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BAML: Gold Market Is Stabilizing

Friday February 27, 2015 12:54 PM

Despite downside risks to the gold market, analysts at Bank of America Merrill Lynch remain optimistic that prices will continue to stabilize this year. They note that sustained demand in emerging markets and lack of selling from investors are supportive for the gold market. “Concerns over asset price bubbles, low volatility and an eventual correction should bring buyers back into the market,” they say. One downside the bank mentions is that gold could weaken as interest rates become less negative, prompting investors to move to equity markets.Comex April gold futures last traded at $1,214.10 an ounce, up $4 on the day.

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


HSBC: Gold Market Firming And Could Hold $1,200 Level

Friday February 27, 2015 10:58 AM

The Fed’s first rate hike could now be priced into the market, which is why gold prices are managing to hold above $1,200 an ounce, says analyst from HSBC. They add that although the market does not look robust, there is evidence that it is beginning to firm. “ETF demand is picking up… and if Indian imports recover more fully, we believe gold can hold around these levels based mostly on a combination of consumer-led physical demand and moderate investment interest,” they say.

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


BNP Paribas: Investors Should Have A Hedge As They Pile Into Risk Assets

Friday February 27, 2015 10:28 AM

Investors have been rushing into equities and riskier assets since the European Central Bank announced its expanded quantitative easing program, but analyst at BNP Paribas are warning investors to use caution? at these current levels. "In particular, recent earnings figures have failed to provide a support to equity prices showing that large companies are struggling to increase their profits," they say. "Investors need to be aware of some worrying factors with regard to these rallies ranging from uncertainties over the global macroeconomic outlook and political risks and tensions in Ukraine to some basic market technicals such as reduced liquidity in the dealer market." They add that despite continued geopolitical uncertainty, the volatility index, or VIX, has remained close to its recent lows. "In light of the high number of uncertainties it makes sense to maintain some kind of out-of-the-money hedges."

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


Capital Economics: Market Waiting For Indian Gov't To Reduce Gold Tariffs

Friday February 27, 2015 10:08 AM

The Indian government is set to unveil its 2015 budget and with it gold analysts are expecting to see a cut in gold import tariffs. Julian Jessop, head of commodity research at Capital Economics, says weaker oil prices have helped reduce the pressure of India’s massive current account deficit. He adds that a reduction in tariffs would be a popular move but it might not be as big as some people are expecting. “For a start, any reduction in the import duty will probably be small, as the government will not want to give up an important source of tax revenue at a time of fiscal consolidation. Hopes of a reduction all the way back to 2% therefore look premature; an initial cut to 6-8% looks more likely,” he says. Although there is a risk that the cut won’t be as big as expected, the fact that the government and central bank are loosening the restrictions on the gold market should result in high imports from pent-up demand.

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


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