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Market Nuggets: Standard: Gold Demand Rises With Prices Below $1,300/Oz

Wednesday August 7, 2013 11:52 AM

Gold demand has picked up again after prices fell back below $1,300 an ounce, says Standard Bank. "Looking at China first, two days ago, when gold was still above $1,300, the physical premium on the Shanghai Gold Exchange reached a high of $22.83; yesterday morning, when gold dropped below $1,300, the high was $26.25," the bank says. By contrast, the premium was $14.87 last week when gold was above $1,330. "The physical premium indicates strong gold-bar demand out of China," Standard says. The bank later adds: "More broadly, the Standard Bank Gold Physical Flow Index, which captures the physical demand trend in Asia, also increased substantially since the start of the week with the gold price below $1,300, not far from levels seen at the start of July when gold had moved into backwardation."

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: HSBC: Impact Of Fed Tapering To Be 'Negative But Limited' For Gold

Wednesday August 7, 2013 8:00 AM

HSBC says it looks for the impact of Federal Reserve tapering of quantitative easing to be "negative but limited" for gold. The introduction of unconventional monetary policies such as QE played a big role in gold's advance during the economic crisis. "We find it logical therefore that any indication of a withdrawal of QE would act to undercut gold prices," the bank says. "The underlying questions are when might QE tapering occur and how negative would any such tapering be for gold prices? It is safe to say that tapering, when it comes, will not be unexpected and therefore we do not anticipate a freefall in prices such as witnessed in April. Also the market has already dropped sharply this year and heavily from the peak of USD1,921/oz in September 2011. We expect the fallout from tapering to be negative but limited, as traditional physical purchases such as jewelry, coin and bar purchases appear to be filling some of the slack left by institutional investors in the wake of the shift in monetary policy."

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: HSBC: Chinese Gold Demand To Cushion Any Price Declines

Wednesday August 7, 2013 7:58 AM

China's gold demand is likely to remain elevated with prices below $1,300 an ounce, says HSBC. China's gold imports from Hong Kong increased to 113 metric tons in June from 68 in the same month last year, according to the Hong Kong Census and Statistics Department. On a net basis after exports, China's gold imports from Hong Kong totaled 101 tons in June, more than double 40 in June of 2012. The demand remained high in June as gold fell below $1,200 near the end of the month from around $1,400 at the start, HSBC says. "While the pickup in physical demand in China has helped put a floor to prices, physical buyer's reaction to gold's price plunge in June does not appear to be as feverish as it was during gold's earlier price rout in mid-April," the bank says. "More recently, gold's price break below USD1,300/oz during the early trading session coincided with an increase in bullion's premium on the Shanghai Gold Exchange to USD23/oz from USD19/oz a day earlier. Gold imports in China are likely to remain at historically elevated levels in the near term, in our view, and will cushion further declines."

By Allen Sykora of Kitco News; asykora@kitco.com

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