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UBS: Client Interest In Swiss Gold Initiative Rising

Wednesday November 19, 2014 2:02 PM

A non-scientific poll conducted Tuesday by UBS of its clients and colleagues shows nearly a third of respondents are “very interested” in an upcoming Swiss gold initiative while 30% are “'somewhat interested,” UBS says. The remaining 39% expressed no interest, which the bank says is likely because the consensus expectation is that the vote will fail. UBS cites the results of an opinion poll Wednesday commissioned by Swiss TV showing the Initiative is unlikely to pass. Support has declined to 38% from 44% on Oct. 24, while opposition has increased to 47% from 36% previously. The remaining 15% are either undecided or did not respond, down from 17% in the previous survey, UBS says. This poll has been highly anticipated as it is the most scientific one available, and UBS says it gives a good indication of voter sentiment in the country.  “The decline in support for the initiative therefore does not come as surprise. The results provide the market with reassurance heading into the Nov. 30th vote and diminish gold's upside risks,” they say.

By Debbie Carlson of Kitco News; dcarlson@kitco.com

 

Metals Focus: ‘The End Of The Bear Market Is Now In Sight’ For Gold

Wednesday November 19, 2014 8:46 AM

Physical demand for gold has been holding up and “the end of the bear market is now in sight,” says Metals Focus. Outflows from gold exchange-traded products have continued this year, but last year’s washout means further liquidations are likely limited, the consultancy says. “Meanwhile, although the response in recent weeks from physical markets in Asia may seem modest, it is worth stressing that physical demand remains relatively robust, which points to another underlying deficit this year,” Metals Focus says. The firm says India’s January-October imports already exceed the full year total for 2013, although with October imports at a 17-month high, expectations are growing that the government will impose new restrictions on bullion inflows. “In our view, even if these measures are announced, their impact is likely to be limited. In part, this reflects the fact that the local market has, over the past year, become accustomed to somewhat elevated gold premiums,” the firm says. Meanwhile, even though Chinese gold purchases have not matched the “buying frenzy” of 2013, “the absolute level of demand has remained healthy” year-to-date, Metals Focus says. Some investors may be reluctant to return to the gold market in the short term due to factors such as expected Federal Reserve rate hikes next year, Metals Focus says. “At the same time though, we believe that many of these gold-negative factors have been largely priced in,” the firm says. “As such, while further downside is possible, the silver lining is that the end of the bear market is now in sight.” The firm looks for gold to bottom around the third quarter of 2015. “As fears of dramatic rate hikes evaporate and gold’s supply/demand fundamentals remain supportive, this will once again allow investors to reconsider the investment case for gold,” the firm concludes.

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

 

Commerzbank: Gold Near Par With Platinum After Topping $1,200/Oz

Wednesday November 19, 2014 8:46 AM

Gold has moved back above $1,200 an ounce for the second day in a row Wednesday and is nearly at par with platinum, Commerzbank says. As of 8:38 a.m. EST, spot gold was at $1,197.85 an ounce and platinum was at $1,204.40. “The gold price temporarily climbed above the psychologically important $1,200 per troy ounce mark again yesterday for the first time in a good two weeks,” Commerzbank says. “We believe this was probably due for one thing to the covering of short positions. For another thing, the price found support from a weaker U.S. dollar. Since gold has outperformed platinum in recent days, both precious metals cost roughly the same at present. The last time this was the case was in April 2013.”

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

 

HSBC: Russia Is World’s Largest Official-Sector Buyer So Far In 2014

Wednesday November 19, 2014 8:10 AM

Russia has been the world’s largest official-sector gold buyer so far this year, although this could be because the country is having trouble selling metal due to the Ukraine crisis, HSBC says. HSBC notes that Russia has accumulated roughly 150 metric tons of gold so far this year, according to news reports quoting the head of the Russian central bank. “This implies that the central bank of Russia bought around 35 (tons) of gold from the end of September as International Monetary Fund data shows the central bank purchased 115 (tons) in the first nine months of this year,” HSBC says. “Based on our calculations, the central bank of Russia has been the largest official-sector gold buyer this year, accounting for nearly 65% of all central-bank gold purchased.” The central bank says it purchased gold in order to diversify its currency reserves. “While the gold purchase by Russia may be interpreted as a positive sign for the yellow metal, we caution that the purchase may be due to the country’s difficulties in selling locally produced gold abroad,” HSBC says. “Earlier in the month, Reuters reported that foreign banks have withheld from purchasing Russian gold following the rise in Eastern European tensions earlier this year, which left the central bank as the primary source to absorb bullion. Also, falling oil prices will likely curtail Russian official sector purchases going forward. According to official data, energy exports account for 70% of Russia’s foreign-exchange earnings and half of government revenue. Excess foreign reserves – mostly the result of previous high energy prices – allow the central bank to purchase bullion....Weak oil prices will limit forex reserve accumulation and likely crimp gold purchases. There is however a possibility other central banks take advantage of recent low prices and purchase gold.”

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

 

INTL FCStone: Market Braces For Possible Increase In Indian Gold Import Duties

Wednesday November 19, 2014 8:10 AM

Gold-market participants are also bracing a potential decision by Indian officials that could result in an increase on the import duties on gold, says Edward Meir, commodities consultant with INTL FCStone. The analyst cites news reports that offi­cials from the Finance Ministry and the Reserve Bank of India were con­sidering whether to reimpose import restrictions on “star trading houses” that were eased earlier this year in an effort to curb smuggling. “These enti­ties consist basically of private jewelry exporters who are allowed to import gold, but the authorities are fearful that their intake is growing too much and that the country’s trade deficit will again be vulnerable, especially if there is another ‘shock’ to the system in the aftermath of the Fed raising rates,” Meir says.

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

 

 

 

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