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Barclays: Gold Smuggling Into India Likely To Continue In Near Term

Friday July 18, 2014 12:43 PM

Gold smuggling into India continues as import restrictions, meant to combat the current account deficit, remain in place, Barclays says. The bank cites news that the Directorate of Revenue Intelligence has been given the task of investigating smuggling through select airports. “We do not think that smuggling will slow down in the near term, as the Indian government chose to keep import restrictions unchanged in the recent fiscal budget,” Barclays says. “That said, restrictions could be eased later this year, but this is not likely until a concrete improvement in the current account deficit becomes evident.” Meanwhile, Chinese demand – as reflected by trading volume on the Shanghai Gold Exchange – has been steady, with the rolling monthly average remaining stable, Barclays adds.

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

 

Mitsubishi: Gold/Silver Ratio Holding Near 62.5 Area

Friday July 18, 2014 12:43 PM

The gold/silver ratio, which measures how many ounces of silver it takes to buy an ounce of gold, largely remained flat this week, says Mitsubishi. “Like gold, silver was subject to downwards pressure from a stronger dollar and upwards pressure from risk hedging this week,” the firm says. “As a result the gold/silver ratio remained fairly flat -- trading on either side of 62.5, a four-month low that has held throughout July. We believe that there is some headroom for the silver price above $20.87, the 38.2% Fibonacci retracement of the June-July uptrend; however the momentum indicators currently appear fairly neutral.” The firm says physical silver investment demand remains strong, commenting that silver exchange-traded-fund holdings have increased by 4% in the year to date compared with a 4% fall in gold ETF holdings.

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

 

Comex Gold Stops At Technical Levels On Both Upside, Downside

Friday July 18, 2014 10:48 AM

Comex gold’s Thursday bounce and Friday pullback both have held right around a couple of technical-chart points. The metal bounced on safe-haven buying Thursday after a Malaysian jetliner was shot down in eastern Ukraine. “We basically filled in the 61.8% Fibonacci retracement between $1,292.60 (the low from Tuesday) and the $1,346.80 high (from July 10),” says Kevin Grady, president of Phoenix Futures and Options. This level lies right around $1,326, and August gold peaked Thursday at $1,325.90. “We went right up to there and fell,” Grady says. Conversely, the metal is holding so far right around the 100-day moving average, points out Charles Nedoss, senior market strategist with LaSalle Futures Group. This moving average comes in at $1,304.60, and the session low so far Friday is $1,305. As of 10:37 a.m. EDT, August gold was $9.40 lower to $1,307.50 an ounce.

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

 

Deutsche Bank: Palladium ‘Preferred Metal’ But ‘Overbought’ For Now

Friday July 18, 2014 8:25 AM

Deutsche Bank favors palladium yet worries the metal may be “overbought” in the short term. The bank offers this assessment of the precious-metals complex in its latest weekly commodities report: “Geopolitical events have been the key influencing factor on both gold and palladium, once again highlighting the surprise support for these markets. We expect a more hawkish Fed to emerge in H2, which will ultimately outweigh any geopolitical support for gold. Although palladium remains our preferred metal due to favorable supply-demand fundamentals, we see current levels as ‘overbought.’”

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

 

BBH: Markets Focused On Geopolitical Developments

Friday July 18, 2014 8:20 AM

Geopolitical tensions remain elevated and dominate market concerns ahead of the weekend, says Brown Brothers Harriman.The shooting down of the Malaysian plane over Ukraine and the Israel's launch of a ground assault in Gaza dominate the focus,” BBH says. Markets generally are now consolidating after a “strong response” to Thursday’s geopolitical events, which pushed down 10-year yields and the dollar/yen, the firm says.  “A U.N. Security Council session will be held today (Friday) and investors will be cautious ahead of the weekend where both geopolitical situations remain fluid,” BBH says. “In addition, the self-imposed deadline for an agreement on Iran's nuclear development is over the weekend with no deal in hand. Given the geopolitical developments elsewhere, there is likely pressure to extend the deadline. Indeed, the isolation of Russia over Ukraine may make an Iranian deal even more difficult to achieve. That said, geopolitics often wane in influence after the initial adjustment.”

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

 

BNP Paribas: Russia-West Situation To Dictate Risk-Taking

Friday July 18, 2014 8:20 AM

Willingness to take on risk in markets may be dictated by how tensions play out between Russia and Western nations, says BNP Paribas. “Investors are unsure how to read the alleged shoot(ing) down of the Malaysian passenger plane over Ukraine; does this represent a further escalation in Russia-West geopolitical tensions, or could it prove a catalyst for politicians to get their act together and move towards some resolution?” the bank says. “Markets are veering more towards the first assumption -- oil prices (are) still elevated -- such an assumption should keep risk sentiment unsettled and keep carry trades vulnerable. The second outcome would be more constructive for risk sentiment. While it is difficult to predict how the situation plays out, we note that underlying fundamentals remain conducive for healthy risk appetite and we expect to see good interest to re-enter carry trades if things calm down.”

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

 

UBS: Palladium Gains May Become Harder; Decline Would Attract Buyers

Friday July 18, 2014 8:20 AM

Speculators are already heavily long in palladium, making further gains harder to come by, although any pullbacks are also likely to attract buying, says UBS. The metal hit a 13-year high this week, with the latest impetus being new sanctions against Russia, leading to ideas that any further ones could somehow curtail palladium supplies out of the country. Thursday’s shooting down of a Malaysian jetliner could mean concerns about more potential sanctions, which would help palladium, although much of this risk is already built into prices, UBS says. “Palladium remains the darling of the precious metals world, and that's unlikely to change anytime soon,” the bank says. “But near-term investors need to bear in mind that spec length sits at 90% of the all-time high, and with its 22% appreciation year-to-date, gains going forward are likely (to) be harder won. Saying that, the downside looks quite contained - a spec sell-off, more likely a result of external factors rather than anything palladium specific, should attract many opportune buyers.”

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

 

TDS: Aluminum Momentum-Driven Gains Likely To Be Short-Lived

Friday July 18, 2014 8:20 AM

TD Securities favors positioning for lower aluminum prices, saying momentum-driven gains are likely to be short-lived. Three-month London aluminum peaked Thursday at $1,994 a metric ton, its strongest level since March 2013. “Recent chatter about supply-side disappointment and good consumption growth has some market participants contemplating (supply) deficits in 2014,” TDS says. “However, TD Securities sees the recent price increases, along with persistently high premiums and electricity rate cuts in China as incentivizing more output to meet increased demand. A surplus of metal should remain this year, and elevated inventory levels should keep prices contained.” TDS says “we would look for opportunities to sell rather than jump on the trend.”

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

 

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