Gold Price

Gold, Silver Prices Fall As Spot Premiums on Coins Steady

Written by Economic Calendar     July 22, 2016    

Gold futures fell this week, with the most-active gold futures contract shedding 0.3%, marking the second-straight week that gold finished with a loss. Still, this week’s decline was much less than the prior week’s when the commodity shed 2.3% of its value. On Thursday, gold touched a one-month low but then regrouped and finished higher for the session. On Friday, August gold declined 0.6%.

Gold futures fell this week, with the most-active gold futures contract shedding 0.3%, marking the second-straight week that gold finished with a loss. Still, this week’s decline was much less than the prior week’s when the commodity shed 2.3% of its value. On Thursday, gold touched a one-month low but then regrouped and finished higher for the session. On Friday, August gold declined 0.6%.

Prior to the past few weeks of weakness, gold was on a winning streak. The commodity rallied on renewed safe haven demand over concerns of the implications of Brexit. But, despite overseas turmoil, US markets have performed quite well. The US has churned out some positive economic data, and New York traded equities rallied, sending the major US stock indices higher. As investors have returned to the equities, safe haven gold has suffered.

On Friday,  for American Gold Eagle Coins, the sell premium was spot gold plus $51, and the buy premium was spot gold +$15. The price of American Gold Eagle Coins also fell this week, but if you compare the fall in gold coin prices to the fall in spot gold price, the spot premiums were about even.

Silver prices also fell this week, with September silver futures falling 2.4% over the week to $19.689. The United States Eagle silver coin price was $23.30 on Friday versus spot silver’s price of $19.73.

Gold and silver prices have some similarity as the two commodities are both precious metals and can therefore react to the same economic developments in similar fashions. This is not always the case; however, with silver also an industrial metal the price momentum of the two commodities can at times diverge. But, right now we see similar factors driving both commodities’ prices.

The US dollar gained this week on the sentiment that the Federal Reserve could hike rates again by the end of the year due to a strong US economy and despite economic weaknesses overseas. This week, the European Central Bank left its interest rates unchanged, and at record lows. There was some expectation that the bank would announce another round of stimulus, in the aftermath of the Brexit decision, but left the door open for future moves.

At the same time recent data on physical demand from China was price-supportive. This week  the Swiss Federal Customs Administration released data that showed that Switzerland exported more gold to Asia again in June. Exports to Hong Kong soared by nearly 50% month-on-month to 35.8 tons. Exports to China remained were steady, but exports to India picked up. In May, swiss exports to Hong Kong, China and India totaled 75 tons, the highest reading of the year. Silver exports were also positive. China imported 248 tons of silver in June, up 10% year-over-year while first half year imports were up 6% year-over-year at 1,453 tons.