Gold today: New York closed Friday at $1,254.30.London opened at $1,254.00 today.
Overall the dollar was weaker against global currencies, early today. Before London’s opening:
The GBP/USD was slightly stronger at $1.1650 after Friday’s$1.1657: €1.
The dollar index was weaker at 93.93 after Friday’s 94.09.
The yen was stronger at 110.76 after Friday’s 111.69:$1.
The yuan was stronger at 6.7503after Friday’s 6.7697: $1.
The pound sterling was stronger at $1.3041 after Friday’s $1.3001: £1.
New York closed nearly $8.00 higher than Shanghai on Friday with London opening only $3 less than Shanghai. If this persists this week with the differentials narrowing as they are, then we will have confirmation that arbitrageurs are proving successful in smoothing out the differences between the global gold markets.
This is a structural change in the global gold market and allows a considerably greater influence of the physical gold market [primarily Shanghai] to impact the gold price and diminish the impact of the ‘paper gold markets of COMEX and the ‘paper’ side of the London gold market, across the world.
We have highlighted in the Gold Forecaster newsletter of ours that while 90+% of gold-linked transactions go through London and COMEX over 90% of physical gold transactions go through Shanghai. With the impact of the arbitrageurs bringing global gold prices together, we will see, at last, the fundamentals of demand and supply impact the price.
An analogy of this is seen in the sea where the surf and waves have the loudest impact, but the current dominates the ebbing and flowing of the sea itself. The current is now taking control whereas the surf and waves appeared to have it before.
Silver today: silver closed at $16.48 Friday after $16.30 at New York’s close Thursday.
LBMA price setting: The LBMA gold price was set today at $1,255.85 from Friday’s $1,247.25. The gold price in the euro was set at €1,078.45 after Friday’s €1.071.61.
Just after the opening of New York the gold price was trading at $1,256.50 and in the euro at €1,078.73. At the same time, the silver price was trading at $16.54.
Gold (very short-term) The gold price rise should consolidate with a positive bias, in New York today.
Silver (very short-term) The silver price should try to catch up to gold if gold rises, in New York today.
Price Drivers
The gold price has broken through overhead resistance and is now consolidating on that resistance which is now support. Today, we expect and are seeing a dollar rally back to overhead resistance before resuming its downward path. The media is blaming the Trump family for the fall, but as we said last week, the dollar bear market has begun in earnest. Once this rally subsides, we do see rallies in the dollar but the trend is lower now.
We cannot blame the Trade deficit as this has been negative yearly since the seventies something the world has accepted as the U.S. ‘exorbitant privilege’ [where the U.S. paid for goods with freshly produced dollars]. That it could be a factor now could only happen if this monetary system of ‘dollar hegemony’ was ending, or has ended. We do believe that that system is changing to a multi-currency one. Consequently, we see the dollar weakening for several years now.
Gold ETFs: Friday saw sales of 2.366 tonnes from the SPDR gold ETF but no change in the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 813.759 tonnes and at 211.86 tonnes respectively.
In the last week heavy persistent gold sales from the SPDR gold ETF have had absolutely no impact on the gold price as it soared up from the bounce straight through the $1,250 “Golden Cross’”.
We expect these sales to halt this week as the gold picture looks so positive.
Since January 4th 2016, 175.677 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6th 2017 13.162 tonnes have been added to the SPDR gold ETF and the Gold Trust.
