Monday August 12, 2013 1:16 PM

Gold "may well have bottomed" earlier this summer when it dipped below $1,200 an ounce, says Adrian Day, president of Adrian Day Asset Management. "Since then, gold has moved sharply over $1,300," he says. "But it remains well below its high, even though fundamental factors are still positive, particularly the easy monetary policies being pursued around the world. For all the talk of tapering, Federal Reserve…policy remains very easy, and there is unlikely to be any shrinkage in the Fed's balance sheet or meaningful tightening in the foreseeable future. In my opinion, the market severely overreacted to the rather mild discussion of cutting back on bond buying, and since then, various Fed officials, including Chairman Ben Bernanke, have been scrambling to undo the damage by reassuring the market that monetary policy will remain easy."

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

 

Market Nuggets: R.J. O'Brien: China On Pace To Top India As Top Gold Consumer In 2013

Monday August 12, 2013 9:33 AM

China is on track to import some 1,200 metric tons of gold this year and surpass India as the world's biggest consumer of the precious metal, says R.J. O'Brien & Associates. "Imports through Hong Kong (the only available official data) totaled 600t in H1 with inbound shipments in May and Jun running above 100t/month," the firm says. "If you take the 1,200t of imports plus the 400t produced domestically, this means China is set to absorb some 60% of world mined gold output in 2013.Demand for gold in Asia remains strong as indicated by the high premiums in Shanghai." R.J. O'Brien also cites data from the China Gold Association on Monday saying that the country's gold consumption rose 54% year-on-year to 706.4 tons in the first half of 2013.

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

 

Market Nuggets: Deutsche Bank Sees More Gains For Base Metals After Chinese Data

Monday August 12, 2013 8:59 AM

Deutsche Bank says industrial base metals may rise further. They were supported late last week first by Chinese trade data for July, then a stronger-than-forecast year-on-year increase of 9.7% in industrial production reported on Friday. "The better-than-expected July China IP number has pushed industrial metals meaningfully higher across the board," Deutsche Bank says. "We expect the rally could continue, driven by further short covering. However, new supply in the second half of the year may limit the upside." With the exception of copper, many industrial metals are trading at or below marginal cost of production, the bank points out. "We expect the fortunes of sector returns remain closely tied to the outlook for Chinese industrial sector activity," Deutsche Bank says. "Given our above-consensus view of Chinese growth heading into next year and the aggressive net short positions accumulated during this year, there is the possibility of a cyclical rebound in industrial metal returns." All six of the base metals traded on the London Metal Exchange were higher as of 8:51 a.m. EDT, with bellwether copper hitting a peak of $7,318.50 a metric ton that was its strongest level since June 7. The biggest percentage gainer was nickel, up $207, or 1.4%, to $14,887 a ton.

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

 

Market Nuggets: Deutsche Bank: Non-U.S. PMIs May Help Gold Until Next U.S. Payrolls Data

Monday August 12, 2013 8:57 AM

Deutsche Bank looks says improvement in Purchasing Managers Indexes outside the U.S. may help gold at least temporarily and enable silver to outperform the yellow metal. “Although we remain structurally bullish on the U.S. dollar, which will sustain headwinds for gold, the improvement in global PMIs outside of the U.S. could see gold supported until the next round of U.S. payroll data,” the bank says. “Within the complex, we expect that silver could start to outperform gold given the ongoing improvement in global growth conditions.” Deutsche Bank adds that a Federal Open Market Committee meeting next month presents ongoing risks to the outlook for precious metal returns if the Fed tapers its asset purchase program, as expected by Deutsche Bank. “We expect gold will remain vulnerable in an environment where U.S. real yields are moving higher, the U.S. dollar is strengthening and the S&P 500 is hitting new highs,” Deutsche Bank says.

