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Gold Today –Gold closed in New York at $1,354.60 on Monday after Friday’s close at $1,367.20.  In Asia the gold price also fell further as you can see below

–         The $: € fell to $1.1100 down from $1.1048.

–         The dollar index fell to 96.12 from 96.60 Monday.

–         The Yen was weaker at 103.44 from Monday’s 102.48 against the dollar.

–         The Yuan was slightly weaker at 6.6859 from 6.6902 Monday.

–         The Pound Sterling was stronger at $1.3158 up from Monday’s $1.2942 but with more falls expected this Thursday as the B. of E. adds further easing of interest rates! Or has this been discounted already?

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  12

2016  07  11

SHAU

SHAU

292.05

294.97

291.86

293.48

Dollar equivalent @ $1:6.6859

$1: 6.6902

  $1,358.65

$1,371.35

$1,357.76

$1,364.32

 

The Chinese gold market is pulling back with New York and London ahead of the Bank of England’s Thursday’s announcement.

LBMA price setting:  $1,352.85 down from Monday 11th July’s$1,358.25.

The gold price in the euro was set at €1,218.78 down €10.63 from Monday’s€1,229.41.

Repeat: Ahead of the opening in New York the gold price stood at $1,347.65and in the euro at €1,214.21.  London is trying to establish a pattern of lower prices ahead of New York when it feels physical buying may not appear in New York and in particular the gold ETFs. The moment physical interest is shown in the ETFs the gold price is lifted.

Silver Today –The silver price closed in New York at $20.29 on Monday up from $20.19 Friday.  Ahead of New York’s opening the price was trading at$20.37.

Gold (very short-term)
The gold price should mark time or weaken until Thursday in New York.

Silver (very short-term)
The silver price should continue to rise until Thursday in New York, but could also discount more U.K. easing in New York today and rise further. It will only fall if there is a large fall in the gold price now..

Price Drivers
If world financial markets were all headed higher, in a healthy economic climate, there would be no need to search for good news. There would be no need to inject enthusiasm into media reports in place of good news. But we find ourselves scraping the barrel for news that’s positive.

But the bad news keeps on coming. Today, we see more strains in the structure of the E.U. Italian banks have an overburden of bad loans of around€350 billion.

They will have to apply the “Bail-in” principles, which leads to depositors with over a certain figure, losing their deposits and getting bad shares in the bad banks. Add to that an October referendum to overhaul its political system and you see causes for further instability in Italy in particular.

Before the E.U. was created, when the Italian Lira was in existence, its exchange rate would have tumbled bringing the benefits of a weaker currency to Italy after such bad news. With the euro came a currency that reflects the stronger member’s economies. Now Italy and other weaker nations suffer the penalty of a persistently strong currency, ill-suited to weak economies with weak banking systems.

As it is the IMF gave two new warnings to the world, one to China to tackle its over-lent situation and one to the E.U. that it will see 1% or barely any growth this year and likely a recession next year. Nearly zero growth or negative growth may well be too much to bear for the world.

Again these factors are positive for gold and silver.

The Technical picture remains unaltered and positive. The consolidation pattern is complete.

The markets are waiting for the announcement on Thursday from the Bank of England on easing. We expect that it will lower interest rates. The concept of raising rates blew away with the wind. If we do have an announcement lowering interest rates from the B. of E. on Thursday we expect it will affect the Fed’s future decisions on interest rates. The effect may even be so much that we will not see a U.S. rate hike until well into 2017, if then.

The global economy gives us no reason to believe it will recover in 2017, quite the contrary, it is more likely to see more woes.

The U.K. is expected to enter a recession shortly, so easing should see the pound’s exchange rate fall once more. [More in our newsletters – subscribe below]

Gold ETFs – In New York on Monday there were no purchases or sales of gold shares in the SPDR gold ETF or Gold Trust. Their holdings remain the same  at 981.256 tonnes and at 214.09 tonnes in the SPDR gold ETF and Gold Trust respectively.

We guess that we will see little to no activity in these funds until Thursday in New York.

Since January 4th this year, the holdings of these two gold ETFs have risen by 397.75 tonnes.

Silver –Silver prices should move higher, much faster than gold, currently, subject to Thursday’s announcement.

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