Gold Price: Waiting for Yellen
The New York gold price closed at $1,078.20 up from $1,071.70 on Friday’s close. In Asia prices dropped to $1,074 before London took it down to $1,067 as the dollar index held close to Friday’s level of 97.90 at today’s 97.85 on the dollar Index. The euro is at $1.0955 almost the same as Friday’s $1.0956 against the dollar. The London a.m. LBMA gold price was set at $1,068.00 up from Friday’s $1,067.20 Friday. In the euro the fixing was €974.05 up from yesterday’s $972.79. Ahead of New York’s opening, the gold price was trading at $1,068.65 and in the euro at €974.33.
The silver price in New York closed at $13.95 down 16 cents. Ahead of New York’s opening the silver price stood at $13.80.
Dealers and speculators are trying to second guess what the market’s reaction to the expected Fed rate hike on Wednesday will be and are reading the price in line with the Technical picture, as downwards. But such plays are high risk ones, for if the Fed does not affect the dollar exchange rate they will have to unwind their positions in the face of a market going the other way.
As you likely know, all financial markets across the globe are waiting with bated breath for the Fed announcement. When markets presume to know what is about to happen they discount that presumption. So the markets then go another way after that. If it is even slightly different to what is expected markets react strongly. So while we expect a quiet week until the announcement, thereafter expect volatility. One new provider [Bloomberg] even has a countdown clock for Janet Yellen’s speech. While she is a demure academic, it is more than likely that she will surprise us. –
Once again, we saw no sales from the SPDR gold ETF and nothing from the Gold Trust, on Friday. The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust remain at 634.63 tonnes in the SPDR gold ETF and at 156.32 tonnes down from 157.07 tonnes in the Gold Trust. These sales would have had no impact on the gold price and most probably were from investors reducing their exposure to higher risk on Wednesday.
When the Bank for International Settlements warned of the “uneasy calm” in global financial markets it touched a host of global problems that would be affected by an interest rate move in the U.S. What they meant too was that many of these problems are in themselves structural problems that have not been fixed by those concerned or cannot be fixed by them. So the ‘ripple effect’ will not just be a short term reaction to Wednesday’s announcement, even if calm returns after the initial reaction. We see these ripples moving through into 2016 and likely changing the scene of world financial markets for more than next year. This will be positive for gold and silver.