Shanghai Gold, Silver Volumes Surge To Records and Premiums Rise As Night Trading Begins

Today’s AM fix was USD 1,275.00, EUR 976.79 and GBP 842.70 per ounce.

Yesterday’s AM
fix was USD 1,280.75, EUR 981.87 and GBP 848.91 per ounce.

Gold rose $34.30 or 2.74% yesterday and closed at $1,285.40/oz. Silver surged $1.03 or 5.38% and closed at $20.18.  


Gold in USD – 1 Week – (Bloomberg)

Gold is marginally lower today, but is up 3.8% this week and on track for its biggest weekly gain since October 2011. There has been a realisation that ultra loose monetary policies are set to continue reigniting bullion’s appeal as an important diversification.

Indian gold demand fell sharply and was down 70% in June from May. The Indian government’s taxes and capital controls have had the desired effect in the short term but at what cost and how sustainable will their measures be?



China continues to be the elephant in the room which is being ignored by the gold bears and Chinese gold demand continues at record levels and is compensating for the sharp fall in Indian demand.



Very robust demand in China is seen in the fact that
Hong Kong jewellers and banks are having difficulty meeting demand and the rising premiums and record volumes on the Shanghai Gold Exchange (SGE).



Premiums on gold futures on the SGE yesterday closed at a $12.90 per ounce over COMEX spot – COMEX at $1,283.30/oz and SGE at $1,296.30/oz. Overnight the premium on the SGE rose sharply and is now at $35.94 – COMEX at $1,275.30 and SGE at $1,311.14/oz (see ‘Gold Futures’ in table below).



Gold Prices/Fixes/Rates/Vols – (Bloomberg)



Trading volumes for gold and silver on the Shanghai Futures Exchange (ShFE) jumped to record highs today a week after the bourse launched after-hours trading, driven by a surge in investment and hedging demand, according to Reuters.


Cross Currency Table – (Bloomberg)


The ShFE launched night trading on July 5 to give investors in the world’s second-largest gold importer, soon to be the largest gold importer,  a tool to manage risk and buy and sell gold and silver during trading hours in London and New York as well as Chinese trading hours.

Weekly buy and sell trading volume for the most active gold contract more than doubled from a week ago to 2.06 million lots as of Friday, exchange data showed.

Daily transactions for gold rose to a record of 595,642 lots on Thursday, compared to an average of 483,529 lots in June, the data showed.

Daily volume for the silver contract rose roughly six fold from a week ago to 2.23 million lots on Thursday.

Before after-hours trading was launched, Chinese investors were often exposed to global price fluctuations in the U.S. and European markets.




Shanghai Gold Exchange


“The extended hours could give China a better hold in the global gold market” noted Reuters.



That it will and we are gradually, and imperceptibly to most, seeing China becoming one of the key players in the global gold market – from a monetary perspective, from a supply and demand perspective and soon from a price perspective.



China, its people, its banks, its central bank and its Gold Exchange will soon exert more influence on the gold market than the speculators who have greatly contributed to gold’s recent price weakness.



The Chinese understand the importance of gold as a store of wealth and as financial insurance unlike many western speculators and banks and the mass of the western public … today.  

Has Gold’s ‘Bubble’ Burst Or Is This A Golden Opportunity? 
Our recent well-attended webinar has been uploaded to YouTube.

Topics covered in the webinar included:

* Outlook For Gold And Silver This Year and Coming Years

* Learning From 1970s Bull Market & 1975/76 Price Collapse

* Safest Way To Own Gold And Silver

* Paper and Digital Gold

* Knowing When To Reduce Allocations Or Sell

* Safest Way To Own Gold And Silver

* Extremely Negative Sentiment Towards Gold

NEWS
Gold heads for biggest weekly gain in nearly 2 yrs – Reuters

Gold Analysts & Dealers Most Bullish in Five Weeks After Fed – Bloomberg

Gold Heads for Best Week Since October 2011 on Stimulus Outlook – Bloomberg

India’s Gold Demand Likely to Rebound From August – Wall Street Journal

COMMENTARY
Video: "Have 5% In Bullion" – CNBC

The Stuff of a Gold Bear Reversal? – Got Gold Report

The War Against Gold – Roubini Wrong Again – Inteligencia Finaciera Global

South Africa’s Gold Mine Crisis – BBC

For breaking news and commentary on financial markets and gold, follow us on Twitter.

Mark O'Byrne

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