New York closed with the gold price at $1,135.70 down $1.60 yesterday. China remains closed until Thursday in its ‘Golden Week’ holiday. When London opened the gold price rose to $1,140.00 after which it was set at $1,136.90 up from $1,134.35 at the LBMA gold setting. The dollar Index was up at 95.89 from 95.58 and the dollar trading against the euro at $1.1217 down from $1.1268. In the euro the fixing was €1,013.55 up from €1,006.70.  Ahead of New York’s opening gold was trading at $1,138.45 and in the euro at €1,114.93.

The silver price closed at $15.62 up from $15.24 or over $1 in two days. Ahead of New York’s opening, silver was trading at $15.70.

Price Drivers

There continues to be upward pressure on the gold and silver prices, despite Shanghai being closed. It is impossible not to draw the conclusion that the physical gold market is separate from the New York COMEX market and London prices. This is because gold and silver prices are made in New York, primarily by dealers and traders reflecting sentiment on COMEX. The perception there reflects expectations for rise in interest rates as well as for the dollar. While the dollar remains in a bull market, we are of the opinion that the Treasury will not permit it to rise to the point the U.S. suffers more on the international competitive front. This is supported by the reality that the peak of $1.07 against the euro and peak on the dollar index, close to 100, have not even been approached since then, surprisingly. After the jobs report the dollar fell a full two cents against the euro and remains close to that level even now.

Record short gold positions continue to be closed and long gold positions opened on COMEX since last Friday.

But against this positive background we saw a sale of 0.221 of a tonne from the SPDR gold ETF and a sale of 0.03 from the Gold Trust. This leaves the holdings of the SPDR gold ETF at 688.983 tonnes and 160.62 tonnes in the Gold Trust. We see this sale as small relative to the volumes being traded currently, so will not influence the gold price. Additions to the gold ETFs in the U.S. in the last two weeks point to a positive attitude to gold growing in the U.S. slowly but surely now.

The Technical picture is now moving to a critical point which may see a strong move this week.

Silver continues to outperform gold having risen over a dollar in the last two days. If gold does breakout to the upside we may see a sprint higher by the silver price.