Gold and Silver Following Shanghai Higher

Gold Today –New York closed at $1,163.50 on the 4rd January after closing at $1,159.50 on the 3rd January. London opened again at $1,173.00 today.

 Overall the dollar is weaker against global currencies today. Before London’s opening:
–         The $: € was weaker at $1.0503: €1 from $1.0441: €1 yesterday.
–         The Dollar index was weaker at 102.36 from 102.98 yesterday. 
–         The Yen was stronger at 116.66: $1 from yesterday’s 117.56 against the dollar. 
–         The Yuan was stronger at 6.8874: $1, from 6.9321: $1, yesterday. 
–         The Pound Sterling was stronger at $1.2319: £1 from yesterday’s $1.2270: £1.
 $1,181.70
Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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 gold prices continue to rise slightly on a daily basis and both London and New York are moving higher, faster as they appear to be catching Shanghai up. This again confirms that demand in Shanghai is solid and solid enough to pull gold out of the developed world gold markets. The strength or weakness of the dollar is not affecting this as you can see in Yuan prices. These appear to be rising in a relatively stable pattern over the last month. It is the translation into dollar prices that reflects dollar moves.

Against New York’s prices Shanghai was trading $19 higher, but against London Shanghai was trading only $10 higher. We have to remember that Shanghai prices are yesterday’s prices after which New York was open, then London. But we can perceive that New York is resisting the price rises at the moment. With no ETF sales yesterday we expect New York to be unable to resist letting gold prices rise.

This is a visible lessening of COMEX’ influence, a structural change in the global gold market.
LBMA price setting:  The LBMA gold price setting was at $1,173.05 this morning against yesterday’s $1,165.90.
 
The gold price in the euro was set higher at €1,116.98 after yesterday’s €1,117.51.
Ahead of the opening of New York the gold price was trading at $1,173.55 and in the euro at €1,117.08.  At the same time, the silver price was trading at $.16.57
 Silver Today –Silver closed at $16.43 at New York’s close yesterday from $16.29 on the 3rd January. 
 
Price Drivers

We have pointed out that Shanghai is now making the market in gold as you can see from the relatively stable pattern of rising gold prices. The gold price in the dollar is reflecting dollar moves against all currencies.

A correct perspective, we feel is to separate the currencies and look at gold prices in each different currency. In the last day we can see that Yuan and euro prices have been relatively stable. When gold prices rise in all currencies or fall in those currencies, that is a gold price move, but when in different currencies it moves differently, this reflects currency moves only.
Gold ETFs – Yesterday in New York, there were no sales from the SPDR gold ETF (GLD) but there was a purchase of 0.41 of a tonnes in the holdings of the Gold Trust (IAU), leaving their respective holdings at 813.871 tonnes and 196.61 tonnes. This was the first decent purchase of gold we have seen since Trump was elected and the Fed raised rates!

Julian D.W. Phillips 
1/6/2017