Silver Market Morning: August-21-2017: Gold and silver building strength below $1,300 as currencies calm!

Gold Today –New York closed Friday at $1,291.60. London opened at $1,285.00 today.

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

 - The $: € was slightly stronger at $1.1740 after the Friday’s $1.1750: €1.

- The Dollar index was slightly stronger at 93.51 after Friday’s 93.47.

- The Yen was slightly stronger at 109.03 after Friday’s 109.05:$1.

- The Yuan was stronger at 6.6717 after Friday’s 6.6769: $1.

 - The Pound Sterling was weaker at $1.2875 after Friday’s $1.2896: £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.]

New York closed $4.00 higher than Shanghai’s close Friday. Then today sees Shanghai moving $0.50 higher than New York’s close before London opened nearly a $6.00 lower than Shanghai, as before trying to move up to Shanghai’s prices.

With Shanghai leading the way today, we see gold prices persistently attacking the $1,300 overhead resistance this week. Please note that the way the gold price keeps rising in Shanghai is quietly steady with no spiking activities. The U.S. is more volatile, but comes into line with Shanghai. London always tries to lower the gold price from the trading level seen in Shanghai, but does not resist the overall rise in Shanghai’s price. So long as this pattern is followed we will see an insistent rising pattern until we move through 280 Yuan. This equates, at current exchange rates to $1,300.

Silver Today –Silver closed at $17.00 Friday after $17.05 at New York’s close Wednesday.

LBMA price setting: The LBMA gold price was set today at $1,287.60 from Friday’s $1,295.25. The gold price in the euro was set again at €1,094.71 after Friday’s €1,102.72.

Just before the opening of New York the gold price was trading at $1,288.20 and in the euro at €1,095.22. At the same time, the silver price was trading at $17.05.

Gold _{(very short-term)} The gold price should rise towards $1,300, again in New York today.

Silver _{(very short-term)} The silver price should have a stronger bias, in New York today.

Price Drivers

The currency markets are quiet today with the expectation that the dollar will correct slightly higher before resuming its fall. It seems to be trying to do that in a half-hearted way at the moment. Meanwhile, gold is looking strong in Shanghai after Friday saw U.S. gold investors returning to the market in both of the U.S. based gold Exchange Traded Funds we follow. We expected this because U.S. investors always buy on a rising gold price. Friday saw the Technical picture brighten as $1,300 was breached, which, no doubt, prompted U.S. buying. We expect to see it do so again through this week.

It is strange to see the media and politicians play down the Korean situation as they are at the moment. To us, we see the U.S. South Korea military exercises as antagonistic to the psychopathic president of North Korea. But news channels are saying, “These are just routine annual exercises that should not be read negatively.” Really? There is a strong chance that we will see North Korea fire a missile towards Guam this week in response to these exercises. Tensions are high in the region. But they are not, we believe a factor in the gold price, at the moment. Should a missile be fired and the U.S. respond along President Trump’s ‘fire and fury’ lines, the gold price will leap much higher.

But putting that aside we do see the gold price rising and if it takes out $1,320 there is very little overhead resistance thereafter. [Read more in the current issue of Gold Forecaster on this].

Russia’s central bank has just released its gold purchase figures for July totaled 400,000 ounces [or 12.44 tonnes] bringing the amount of gold purchased year to date to 113.3 tonnes, on track to meet the annual levels it has purchased for the past three years [around 173 tonnes in 2015, 206 tonnes in 2015, and 200 tonnes last year].

These figures account for a little over 70% of the country’s domestic new mined gold output over the period, implying it is selling the balance outside of the country [likely to China through Russian banks]. Previously these would have been sold through London in the U.S. dollar. We believe that if China is the buyer, it is more than likely that Russia achieved the proceeds in the Yuan.

Gold ETFs – Friday there were purchases of 3.843 tonnes of gold into the SPDR gold ETF and purchases of 1.20 tonnes of gold into the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 799.286 tonnes and at 214.48 tonnes respectively.

Since January 4^th 2016, 176.123 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.

Since January 6^th 2017, 14.157 tonnes to the gold ETFs we follow.

Regards,

Julian D.W. Phillips

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