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Standard Chartered: 'Subdued' Gold In August, Then September Recovery

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Standard Chartered looks for gold-price action to remain “subdued” in August but recover next month. “August is a seasonally slow period for demand, and we believe it is likely that gold prices will recover after the September FOMC [Federal Open Market Committee] meeting, when we think the Fed will hike for a third time this year, and seasonal demand starts to materialize,” Standard Chartered says. “A lingering concern is that India’s monsoon forecast has weakened.” A weaker monsoon could mean lower farm incomes in the key consuming nation, thus hurting demand. “The relative strength indicator suggests gold prices are hovering around oversold territory and should find technical support around $1,194,” Standard Chartered says. “However, price action is likely to remain soft near term given extreme short positioning and around 210 tonnes of loss-making ETF [exchange-traded-fund] positions.”

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

 

Metals Focus Sees Rising Silver Prices Outperforming Gold

Wednesday August 8, 2018 09:50

Metals Focus sees silver rising later this year, suggesting the metal may outperform gold. Headwinds for the precious metals may last for a while yet, the consultancy says, listing ongoing trade tensions that have led to U.S. dollar strength and investors rotating out of emerging-market bonds and equities into U.S. Treasury notes. The consultancy also says a silver supply surplus is building, noting that Comex silver warehouse stocks have hit all-time highs. Further, retail investment has been soft. “In spite of these headwinds, we believe that silver prices will start to recover in late 2018,” Metals Focus says. Analysts say they look for the dollar to turn lower, since two more U.S. rate hikes this year are already factored into prices. Further, many suspect equity prices have peaked, the consultancy continues. Money managers hold a net-short position in silver futures, which may prompt a short-covering rally when they buy to exit, Metals Focus explains. “Moreover, when conditions start to turn more positive for precious metals, there is scope for silver to reassert itself and so outperform the yellow metal,” analysts conclude.

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

 

Commerzbank: India’s Gold Demand ‘Picking Up Again’

Wednesday August 8, 2018 09:50

Indian gold demand is showing signs of life but the People’s Bank of China remains absent from the gold market, says Commerzbank, citing reports involving the world’s two largest gold-buying nations. “Gold demand appears to be picking up again somewhat in India,” Commerzbank says. Analysts cite preliminary data from the Ministry of Finance showing that gold imports climbed to 65.6 tonnes in July, up 20% from the same month a year ago. “Year-on-year, Indian gold imports have thus risen for the first time this year,” Commerzbank says. “The new goods and services tax was introduced in India on 1 July 2017 and initially prompted restraint among Indian consumers.” Analysts suggested full-year Indian imports may be at the lower end of the World Gold Council’s forecast of 700 to 800 tonnes of gold this year, meaning they likely will fall short of last year’s 763 tonnes. Meanwhile, Commerzbank cites data from the International Monetary Fund showing that the Chinese central bank bought no gold in July. “The PBOC’s gold holdings were last topped up in October 2016…,”Commerzbank says. “It was recently speculated on the market that the PBOC had been using its currency reserves to stabilize the Chinese currency. Its reserves rose slightly in July, however.” 

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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