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

 

Market Nuggets: US Dollar May Rise This Week – BNP

Monday August 12, 2013 8:37 AM

The U.S. dollar started the week firmly against most major currencies and the strength could translate into further gains this week, says BNP Paribas. The firm's analysts say the key economic reports they are watching are related to manufacturing. “With markets looking for evidence of diverging growth prospects as we emerge from the summer, the August Philadelphia and New York Fed surveys published this week may be of  … interest. Continued improvement in these measures could reinforce the message sent by the very strong July ISM report and signal that the acceleration in manufacturing momentum is continuing in August,” they say. BNP forecast the Empire State survey to rise slightly. The Philadelphia figure will likely slip a bit from July’s two-year highs; BNP has a better-than-consensus estimate. “We look for a gradual improvement in U.S. activity to keep tapering expectations supported and for the policy divergence theme to reassert itself in the weeks ahead to the benefit of the U.S. (dollar),” they add. They are also doubtful of any strength in the euro versus the U.S. dollar, saying although Europe may be exiting from a recession, “the recovery in Europe is coming from very weak levels and the ECB (European Central Bank) remains far behind the Fed (Federal Reserve) in terms of discussion of exit strategy.”

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: Physical Demand Supporting Gold – Commerzbank

Monday August 12, 2013 8:35 AM

Physical demand supports gold, even as exchange-traded fund net outflows continue, says Commerzbank. The physical demand is keeping prices supported and so far “appears able to compensate for the lower level of investment interest,” they say. Chinese demand for the first six months was 706.3 metric tons, versus 832.2 tons in 2012, Commerzbank says, citing data from the China Gold Association. “If China’s gold production of around 193 tons is factored into the equation, Chinese demand was met almost exclusively by net gold imports from Hong Kong, which amounted to 518 tons in the first six months of the year. Comparing this import pull with the outflows from gold ETFs, which totaled some 586 tons in the first half of the year, also portrays the situation very vividly. These figures are impressive evidence of the transfer from ‘weak’ to ‘strong hands’ and from the West to the East,” they say.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: Chinese Data Points To Further Base Metals Strength – Commerzbank

Monday August 12, 2013 8:33 AM

Base metals rallied on improved Chinese data, and Commerzbank says the strength in the Chinese economic figures is likely to persist and will underpin the industrial metals. The bank noted a rise in the construction sector and a pickup in the Chinese automotive sector. Copper inventory levels in the London Metal Exchange are at a four-month low and the stocks in the Shanghai Futures Exchange are at their lowest level since July 2012, despite higher imports. "What is more, the bonded warehouse stocks in China are likely to have been hugely reduced. The current data points to a continuation of the metals rally," they say.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: TD Securities: Gold Lifted By Short Covering; Buy Stops Triggered

Monday August 12, 2013 8:32 AM

Gold is higher as the North American trading day gets under way after a bout of short covering overnight, with buy stops triggered around $1,321 an ounce then again around $1,330, says Steve Scacalossi, director of global precious metals with TD Securities. As of 8:16 a.m. EDT, Comex December gold was up $14.60 to $1,326.80 an ounce after getting as high as $1,333, and spot gold was up $13.50 to $1,326.50. September silver was up 47.3 cents to $20.88, while spot metal was up 37.6 cents to $20.89. "At this point, our resistance levels of $1,325 and $20.60 have been crossed, and we now eye $1,340-$1,360 and $21.20-$21.40 in gold and silver, respectively, for further short-term resistance," Scacaloss says. "We expect that today buyers will prefer to remain on the sidelines while some light profit-taking takes place, which could cap prices for the time being."

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

 

Market Nuggets: Barclays: Gold ETP Holdings Up 1.6 Metric Tons Friday, Down 22.4 Tons In August

Monday August 12, 2013 8:30 AM

Global holdings of gold by exchange-traded products rose by a modest 1.6 metric tons Friday, the largest daily inflow since May 9, Barclays reports. Still, the amount of metal held in trust is still down 22.5 tons so far in August. Year-to-date outflows have reached to 667.5 tons, 24% from its peak. "Although net redemptions have occurred on a global basis, they remain concentrated across North American listed products," the bank says.

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