Silver Market Morning: April 19 2017 - Gold building strength below $1,300 still!

Gold Today –New York closed at $1,290.10 yesterday after closing at $1,283.30 Tuesday. London opened at $1,283.00 today.

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

  - The $: € was weaker at $1.07.24 after yesterday’s $1.0649: €1.

- The Dollar index was weaker at 99.66 after yesterday’s 100.24.

- The Yen was weaker at 108.99 after yesterday’s 108.84:$1.

- The Yuan was slightly stronger at 6.8854 after yesterday’s 6.8860: $1.

- The Pound Sterling was stronger at $1.2857 after yesterday’s $1.2590: £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.]

The Shanghai Gold Exchange was trading at 286.00 towards the close today. This translates into $1,286.95. New York closed $3.15 ABOVE Shanghai’s closing. London opened at a $3.95 discount to Shanghai.

Shanghai led the way lower today taking London back to the mid-$1,280 area again. To us this was important as it confirms the price dominance of Shanghai over London. If New York gold prices rise today without any specific news to cause that, then it will be an attempt to reclaim price dominance. If not then Shanghai will show its overall, dominant, pricing power.

LBMA price setting: The LBMA gold price was set today at $1,282.05 from yesterday’s $1,285.00.

The gold price in the euro was set at €1,195.72 after yesterday’s €1,203.30.

Ahead of the opening of New York the gold price was trading at $1,285.00 and in the euro at €1,198.01. At the same time, the silver price was trading at $18.27.

Silver Today –Silver closed at $18.32 yesterday after $18.41 at New York’s close Thursday.

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

New York’s gold price climb nearly took the gold price to $1,300, but more work needs to be done to achieve that still. With Shanghai taking the gold price down today, the fear of war has subsided somewhat, but it has not gone away. The gold price did gain some impetus from war fears, holding sellers back and producing small buying of gold. But the gold price still has further to climb in the euro as the dollar weakens against all currencies.

It seems markets are paying attention to President Trump, not the Treasury Secretary on the dollar, after all. Even Goldman Sachs has closed its bullish calls on the dollar. With the dollar index falling back through support, we expect more falls in the dollar.

In China the economy has shown itself to be robust and the Chinese government’s plans to develop a self-sustaining economy within China is meeting with success as it continues to turn from its dependence of exports. But this would not lead to the Chinese selling gold as it would in the U.S. if the economy is burgeoning, no, it is doing the reverse and prompting more gold buying as a wealth protector. We don’t expect to see China allow capital investments outside of the country unless the directly benefit the nation. But they will allow capital out to buy gold.

Gold ETFs – Yesterday saw no purchases or sales of gold into or from the SPDR gold ETF but a purchase of 0.59 of a tonne into the Gold Trust. Their holdings are now at 848.921 tonnes and at 203.46 tonnes respectively.

Since January 4^th 2016, 251.027 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 40.971 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips

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