By Julian D.W. Phillips

Gold closed in New York at $1,233.00 up from $1,229.20 on Thursday. In Asia, it rose to $1,237 ahead of London’s opening. It then pulled back during the morning to be set by the LBMA at $1,231 down from $1,235.40. The dollar index is slightly weaker at 97.39 up from 97.44 on Thursday.

The dollar is almost the same against the euro at $1.1024 up from $1.1028 on Thursday. The gold price in the euro was set at €1,116.65 up from €1,120.24.

Ahead of New York’s opening, the gold price was trading at $1,237.00 and in the euro at €1,121.79.

The silver price closed in New York at $15.13 down 11 cents.  Ahead of New York’s opening the silver price stood at $15.13.

Price Drivers

There was no change in the SPDR gold ETF or the Gold Trust yesterday. The holdings of the SPDR gold ETF are now at 760.323 tonnes and at 188.25 tonnes in the Gold Trust.  Today in the U.S., is a frantic day, as Friday’s usually are, so be ready for action! The Technical picture remains positive.

This time COMEX did not drag prices down when there was no activity in the gold ETFs.

Indian demand has remained muted with discounts on the gold price. This is for two reasons, the first being that the recent price jumps were too big and too quick, so Indian buyers retreated to the sidelines.

More importantly and secondly, with the Indian budget coming up next week, the hope that government will lower the 10% of duties they imposed on gold imports will be lowered. This would reduce, if not eliminate, smuggling [possibly responsible for an extra 250+ tonnes extra of imported gold]. Then ‘official’ if not real, import figures would change. But right now we expect a shunt-effect as demand is held back to be released after the budget, whether or not duties are lowered.

We are informed that the expected Yuan Gold Fix on the Shanghai Gold Exchange will begin on the 19th April. At least 10 banks will be involved including some foreign banks. We expect the volumes traded of physical gold will be very large. This marks one of several structural changes in the global gold market which will change its shape and nature.

Meanwhile, across in the developed world, the G-20, usually a disappointing event, commences today. The OECD and IMF have issued strong warnings that debt is too high and unless governments step up to the plate to promote real growth [fiscal policies and infrastructural projects for a start] the downward trend in growth will continue. We can’t see governments doing this after 8 years so far, of failing to do this after the ‘Credit Crunch’. Warnings concerning a ‘currency war were also given by the Bank of England.

Citibank has come out and warned of a global recession coming. With the continuing shift of wealth and trading power continuing to eat away at the developed world, only vigorous action by governments can stop the rot. But when Germany opposes Fiscal stimulus ‘because debt levels are too high’, then we begin to lose hope!

The silver price is now holding back despite the continued positive picture for gold.