Silver Market Morning: Feb 14 2017 - Gold consolidating but U.S. gold ETF investors buying big!

Gold Today –New York closed at $1,225.90 on the 13^th February after closing at $1,234.00 on the 10^th February. London opened at $1,227.50 today.

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

 - The $: € was slightly stronger at $1.0623: €1 from $1.0653: €1 on yesterday.

- The Dollar index was slightly stronger at 100.78 from 100.67 on yesterday.

- The Yen was slightly stronger at 113.48:$1 from yesterday’s 113.61 against the dollar.

- The Yuan was stronger at 6.8681: $1, from 6.8804: $1, yesterday.

- The Pound Sterling was slightly stronger at $1.2529: £1 from yesterday’s $1.2520: £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.]

Shanghai was closed today.

LBMA price setting: The LBMA gold price was set today at $1,229.65 up from yesterday’s $1,229.40.

The gold price in the euro was set higher at €1,157.43 after yesterday’s €1,155.55.

Ahead of the opening of New York the gold price was trading at $1,229.40 and in the euro at €1,156.48. At the same time, the silver price was trading at $17.94.

Silver Today –Silver closed at $17.82 at New York’s close yesterday against $17.94 on the 10^th February. You will note its rise against gold is holding.

Gold _{(very short-term)} The gold price will consolidate with a weaker bias, in New York today.

Silver _{(very short-term)} The silver price will consolidate, in New York today.

Price Drivers

Today sees Shanghai closed today, removing the Shanghai influence on the gold price. In the Chinese vacuum, western gold markets are using the opportunity to pull gold prices lower on a day when the dollar is slightly stronger but not sufficient to make the gold price fall. Hence, we see today as a day when we could see bargain hunters.

Why are we so firm on this? As you can see below there were substantial physical gold purchases into the SPDR gold ETF and smaller ones into the Gold Trust. This should have moved prices higher. But with Shanghai closed, dealers clearly feel that selling may come in.

What seems to be a market driver is that if investors in the SPDR [GLD] gold ETF come in again as they did yesterday, dealers will be caught wrong-footed and be forced to lift gold prices quite a bit higher for when eastern markets return.

The gold market today is directionless. It will change when far eastern demand comes back, but today we expect no dramatic moves, but may well see physical demand appear, but this will only show in prices later today or tomorrow.

Even in the U.S. where the mood is more positive than elsewhere we see inflation needing to pick up more before the Fed contemplates higher interest rates and as we said before, the tax and stimuli policies need to be clearer before the Fed acts.

Gold ETFs – Yesterday we saw purchases of 8.295 into the SPDR gold ETF and of 0.39 into the Gold Trust. Their respective holdings are now at 840.872 tonnes and 201.29 tonnes.

Since January 4^th 2016, 241.552 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 31.471 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips

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