Gold Price And Silver Price Fall To Support!

Gold Today –Gold closed in New York at $1,324.30 on Wednesday after Tuesday’s close at $1,338.60.  London opened at $1,326.75.

-         The $:€ was at $1.1276 from $1.1375 yesterday.

-         The Dollar Index was at 94.70 from 94.67 yesterday.

-         The Yen was at 100.37 from yesterday’s 100.20 against the dollar.

-         The Yuan was weaker at 6.6560 from 6.6536 yesterday.

-         The Pound Sterling was at $1.3217 from yesterday’s $1.3230.

Yuan Gold Fix

Shanghai lifted prices slightly in both the morning and afternoon fixes. But they did allow the U.S. prices to guide them. While Shanghai can lead gold prices we feel that at least until October 1^st they will take a low profile by remaining roughly in synch with western gold markets.

Perhaps the fall in gold prices was a dealer-led pull back ahead of Janet Yellen’s Friday speech. This discounts an announcement that a rate hike will happen very soon. If she does not imply that, then we see the gold market moving higher.

 LBMA price setting:  $1,324.50 after yesterday’s $1,337.90.

 The gold price in the euro was set at €1,172.64 down €9.05 from yesterday’s €1,181.69.

 Ahead of the opening in New York the gold price stood at $1,324.15 and in the euro at €1,172.85. 

 Silver Today –The silver price closed in New York at $18.55 yesterday down from $18.88 Tuesday.  Ahead of New York’s opening the price was trading at $18.53.  

Gold _{(very short-term)}

The gold price will continue to consolidate, in New York today.     

Silver _{(very short-term)}

The silver price is expected to consolidate at lower levels waiting for gold to move, in New York today. 

Price Drivers

The market in gold has fallen to support. Some will say it has broken down but we feel it has not yet done so convincingly. It may well form a very positive pattern at these levels. We feel that, because the current fall in the gold price had no physical content, as you can see below.

 When a market does this, it is because dealers fear selling and protect themselves against it. Should there be no sales after that but relatively small buying dealers will mark up prices above where they fell from to prepare for buying.

Behind the scenes we note that the velocity of the U.S. money supply [M2] has fallen to critical levels. It measures how much of the money supply is being used, relative to GNP. It is established by dividing a country’s GNP by the total supply of money. No doubt the Fed is factoring this into whether to raise rates or not. In such an environment, a rate hike will shock the economy far more than a rate hike would if the velocity of money reflected a strong economy.

Gold ETFs – In New York on yesterday there was no change in the holdings of the SPDR gold ETF but a purchase of 0.75 of a tonne into the Gold Trust. This left their respective holdings at 958.369 tonnes and 224.60 tonnes.

Since January 4^th this year, the holdings of these two gold ETFs have risen by 383.854 tonnes.

Silver –Silver prices now fell back 32 cents yesterday confirming that silver prices will remain sensitive to even small moves in the gold price.