Loading ...There were no sales or purchases from or to the SPDR gold ETF or from or to the Gold Trust, on Thursday. The holdings of the gold ETFs stand at 773.449 tonnes in the SPDR gold ETF and at 164.18 tonnes in the Gold Trust. Equity markets in the U.S. are falling, but as you can see from zero sales from the SPDR gold ETF, this does not means that U.S. investors are moving into gold.
The gold price hit a level where Asian demand came through to snatch bargains in London, as we expected around $1,200. The gold price fell back to $1,208, but recovered quickly to $1,222 where it held overnight until London opened. This is an important move to us as there is no cogent reason why the gold price should fall with the euro. Yes, it is recognized as a hedge against the dollar, both ways, in the developed world, but this should not be reflected in day-to-day prices. It is becoming a hedge against all currencies and will be so in the future.
With the dominant factor in the gold market being Asian demand and supply we expect prices to reflect those market behaviors, as we said yesterday. This is rising, as they see such low prices and the season for gold is upon them.
Unlike the developed world, we see that gold has a very active role in the Chinese banking system in leasing and collateral down at company and individual levels. In the west its role is as an investment or important reserve asset. While the west may feel this archaic, we feel the Chinese are getting it right and in the future, in the west gold will take on a much more active role in cross border transactions.
Today marks the last day of the third Central Bank Gold Agreement and next week the beginning of the fourth one. In the statement from the signatories the big difference is that there are no more plans to sell gold. Essentially, their sales have been completed. They repeat that gold remains an important element of global monetary reserves. This Agreement will be reviewed after five years. So, no overhang of central bank gold sales over the gold price!
Silver– The silver price has stopped falling too.
Julian Phillips is the founder of www.GoldForecaster.com and www.SilverForecaster.com