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ETF Securities: Silver To Eventually Benefit From Rising Industrial Demand

Tuesday August 5, 2014 12:29 PM

ETF Securities looks for improving industrial demand to ultimately underpin silver, although worries about rising U.S. interest rates may pressure precious metals in the near term. “From a fundamental perspective, the strong correlation to gold continues to pressure the silver price lower….Largely to blame is the stronger U.S. dollar and improving investor sentiment, which is being buoyed by the robust U.S. recovery and the re-rating of the potential for tighter Fed policy as the central bank remains on track to wind down its bond buying by year-end,” said the provider of metals exchange-traded funds. “In the near term, the silver price may remain under pressure until it is clear that industrial demand is coming through. With the U.S. manufacturing ISM (Institute for Supply Management Purchasing Managers Index) rising to its highest level since 2011 and China demand picking up, we anticipate that industrial demand support will ultimately offset negative pressure from expectations of rising real interest rates.”

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


ETF Securities: Platinum To Play ‘Catch-Up’ With Palladium

Tuesday August 5, 2014 12:29 PM

ETF Securities sees potential for platinum to play “catch-up” with sister metal palladium, which has outperformed so far this year. “The platinum-to-palladium ratio has dropped to its the lowest level since 2002, despite a South African strike that took over 1moz (million ounces) of platinum off the market,” says ETF Securities. “While the palladium price has been in a better position to benefit from a pick-up in China and U.S. economic growth given its heavy use in the gasoline auto catalysts that dominate their auto markets, as the global recovery broadens to include Europe, we believe platinum -- used heavily in diesel auto catalysts and Chinese jewelry -- will start to see more demand traction.”

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


INTL FCStone Sees Commodities Sliding Again During August

Tuesday August 5, 2014 7:46 AM

Commodities collectively had their worst monthly performance in more than two years during July and the group could “push somewhat lower” in August, says INTL FCStone in a monthly outlook. The firm describes August as usually a “messy month” for equities leading to an “even sloppier” September. “If we are correct on our view on U.S. equities, we could see spillover selling hitting precious metals, oil, and some of the base metals, at least initially, before the various asset classes start to decouple,” INTL FCStone says. “Gold is already struggling under the prospect of decent growth in both China and the U.S., lackluster investment demand, poor technicals and the likelihood of higher U.S. rates going into 2015. Platinum and palladium could also ease a bit this month, although their fundamentals look much better than gold. Oil markets are oversupplied and with various geopolitical hotspots not imperiling oil flows, at least for the moment, we think the path of least resistance is lower still. We believe that lower trading ranges are also in store for energy products, as well as for natural gas. Base metals have regained some lost ground this week, but we think that some in the group are overextended based on fundamentals. Zinc, in particular, is now at a three-year high and we believe prices have more than discounted the complex’s improving supply/demand profile, while not adequately discounting the very real possibility of a further contraction in the Chinese real estate market.” However, INTL FCStone says lead “has not participated fully in the recent base metals advance and we still like its story heading into the second half of the year.” The firm describes itself as neutral on copper at current prices, looking for a sideways range this month.

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


HSBC: Perth Mint Gold Sales Down In July; Lower Prices May Encourage Investors

Tuesday August 5, 2014 7:45 AM

Perth Mint data show a year-on-year decline in sales of gold bullion coins and bars for July, but lower prices lately may help revive demand, says HSBC. According to Perth Mint data, sales of gold coins and minted bars totaled 25,103 ounces in July, down from sales of 39,405 in July 2013. For silver, sales totaled 577,988 ounces in July, down from 586,358 sold in the same month last year. U.S. Mint data last week showed a 49% year-on-year decline in gold coin sales to 35,500 ounces. “This corroborates with our view that higher gold prices in July have kept price-sensitive retail investors from purchasing bullion,” HSBC says. “However, gold’s recent price decline to below $1,300/oz may be an encouraging sign for these investors to step in as buyers. This may help soften further gold price declines, in our view.”

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


TD Securities: 'The Risk For Gold Is To The Upside Temporarily'

Tuesday August 5, 2014 7:44 AM

TD Securities sees potential for gold to rise in the short term but slide in the longer term, all based on expectations for Federal Reserve monetary policy. The market got a heavy dose of U.S. economic data last week, with gold rising on major reports that were weaker than forecast but falling on those that were stronger. For now, near-zero U.S. interest rates are likely to last until a catalyst that convinces the Federal Open Market Committee that the labor market is in full recovery, TDS says. Fed Chair Janet Yellen remains concerned about jobs and is likely to keep monetary policy accommodative, TDS says. “For that reason, a rout in the gold market is unlikely,” TDS says. “At this point, the market is convinced that only very strong economic prints will change the Fed chair's current super easy stance. If we had to guess, the risk for gold is to the upside temporarily. Until we get the data that is able to convince the Fed and the market that rates will be allowed to move higher, gold could move north of $1,300/oz , before it slides below the $1,240/oz (level).”

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



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