By Julian D.W. Phillips

This report comes to you after being away from our desk for the last three days. Since then gold and silver retreated to support and remain just above it. But gold in the euro is very strong as the dollar moved up. The Technicals continue to look very good in all currencies including the dollar.

Again we reiterate the gold market is split in two parts with New York being followed by London reflecting U.S. sentiment on COMEX and the physical market in which Asia more than dominates having little to no impact on the gold price. The U.S. market has now turned up, convincingly.

We have long pointed out that if the Shanghai and western gold markets develop an effective arbitrage market, Shanghai would dominate the gold price. We are now seeing two more steps down that road. The CME Group and China Construction Bank will now begin the physical delivery of Renminbi for new futures contracts in London. The futures contracts will be listed on CME Group’s European exchange, CME Europe. China Construction Bank is Beijing’s official clearing bank in London, making the Yuan available internationally, as it pushes for formal reserve currency status. This bank has now joined the LBMA gold price setting. We expect more Chinese banks to join the precious metal price setting LBMA process in the future.

While the Yuan trading comes with a greater arbitrage of precious metals between Shanghai and London, we see the gold and silver prices moving to being in sync. in a global market in the near future

There has been a sale of 2.68 tonnes since Friday from the SPDR gold ETF but a purchase of 1.08 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are at 697.322 tonnes and 162.83 tonnes in the Gold Trust.

Silver will mark time until gold rises. –