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Societe Generale Trims Forecasts For Platinum, Palladium

Wednesday October 15, 2014 2:17 PM

Societe Generale is “cautious” on platinum group metals and downwardly revised its forecasts. Prices have tumbled in recent weeks, and while speculators remain net long, their bullish positioning has fallen since mid-August as the number of shorts increased, Societe Generale says. Outflows from exchange-traded funds have occurred. South African production has ramped up from a strike faster than expected, and there is a realization existing above-ground stocks may be more than once thought, the bank says. Further, PGMs fell with gold as the dollar strengthened in recent weeks, although the opposite is the case so far Wednesday. Despite favorable supply/demand fundamentals, platinum is likely to come under pressure again if gold comes back under pressure, the bank says.  “As a result, our price targets in the short to medium term look overly ambitious and we are revising down our average price this year and in 2015 to $1,410/oz (from $1,450/oz previously) and $1,450/oz (from $1,500/oz previously), respectively,” Societe Generale says. “In the case of palladium, we are revising down our average price this year and in 2015 to $810/oz (from $835/oz previously) and $920/oz (from $950/oz previously), respectively.”

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

 

TD Securities: Equities Look Vulnerable But Selloff Is Not ‘Capitulation'

Wednesday October 15, 2014 1:50 PM

The U.S. economy is in a position to flourish with a stronger currency, but a stronger U.S. dollar will take its toll on equity markets, says Eric Green, head of U.S. rates and economic research at TD Securities. However, he added that the rout currently seen in equity markets, with the Dow Jones Industrial Average down 446 points to 15,878 and the S&P 500 is down 51 points to 1,826, is not a capitulation trade. “Uneven growth prospects, a central bank closing the books on QE, and a stronger USD all suggest more downside in equities over coming weeks. This is not the end of the world; it is fundamentally a re-balancing that will take more froth out of an overextended market, but from an asset allocation perspective sovereign bonds will remain bid in a period of uncertainty,” he said.

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

BBH: Hawkish Bias Of Fed’s Sept. Dot-Plot ‘Has Been Completely Unwound’

Wednesday October 15, 2014 8:13 AM

Interest-rate markets have scaled back expectations for how aggressively the U.S. Federal Open Market Committee tightens interest rates next year, says Brown Brothers Harriman. “The hawkish bias of the dot-plot released at last month's FOMC meeting has been completely unwound,” BBH says. The so-called dot-plot shows where Fed officials think the central bank’s benchmark Federal funds rate will be in the future. “The gap between what the market is pricing the Fed to do next year and what the FOMC dot-plot says has gotten wider,” BBH says. “The market has pushed the expectations further out. The December 2015 Fed funds futures contract now implies less than a 50 bp (basis- point) effective Fed funds rate.” After the last FOMC meeting, observers said the dot plot showed policy-makers collectively expected a 1.375% rate at the end of 2015. “Just like the tapering began several months after the market had initially expected it, so too will we see the first rate hike, the next important step in normalizing monetary policy,” BBH says.

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

 

HSBC Sees Potential For Platinum To Gain Vs. Gold In Medium Term

Wednesday October 15, 2014 8:13 AM

HSBC says it sees potential for platinum to outgain gold, especially now that it has given up much of its premium to the yellow metal. The platinum/gold ratio has fallen to around 1.02 this week, a 17-month low, the bank notes.  “Platinum historically trades at a premium to gold,” HSBC says. “However, this premium has been nearly wiped away as losses in platinum since early August were more pronounced than losses in gold for the same period. While unusual, platinum has traded at a discount to gold for nearly two years between 2011 and 2013, which we attribute to an exceptional period of higher gold prices. Despite the narrowing of platinum’s premium over gold, the supply-and-demand fundamentals for both metals suggest platinum may have more room for gains over gold in the medium term, in our view.”

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

 

Commerzbank: Gold Eases, No Longer Profiting From Slump In Oil, 10-Year Yields

Wednesday October 15, 2014 8:13 AM

Comex gold has a softer tone after mostly up days since it hit its low for the year on Oct. 6. “Gold is initially not continuing its recovery movement of recent days this morning and has dropped back below $1,230 per troy ounce,” says Commerzbank. “In other words, the yellow precious metal is no longer profiting from the ongoing slump in oil prices, nor from the sharp fall in yields on 10-year U.S. Treasuries, which have declined to their lowest level in 16 months, since both factors are indicative of lower expectations of inflation. Silver, platinum and palladium are once again unable to shake themselves free of gold, and to a disproportionate extent are copying the performance of the gold price.” As of 7:57 a.m. EDT, Comex December gold was $5.20 softer to $1,229.10 an ounce.

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

 

BBH: ‘Oil Prices Continue To Collapse’

Wednesday October 15, 2014 8:13 AM

West Texas Intermediate crude oil, traded on the New York Mercantile Exchange, has fallen to its lowest level since June 2012, based on a futures continuation chart. The most-active November contract bottomed overnight at $80.37 a barrel and, as of 7:57 a.m. EDT, was down 69 cents to $81.15. Traders in a number of other markets are keeping tabs on crude. “Oil prices continue to collapse,” says Brown Brothers Harriman. The firm later adds, “Recent forecasts by the IEA (International Energy Agency) point to the lowest consumption growth since 2009. And on the supply side, we have made the point that there are two factors contributing the price action. First, Saudi Arabia is not cutting output in response to the fall in prices, as it has often done in the past. Second, U.S. oil output rising, which is seen more of as a secular than a cyclical trend.”

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

 

Price Futures Group: Gold Bulls Have ‘Love-Hate Relationship’ With Tumble In Oil

Wednesday October 15, 2014 8:13 AM

The recent tumble in oil prices has mixed implications for gold, suggests Phil Flynn, senior market analyst with Price Futures Group. “Gold bulls have had a love-hate relationship with the recent drop in the oil price,” he says. “On one hand, the selloff reeks of deflation which is bearish. On the other hand the destabilization turmoil that may be caused by deflation in shaky economies may create a safe-haven bid.”

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

 

 

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