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Standard Chartered: ETP Investors Increase Exposure To Gold Prices

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Exchange-traded-product investors increased their exposure to gold over the past week, says Standard Chartered. The products trade like a stock but track the price of the commodity, with metal put into storage to back the shares. Gold ETP holdings rose 9 tonnes. However, investors reduced their exposure to the other precious metals, Standard Chartered points out. Silver outflows reached 343 tonnes over the past week, platinum net redemptions reached some 10,400 ounces and those for palladium reached 12,500 ounces.

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

 

CME Group: April Metals Trading Volume Rises 24% Year-On-Year

Wednesday May 2, 2018 09:27

CME Group reports that metals-trading volume averaged 682,000 contracts per day in April, up 24% from 548,000 in the same month in 2017. Average daily volume for gold futures and options grew 28% year-on-year to 371,000 contracts, while the same for silver climbed 14% to 134,000 contracts. On a rolling three-month basis, metals volume averaged 685,000 contracts for the period ending with April. This is down from 713,000 for the three-month period ending in March but up from 662,000 for the comparable period ending with February and 684,000 for the period ending with January.

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

 

Standard Chartered: Chinese Trends Point To Palladium Demand

Wednesday May 2, 2018 09:27

Underlying automotive trends in China bode well for palladium during the remainder of 2018, says Standard Chartered. The main industrial use of the metal is for catalytic converters that scrub emissions from auto exhaust. Prices have fallen back lately, but Standard notes the market remains in backwardation, in which nearby contracts are more expensive than the deferred and which is seen as a sign of a tight market. The bank looks for U.S. auto sales to ease this year. However, analysts point out, the most recent data show China’s auto sales rose by 3% year-on-year in March and are 2.6% higher year-on-year so far in 2018. Further, the inventory of autos started to rebound in the first quarter after a seasonal decline in December. “China is rolling out stricter emissions standards and requires vehicles to meet ‘China VI’ standards (based on European and U.S. standards) by mid-2020,” Standard Chartered says. China’s palladium imports rose 2% year-on-year in March, although they are still down for the year to date. “Despite lingering concerns around auto sales and new energy vehicles, underlying trends in China suggest palladium demand is likely to be supported, at least this year,” Standard concludes.

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

 

MKS: Price Action In $1,300 To $1,310 Area Important For Gold

Wednesday May 2, 2018 08:55

Gold has reached a key area on the charts, says Alex Thorndike, senior precious-metals trader with MKS (Switzerland) S.A. Spot gold fell to the $1,302 area Tuesday before bouncing, trading at $1,309.95 as of 8:18 a.m. EDT. The area from $1,300 to $1,305 area is “critical” for the gold since this includes the 200-day moving average, a 50% Fibonacci retracement level and the psychologically important $1,300 round number, he says. “If we break and close below $1,300, it opens the risk of a move back toward $1,263-65,” Thorndike says. “That being said, there is also a case to be made that this could be the ideal place to watch for a reversal in the metal. We have bounced off this area ($1,300-1,307) three times since January, and having now completed a multi-month corrective phase, we could punch higher. Bottom line -- how price action develops in this $1,300-1,310 area will likely be important….”

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

 

Metals Focus: Gold-Oil Ratio To Remain Soft For Now But Eventually Recover

Wednesday May 2, 2018 08:55

Metals Focus says the gold-oil ratio could fall some more before recovering later in the year. The ratio, which measures how many barrels of oil it takes to buy an ounce of gold, has fallen to 17.5, its lowest level since December 2014. “This reflected both weakness in gold and gains for oil, the latter driven partly by concerns about the Iranian nuclear deal,” Metals Focus says. “As a result, although the ratio may edge lower in the near term, taking a longer-term view, we expect gold to move higher, which in turn will also see the gold-oil ratio rise.” The ratio hit a record high in February 2016 of 41.5. Since, the ratio has been slumping again as oil moves higher on concerns about reduced OPEC supply, fears over the scrapping of the Iran nuclear deal and broader geopolitical concerns in the Middle East. At the same time, gold has been hurt as rising Treasury yields boost the U.S. dollar. While the gold-oil ratio could fall further in the short term, Metals Focus says the downside should be limited since upside risks in oil have been factored into prices and speculative long positions outnumber shorts by around 20 to one. Looking ahead to the second half of 2018, Metals Focus says “our view remains broadly unchanged -- that equities will experience a sharper correction. In addition, the recent upturn in the trade-weighted dollar is likely to be unwound, led by a firmer euro. As a result, we may see the gold-oil ratio start to recover, albeit modestly, during the latter part of this year.”

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

 

BBH: Fed Key To ‘Newfound Respect’ For U.S. Dollar

Wednesday May 2, 2018 08:55

Brown Brothers Harriman says the Federal Reserve’s inclination to keep hiking interest rates is the key to “newfound respect” for the stronger U.S. dollar. BBH says there is a “stark contrast” between the major central banks around the world. “The Federal Reserve is likely to confirm its intention to continue to gradually guide U.S. rates higher later today, while the ECB [European Central Bank] sounds more cautious than confident,” BBH says. “The BOJ [Bank of Japan] continues to press hard and refuses to even discuss an exit.  Then there is the Bank of England, where [Governor Mark] Carney -- in all fairness, due to soft data -- once again yanked the football away as it was about to be kicked.  A rate hike next week now would be more disruptive than standing pat.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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