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Goldman Sachs Forecasts $1,000/Oz Gold In 12 Months

Goldman Sachs looks for more gold weakness over the next 12 months, calling for $1,000 an ounce a year from now. The bank looks for general commodity weakness to continue over the next year, “keeping us underweight” commodities during that time frame. Eventually, however, Goldman looks for “much better commodity returns” once the global economy shifts into the next phase of the business cycle – recovery. For gold, specifically, Goldman writes: “We continue to expect further dollar strength and believe a gradual increase in U.S. real rates will push gold prices lower over the next 12 months….Since peaking in October, gold has fallen by 8% on the back of an increase in the probability of a Fed hike in December following the stronger-than-expected (October) non-farm payrolls report. Our gold forecasts remain $1,100/oz in three months, $1,050/oz in six months and $1,000/oz in 12 months.”

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

 

Goldman: Palladium To Outperform Platinum Over Next 12 Months

Thursday November 19, 2015 10:09

Goldman Sachs looks for palladium prices to fare better than sister metal platinum over the next year. A further shift by car buyers from diesel-powered vehicles (which use platinum for catalysts) to gasoline-powered cars (which use palladium) is likely to keep a lid on platinum prices until there is a significant reduction in platinum output, Goldman says. “Palladium demand is expected to improve on the back of a recovery in Chinese automotive output -- predominantly gasoline -- and European auto producers to shift
towards producing more gasoline cars…,” Goldman says. “Palladium has fallen sharply on weak Chinese automotive output. Over the next 12 months we forecast prices to move up to $750/oz, though the risks to this forecast are also skewed to the downside.”

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

 

HSBC: Gold May Have Already Factored In Fed Rate Hike, May Trade Sideways-Higher

Thursday November 19, 2015 10:00

Gold may well stabilize, at least in the short term, now that the market appears to have largely factored in a Federal Reserve rate hike next month. Prices have fallen in recent weeks on expectations for tightening, but have generally held up since minutes of the Fed’s October meeting, released late Wednesday, showed most policy-makers felt conditions for a rate hike in December “could well be met.” Money managers, who have cut their net length, are “mostly prepared” for a Fed hike, says HSBC. “This may explain gold not falling on the release of the ostensibly bearish minutes,” HSBC says. “It is possible that the gold market has largely factored in a rate rise. This leads us think gold is likely to trade sideways to slightly higher, at least in the near term.” The metal was modestly higher as global trading was shifting to New York trade early Thursday, with the Comex December futures up $3 to $1,071.70 an ounce as of 8:04 a.m. EST.

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

 

HSBC: Johnson Matthey Data Suggests PGMs To Eventually Move Higher

Thursday November 19, 2015 08:11

The closely followed Johnson Matthey report on supply and demand for platinum group metals, released Wednesday, provides fodder for an eventual move higher in prices, says HSBC. Johnson Matthey looks for demand of platinum to outpace supply in 2015 by 652,000 ounces and a palladium deficit of 427,000 ounces. “The JM report confirms that the PGMs are in a structural production/consumption deficit,” HSBC says. “This has not stopped prices from going sharply lower, however, as near-term investor liquidation and above-ground supplies are more than sufficient to meet the shortfall. But it does argue that fundamentally there is reason for prices to eventually move higher.”

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

 

Barclays: Minutes Show Divided FOMC Although Dec. Rate Hike Expected

Thursday November 19, 2015 08:11

Barclays looks for the Federal Open Market Committee to hike U.S. interest rates at a meeting next month but also says policy-makers may be more divided than previously thought. Minutes of the October meeting, released Wednesday afternoon, reflect a committee that may be less hawkish October post-meeting statement initially conveyed, Barclays says. “Members seemed to have differing levels of confidence over the likelihood of inflation returning to target, although as a whole the committee believes that with appropriate policy, inflation will gradually return to 2%,” Barclays says. “Members also seemed uncertain over the state of labor markets. Many expressed concerns about the likely evolution of labor markets, and some noted that the weak job reports in August and September posed downside risk to the outlook. Of course, the October jobs report seems to have allayed many of these concerns, leaving the committee primed for a December rate hike.” Barclays economists later add: “We believe that divisions within the committee and the soft path of inflation we expect early next year will lead to a lower policy path in 2016 than the committee expects; we forecast it will hike only three times in 2016. ”

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

 

 

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