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Barclays: Swiss Trade Data Suggests Palladium Market Remains Tight

Tuesday October 21, 2014 1:01 PM

Trade data for Switzerland suggests that the palladium market remained tight in the third quarter, says Barclays. Exports more than doubled while imports fell more than 50% month-on-month in September, the bank says. Meanwhile, Russian shipments into Switzerland, through which much of the world’s platinum group metals pass, were around 6,560 ounces, near the trend of the past few years. “This reinforces our expectation for a sizable deficit this year and next, and supports our view that PGM prices as a whole still look to be favorable buying opportunities,” Barclays says. Switzerland was also a net exporter of platinum, the bank adds.

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

 

UBS: Swiss Gold Exports At 7-Month High; Physical Demand Absorbing Investor Liquidations

Tuesday October 21, 2014 9:38 AM

Swiss trade data show gold exports hit a seven-month high in September and that the flow to Eastern from Western nations continues, says UBS. Swiss exports were 172.6 metric tons last month, the most since February.  Gold shipments to China jumped to 12 tons after averaging around three tons during the previous four months. Shipments to Hong Kong increased to 24.7 tons, the most since April. Switzerland exported 58.5 tons to India last month, the largest shipment year-to-date and nearly twice the average monthly volume, UBS says. Meanwhile, September gold imports into Switzerland were also high at 194.6 tons. Inflows from the U.K. jumped to 63.3 tons from 8.6 in August. “This suggests that a good portion of investor liquidations in September, that pushed the prices through the $1,200 psychological level, were absorbed by physical demand, with metal making its way from London vaults into Swiss refineries for refining/recasting and ultimately shipped to physical buyers in Asia,” UBS says. “This scenario is reminiscent of what happened in 2013 when gold prices collapsed, albeit the volumes this time around are much more contained. Nevertheless, it does highlight the importance of physical markets in providing support during times when gold needs it most.”

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

 

Commerzbank: Gold ETF Holdings Decline Despite Strength In Prices

Tuesday October 21, 2014 8:26 AM

Global gold holdings by exchange-traded funds have fallen despite recent strength in the precious metal, points out Commerzbank. Gold extended last week’s multi-week highs Tuesday after holding up Monday even though ETFs tracked by Bloomberg posted net outflows of 8.9 metric tons that was the result of an  outflow from the world’s largest such ETF, SPDR Gold Shares. Commerzbank notes this was the largest one-day outflow from the ETF in a year. “Given the numerous risks on the market, we are surprised that there is still any substantial retreat at all from gold ETFs,” Commerzbank says. “It might, though, also be the result of forced selling to cover losses elsewhere. It remains to be seen, however, whether the price increase of gold is sustainable. Physical demand in Asia has not after all really started to pick up much again. According to industrial sources, the Reserve Bank of India is not going to relax restrictions on gold imports further. The relatively high level of gold imports in September in the run-up to the holiday season could therefore soon ease off again. In our view…an increase in demand for gold in Asia is a must if a sustained price recovery is to occur.”

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

 

Nomura: Chinese GDP Stronger Than Forecast But More Stimulus May Be Coming

Tuesday October 21, 2014 8:26 AM

Chinese economic growth held up better than expected in the third quarter but there is still potential for more monetary policy stimulus, says Nomura. China’s gross domestic product grew 7.3% in the July-September period, down from 7.5% in the second quarter but above consensus expectations of 7.2%. “However, the pick-up in September industrial production growth to 8.0% from 6.9% in August was encouraging, especially because of its strong correlation with GDP growth and bodes well for an economic recovery in Q4,” Nomura says. “Our China economics team notes that the government has clearly stepped up its policy easing after very weak August data…but the September data suggest that these efforts have only succeeded in stabilizing growth, and that more policy stimulus is needed to lift GDP growth in Q4. The reduced efficacy of policy easing may be related to the powerful headwinds from the property market correction, the severe overcapacity in many upstream industries and an overleveraged corporate sector. We continue to expect 50bp (basis-point) cuts of the bank reserve requirement ratio each quarter from Q4 2014 to Q4 2015.” Commodity traders keep close tabs on China’s economy, as the country is a major consumer and is the world’s largest buyer of copper and gold.

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

 

TDS: Gold Could Extend Gains, Would Favor Selling Rallies

Tuesday October 21, 2014 8:26 AM

TD Securities figures gold could rise some more as the financial markets push out expectations for Federal Reserve rate hikes, but the firm also views rallies as a selling opportunity. Gold rallied last week on concerns about the strength of the U.S. economic recovery as investors mused that the Fed might not be ready to increase the federal funds rate in the first half of next year. “If higher interest rate expectations are postponed, the real cost of holding a zero-yielding asset like gold will not rise, making it cheap to hold,” TDS says. Also, a dovish Fed implies financial market risk persists and gold might be sought as a hedge, helped by a weakening dollar. Potential short covering could even carry gold as high as $1,300, TDS says. “As such, any rally anywhere near these levels makes a good selling opportunity. So sell the rallies is the order of the day, unless the U.S. economic growth hypothesis gets derailed.”

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

 

 

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