Friday August. 1, 2014 2:53 PM

Higher gold prices for much of July might have hurt demand for gold coins, but the pullback toward month-end may help revive that buying, says HSBC. The bank cites U.S. Mint data showing that combined American Eagle and Buffalo gold coin sales totaled 35,500 ounces in July, down 45% from 64,500 in June and down 49% from 69,000 in July 2013. “Coin sales are often used as a barometer for retail investors as demand typically rises during periods of price drops and weakens during periods of price rallies,” HSBC says. “The drop in sales for July suggests a softening in retail gold demand given relatively more expensive bullion prices for July as they averaged USD1,312/oz, compared to USD1,283/oz for June. The recent pullback in bullion prices to below USD1,300/oz may increase retail investor’s appetite for gold, in our view.” American Eagle silver coin sales in July were 1,975,000, down from 2,692,000 in June and 4,406,500 in July 2013.

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

 

HSBC: U.S. Auto Sales Bode Well For PGM Demand

Friday August. 1, 2014 2:53 PM

U.S. auto sales rose in July, and if this trend continues, bodes well for demand of platinum group metals, says HSBC. The bank cites news reports Friday that the so-called Big Three U.S. automakers reported light vehicle sales of 636,063 for July, a 12% year-on-year increase. Additionally, Nissan Group and Toyota reported year-on-year increases. “The PGMs are an important component used in the fabrication of auto catalysts,” HSBC says. “Further strength in the automotive sector and, thus, PGMs demand is a supportive case for higher prices, in our view.”

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

 

RBC's Gero: Comex Gold Draws Support From U.S. Payrolls Data

Friday August. 1, 2014 9:32 AM

Comex gold has risen after U.S. nonfarm payrolls, with July jobs growth above 200,000 for the sixth straight month but slightly below consensus forecasts. “This morning’s numbers helped gold because it means that the Fed will continue to stick to their guidance of keeping rates lower longer,” says George Gero, vice president and precious metals strategist with RBC Capital Markets Global Futures. Had the data surprised to the upside, it might have led to worries about Fed officials tightening sooner. The market has been focused largely on U.S. monetary policy this week rather than geopolitical events, Gero adds. As of 9:26 a.m. EDT, Comex December gold was $12.50 higher to $1,295.30 an ounce.

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

 

INTL FCStone: More Sustainable Advance For Base Metals May Not Occur Until 2015

Friday August. 1, 2014 9:32 AM

Any gains in base metals may not become more pronounced until 2015 when supply issues start to surface, says INTL FCStone. “While we are still bullish on the base metals group, we see a more sustainable advance setting in during 2015 when some of the supply retrenchments we are expecting to see materialize,” says commodities consultant Edward Meir. “The balance of this year should be a choppier affair, as various markets enter a trading range mode, albeit a higher one than what we saw earlier in the year.”

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

 

HSBC: Physical Gold Demand On Price Pullbacks May Stem Further Losses

Friday August. 1, 2014 7:52 AM

There are signs of Chinese physical demand for gold picking up after the recent price decline, says HSBC. “Bullion’s premium on the Shanghai Gold Exchange, a gauge on China’s gold appetite, rose to USD3.20/oz, the highest since 13 May,” the bank says in a late-Thursday report. “Despite a seasonally weak period for gold buying, physical buyers have reacted positively to cheaper prices. This may help stem further price losses, in our view.”

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

 

Deutsche Bank Upbeat On Industrial Metals But Sees Risk Of Correction Lower

Friday August. 1, 2014 7:52 AM

Deutsche Bank sees potential for more medium-term gains by industrial base metals but warns of the potential for a correction first. “Industrial metals have proved to be the most resilient of the five broad commodity sectors during the third quarter,” the bank says. “Indeed it has been the only sector able to post positive returns since the end of June. Signs that China will avoid a hard landing and the tendency of the sector to do well as the Fed prepares to tighten monetary policy suggest that the sector is likely to outperform relative to energy and precious metals over the coming year.” However, the firm also says, “whilst we remain positive on the medium-term outlook for the complex, we view the recent price rally as having run ahead of current supply-demand fundamentals. In our view, this raises the risk of short-term price corrections.”

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

 

TDS: Western Sanctions Against Russia Ignored By Commodity Markets

Friday August. 1, 2014 7:52 AM

European and U.S. sanctions against Russia over the Ukraine crisis have been largely ignored by commodity markets, with crude oil, palladium, aluminum and nickel dropping, TD Securities points out. “This is contrary to what one would have expected, as sanctions against a major global producer, or a slowdown in supply, typically result in upside pressure,” TDS says. The firm offers an explanation on why commodities did not run higher after Western sanctions were ratcheted higher. “The simple answer is that these sanctions seem to impact Russia's ability to generate long-term economic activity from natural resources while avoiding any influence on the current production,” TDS says. The sanctions appeared aimed at limiting Russia’s ability to use Western technology to exploit oil reserves and from using Western financial centers to raise capital for the oil and mining sectors, TDS says. “The absence of any sort of export embargo or an outright ban on settlements implies that Western powers are attempting to undermine more the long-term growth foundation instead,” TDS says. “As such, current supply of oil and many metals will be relatively undisturbed and hence the markets' lack of worry about these sanctions.”

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