STA Blog

Gold bugs are probably a happy bunch this month, as suddenly the spot price of the precious metal on the wholesale markets has perked up considerably. Not surprising really, what with Trump tariffs, trade wars, sagging stock markets and shrivelling GDP. The first chart is a daily one of the price per ounce in US dollars, the way we in the West tend to think of it, and how it is usually written up in the media. The clear change in tone since late May, after some rather lacklustre moves starting March, can be seen.

Chart 1

Now compare this to the second chart, a weekly one of the price of the front month contract traded on Shanghai’s Futures Exchanged, priced as yuan per gram. Here you see the spurt higher started mid-April, kicking in more strongly mid-May – linked to yuan weakness. Its managed to match 2016 levels at long last, and might well struggle at the psychological 300-yuan area. Worth noting that 305 yuan is the 50 per cent retracement since 2011’s record high at 398.68 – just below the psychological 400 yuan.

Chart 2

Our third chart is a monthly one, again of the front month futures contract on the Tokyo Commodity Exchange, priced as yen per gram. In May prices dropped a little, recovering early June, both moves utterly unworthy of mention. Trading clearly within the horizontal band established from 2011, open interest plotted along the bottom shows how steadily investor attention in this asset class has waned since 2005. Obviously recent yen strength has played a part.

Chart 3