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Gold Market Range Bound, Suffering From Apathy - ANZ

By Kitco News
Tuesday May 5, 2015 12:33 PM

(Kitco News) - The strong apathy sentiment in the gold market could come to an end on Friday as the U.S. nonfarm payrolls report is expected to provide much needed direction says one commodity analyst.

Victor Thianpiriya, commodity strategist at the Australian-based bank ANZ, said in an email to Kitco News that he does not have any strong conviction for gold as the market is awaiting the next catalyst. 

In a report published last week, analysts at ANZ noted that gold had a neutral bias within all of its key market indicators, including physical demand, speculative positioning, market specific demand and market sentiment.

China and India remain the two dominate forces in physical gold demand but ANZ noted that both of these markets are showing signs of fatigue. They noted that Hong Kong exports to the mainland fell to a seven-month low in March.

They added that adequate onshore supplies are keeping premiums on the Shanghai Gold Exchange steady at around $2 an ounce.

“We are also hearing that volumes on the Shanghai International Exchange are soft as participants see little trading opportunity with such a tight SGE/London premium,” the analysts said in the report.

Turning to India, ANZ said that although imports into the country have been positive with imports in March hitting 134 tonnes, doubling 2014 levels, this might not be a lasting trend.

“The strength in India’s imports is likely to be temporary though, as we are in peak demand season in India and it comes on the back of the lifting of import restrictions in December,” the analysts said.

Despite ongoing uncertainty in Europe as Greece continues to negotiation new bailout funding terms, ANZ is also not seeing a lot of safe-haven demand for the yellow metal. The bank added that only an actual default would impact markets as investors down play the risks.

“This remains on everyone’s radars, but so far contagion risk looks contained,” the analysts said.

Turning to Friday’s employment data, Thianpiriya said that the gold market will take its cue from U.S. bond yields and the U.S. dollar. Currently consensus forecasts are expecting to see 231,000 jobs created in April. 

However, economists have noted that a print below expectations but still above 200,000 could keep the Federal Reserve on track to raise interest rates by September.

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



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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