Silver Market Morning: Mar 21 2017 - Gold still consolidating at higher levels!

Gold Today –New York closed at $1,234.60 yesterday after closing at $1,228.80 on the 17^th March. London opened at $1,231.70 today.

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

  - The $: € was weaker at $1.0793: €1 from $1.0765: €1 yesterday.

- The Dollar index was weaker at 100.06 from 100.16 yesterday.

- The Yen was weaker at 112.86:$1 from yesterday’s 112.74 against the dollar.

- The Yuan was stronger at 6.8968: $1, from 6.9051: $1, yesterday.

- The Pound Sterling was weaker at $1.2380: £1 from yesterday’s $1.2419: £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.]

At the close in Shanghai today, the gold price was trading at 276.50 Yuan, which directly translates into $1,246.97. But allowing for the difference of gold being traded this equates to a price of $1,241.97. This more than $12.37 higher than the New York close and $10.27 higher than London.

The price differential between the three centers is narrowing again as China continues to dominate gold prices. Even a nearly 4 tonne sale from the SPDR gold ETF did not change U.S. prices. As you can see above, Shanghai’s gold prices are steady at higher levels uninfluenced by London or New York at the moment.

LBMA price setting: The LBMA gold price was set today at $1,232.05 down from yesterday’s $1,233.00.

The gold price in the euro was set at €1,139.94 after yesterday’s €1,146.34.

Ahead of the opening of New York the gold price was trading at $1,233.15 and in the euro at €1,141.07 At the same time, the silver price was trading at $17.43.

Silver Today –Silver closed at $17.42 at New York’s close yesterday against $17.38 on the 17^th March. Silver prices continue rising slowly in line with gold’s dollar prices.

Gold _{(very short-term)} The gold price should continue to consolidate, in New York today.

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

Price Drivers

Turning back to the G-20 statement we note that the G-20 maintained its call for competitive devaluations and FX market instability to be avoided. While it goes against brazen devaluations for the sake of gaining competitive advantage, protectionism will alter trade balances, which will affect exchange rates. Behind such international plays, nations do attempt to keep their exchange rates low and lower. So while brazen currency wars are to be avoided, they will continue indirectly. Hence, the concerns surrounding trade with the G-20 statement calling for protectionism to be resisted not included in the statement.

Markets are still expecting the enormous policy implementation of new tax rates and infrastructure spending. These are certain to have far more impact on global financial markets than any policy decisions President Trump has made to date. Likewise any implementation of Trade tariffs. These will ripple out and over precious metal markets. At this point ahead of these announcements we see them being positive for gold.

Gold ETFs – Yesterday saw sales of 3.849 tonnes from the SPDR gold ETF but no change in the Gold Trust. Their respective holdings are now at 830.251 tonnes and 197.82 tonnes.

Since January 4^th 2016, 227.041 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 16.985 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips

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