Back to a gold premium in China – Phillips

Julian Phillips notes technical support has not been breached for gold and meantime that gold trades at premium in China again.

Gold Today – The gold price closed at $1,292.90 down $10.20 on the previous Friday, in New York. In the last week it was pushed back to support just above $1,280 but recovered in Asia and London to Fix this Monday morning at $1,302.00 and in the euro at €938.446 down only €3.169 on the last 11 days. The euro itself stood at $1.3874 half a cent stronger than 11 days ago. Ahead of the opening in New York gold stood at $1,301.00 and in the euro at €937.79.

Silver Today – The silver price closed at $19.67 unchanged on Friday 11 days ago, in New York. Ahead of New York’s opening, it was trading higher at $19.60.

Gold (very short-term): We expect the gold price to consolidate, today in New York.

Silver (very short-term): We expect the silver price to consolidate, today in New York.

Price Drivers
It was good to be away from the desk for the last week, because the trading within a relatively small band can cause investment myopia over time. As you can see silver is unchanged since we left and gold has recovered. Prior to our departure the Technical picture was pointing higher, but this did not happen. Now it is pointing lower, but has failed to penetrate support. The fundamentals remain robust, but short-term traders creating activity through their constant pressure to the downside appear to be holding sway, but do not have the force to change the fundamental picture. That’s why gold and silver could go both ways.

What they have achieved by this pressuring of the gold price is to shake out some more weak holders or stale bulls from the SPDR gold ETF to the extent of 6.292 tonnes over the last week, but none from the Gold Trust. Their respective holdings now stand at 792.139 tonnes and 164.41 tonnes.

This was enough to keep gold below $1,300, but unless it continues we cannot see the efforts of traders succeeding. If it forces a change of policy onto the large long-term institutional holders we could see lower prices. However, it would reinforce failure in these institutions if it did. So we wait and see.

In China the gold price is trading at a premium again, signifying that despite the increase in the number of banks importing gold, supply is becoming insufficient again. We believe that China either knowingly or unknowingly is controlling the gold price, not New York! 

Silver – The silver price is holding firm seemingly free from the attacks of short-term traders. Undeterred by $: € exchange rate changes silver perhaps reflects a truer picture of precious metals prices at the moment.

Global Gold Price (1 ounce)
Today Friday 17th
Franc Sf1,142.15 Sf1,140.34
US 1301 1298.5
EU 937.79 936.8
India Rs.78,808.08 Rs.78,390.45

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