New York closed with the gold price at $$1,187.90 up from $1,168.10 yesterday. In Asia this morning gold pulled back to $1,184 ahead of London’s opening. London held it around that level before the LBMA price setting fixed it at $1,183.35. The dollar Index was weaker at 94.04 from 94.65 and the dollar was trading against the euro at $1.1441 down from $1.1390. In the euro the fixing was €1,034.31 up from €1,029.11.  Ahead of New York’s opening gold was trading at $1,184.70 and in the euro at €1,035.31.

The silver price closed at $16.16 up 26 cents over Tuesday’s close. Ahead of New York’s opening, silver was trading at $16.12.

Price Drivers

The Technical position now looks good. What is positive for gold are the reasons why gold looks strong. We see them as extremely important structurally. We cannot cover these reasons in this daily report as there is not enough space [see newsletters]. What we can say is that a structural change has taken place in the dollar and its relationship to other currencies that will affect the global monetary system for many years to come. It has not been heralded by the media but it doesn’t need to be. The ramifications for gold and silver are enormous.

On the U.S. physical side, we saw large purchases into the SPDR gold ETF of 7.743 tonnes but only a small amount of o.4 of a tonne into the Gold Trust. It seems U.S. investors, watching the Technical position are now moving into physical gold as well as continuing to cut short positions while increasing long positions. The holdings of the SPDR gold ETF are at 694.939 tonnes and 161.75 tonnes in the Gold Trust.

Bear in mind that the ongoing demand for physical gold from the Far East continues. We hear reports of lower demand for gold in India, but find this difficult to accept as smuggled gold comes in unseen and immeasurable at a 10% discount to ‘official’ gold as they are ex-duties. Indians are unfazed by buying such gold, so it is logical that ‘official’ imports of gold should suffer. Nevertheless projections of 900 to 1,000 tonnes will be imported into India through ‘official’ channels this year.

In China the continuing rise in Chinese middle classes continues unabated at a projected 10% growth per annum. The People’s Bank of China continues to add to its reserves at levels it deems worthy of publication, although most believe agencies for the central bank are continuously buying gold for China. It is worthy of note that PBoC purchases do not have to be reported via the Shanghai Gold Exchange. So, total imports to China remain opaque, probably higher than reported.

Silver will rise with gold but at a faster pace.