Gold and Silver Market Morning: Mar 17 2017 - Gold jumping after the Fed!

Gold Today–New York closed at $1,226.30 yesterday after closing at $1,220.00 on the 15^th March.London opened at $1,227.00 today.

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

-The $: € was weaker at $1.0754: €1 from $1.0709: €1 yesterday.

-The Dollar index was weaker at 100.38 from 100.72 yesterday.

-The Yen was unchanged at 113.44:$1 from yesterday’s 113.44 against the dollar. 

-The Yuan was stronger at 6.9068: $1, from 6.8967: $1, yesterday. 

-The Pound Sterling was stronger at $1.2343: £1 from yesterday’s $1.2266: £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 275.90 Yuan, which directly translates into $1,242.46. But allowing for the difference of gold being traded this equates to a price of $1,237.46. This more than $11.16 higher than the New York close and $10.46 higher than London.

As you can see the price differentials between the three centers has been narrowing considerably. With today being a day when the gold markets are taking a breather after the rise we expect the differentials to continue to narrow as Shanghai pulls gold prices higher across the world.

LBMA price setting:The LBMA gold price was set today at $1,228.75 up from yesterday’s $1,225.60.

The gold price in the euro was set at €1,144.51 after Friday’s €1,142.64.

Ahead of the opening of New Yorkthe gold price was trading at $1,230.55 and in the euro at €1,146.51 At the same time, the silver price was trading at $17.37.

Silver Today –Silver closed at $17.32 at New York’s close yesterday against $17.31 on the 15^th March. Silver prices have barely moved over the last day as the primarily American investors in silver have hardly reacted to exchange rate moves in currencies. This is where silver and gold are distinctly different in that silver prices are dollar based in American markets, so are not vulnerable to global swings in currency values, except indirectly via the gold price. Silver prices constantly follow the direction of gold price but not to the same extent.

Gold_{(very short-term)} The gold price should consolidate with a stronger bias, in New York today.      

Silver_{(very short-term)} The silver price should consolidate with a stronger bias, in New York today.

Price Drivers

Today currency and precious metal markets are taking a breather as they digest the fed’s future path and its impact on the dollar. But the euro is strengthening significantly against the dollar.

We were in doubt as to whether the dollar’s previous bull run was resuming, but after the Fed’s action we continue to see the dollar’s bull market as over. The Fed’s action will affect the currency [and gold and silver] markets for some time to come [months] as it is a structural path that was not expected by markets. Markets expected a considerably more hawkish Fed statement. We cannot see this before the end of the year, if the U.S. economy becomes more robust than it is now.

On top of this we are now seeing more of President Trump’s policies unfolding as he ‘muscles-up’ the U.S. government and defense departments at the expense of the State Department, etc. But we await his infrastructure spending plans.

But it is clear that his road through the Senate is going to be difficult. It is also clear that his implementation of his policies will run the same gauntlet. The exuberance of expectations is losing steam, now the market sprint will likely slow to a plod. This points to a weaker dollar and better gold prices, we feel.

Gold ETFs –Yesterday saw sales of 2.369 tonnes from the SPDR gold ETF but purchases of 0.6 of a tonne into the Gold Trust.Their respective holdings are now at 837.062 tonnes and 197.82 tonnes. 

Since January 4^th 2016, 233.852 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6^th 2017 23.796 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips 

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