the Fed cannot afford! Certainly little could be more positive for the gold price. Despite their positive demeanor, Fed officials must be very disturbed by the downturn in inflation. 

Gold ETFs – It looks like some U.S. Investors are returning to the SPDR gold ETF as we see purchases yesterday of 6.451 tonnes but, once again, no change in the Gold Trust holdings. This is a substantial amount but we wait to see if there will be follow through. Technically the gold price showed it has surmounted resistance and is now sitting on that, which is now support. Without knowing the individual customers, it would seem that a fund committed itself to the gold price falling back from $1,260 below $1,250, but the Technical picture is now failing, as Asian demand continues to lift western gold market prices higher.

The SPDR gold ETF and Gold Trust holdings are at 791.875 tonnes and at 210.87 tonnes respectively.

Since January 4^th 2016, 162.758 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6^th 2017 0.283 tonnes of gold have been added to the SPDR gold ETF and the Gold Trust. The gold acquisitions by these two funds in 2017 have returned to the positive and now stand at 0.283 of a tonne in 2017.

Regards,

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

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