Gold and Silver Market Morning: July 12 2017 - Gold and silver have confirmed the bottom is in!

Gold Today–New York closed yesterday at $1,216.40.London opened at $1,218.50 today.

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

 -The $: € was weaker at $1.1448 after yesterday’s$1.1396: €1.

-The Dollar index was weaker at 95.76 after yesterday’s 96.11.

-The Yen was stronger at 113.36 after yesterday’s 114.32:$1. 

-The Yuan was strongerat 6.7881after yesterday’s 6.7995: $1. 

-The Pound Sterling was weaker at $1.2855 after yesterday’s $1.2902: £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.]

Both New York and London turned higher yesterday. New York rose to Shanghai’s level again, at the close yesterday and London today went higher but still left a differential with Shanghai at $7 which was lower than yesterday’s differential. All global gold markets have found their bottom.

Silver Today –Silver closed at $15.84 yesterday after $15.66 at New York’s close Monday.

LBMA price setting:The LBMA gold price was set today at $1,219.40 from yesterday’s $1,211.90.The gold price in the euro was set at €1,064.23 after yesterday’s €1.063.26.

Ahead of the opening of New Yorkthe gold price was trading at $1,217.20 and in the euro at €1,062.69. At the same time, the silver price was trading at $15.83.

Gold_{(very short-term)}The gold price should consolidate at higher levels, in New York today.      

Silver_{(very short-term)} The silver price should consolidate at higher levels, in New York today.      

Price Drivers

The gold price has confirmed the bottom is in and it rose to $1,219 this morning in London. The support at the $1,200 level is very large. But you will note that in the euro, it has barely moved. We see the weakening dollar playing a strong role in the dollar gold price going forward. This means that we must gauge the gold price by looking at it in different currencies as well as the dollar.

Demand from China remains strong as you can see from the numbers out of Shanghai [above], but demand out of India is scant.

The buying in India ahead of the new GST tax took demand away for a period after its imposition. Once this is soaked up by the market, demand will return to normal. With the Monsoon still underway we do not expect demand to pick up until the end of August.

Trump or A.I.

The media in the U.S. is hounding President Trump and his family relentlessly. But now they are attributing his son’s actions in meeting Russians as a reason for Treasury yields moves. The impact they are having is that the new Administration’s plans on stimulating the economy and ‘draining the swamp’ have led to the Administration finding they are stuck in the mud and can’t get going on their plans. This in itself is weakening the dollar and holding back the economy from becoming robust. Markets will price this in, not the Trump / Russia issue.

What is now coming to the fore in matters concerning the dollar and the Fed is falling inflation and the failure of wages to rise as expected with ‘full’ employment. While we have been highlighting artificial intelligence as a major economic factor for years now, we see banks recognizing it a contributing strongly to the poor quality jobs being taken up and for workers inability to wage bargain. We see A.I. continuing to do this in the years ahead and now likely to affect Fed policy on interest rates. The impact will be increasingly dovish and lead to the dollar weakening over the years ahead. It is already close to entering a bear market. The same problem is being felt in all industrialized countries including China.

Gold ETFs –Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 832.391 tonnes and at 211.41 tonnes respectively.

Since January 4^th 2016, 193.902 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6^th 2017 31.387 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips 

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