Mitsubishi: Gold Remains Underpinned As Investors Seek Safe Havens
Tuesday July 05, 2016 08:31
Gold posted its best monthly performance in June since February on increased risk aversion following the U.K. Brexit vote, and has risen still higher since. While global equities have recovered since the Brexit shock and the Chicago options index VIX "fear gauge" has dropped back to its pre-referendum levels, yields on sovereign bonds continue to grind lower as investors seek safe havens, Mitsubishi says. Yields on 10-year U.S. debt are at record lows below 1.4%. "All of this adds up to an environment where holding non-yielding precious metals looks increasingly attractive (to) institutional investors – indeed strong gold ETF (exchange-traded-fund) inflows, and a building of speculative Comex gold gross long futures positions to new record highs, have continued." If this week's ADP private-payroll data and official nonfarm payrolls readings indicate a return to growth in job creation in June, gold and other safe havens such as sovereign debt could lose some of their appeal, but likewise any disappointment in the jobs numbers -- like those released last month -- could send gold higher, Mitsubishi says.
By Allen Sykora of Kitco News; asykora@kitco.com
INTL FCStone: Central-Bank Accommodation To Support Precious Metals In July
Tuesday July 5, 2016 08:31
Expectations for continued loose monetary policy from a number of central banks after the U.K. vote to leave the European Union should continue to support precious metals, says INTL FCStone in its monthly commodities outlook. Lower forecasts for economic growth in Europe mean the European Central Bank and Bank of England should continue to increase accommodation, with the Fed also likely to remain dovish with Brexit as an excuse, INTL FCStone says. "There has been mounting speculation that the Chinese will also roll out something more aggressive," the firm says. "The collective bias toward renewed easing is going to be supportive for the precious group going into July, particularly for gold and silver, while platinum and palladium will also be pushed higher. We see a $1,285-$1,392 trading range for gold in July, while silver should trade between $18-$22.30/ounce."
By Allen Sykora of Kitco News; asykora@kitco.com
CME Group: Average Daily Metals Volume Up 45% Year-On-Year In June
Tuesday July 05, 2016 08:54
CME Group reports that metals trading volume jumped 45% year-on-year to 483,000 contracts in June, compared to 333,000 in the same month last year. Gold futures average daily volume jumped 76% from a year ago to 230,000 lots daily, while silver futures volume jumped 22% daily to 84,000. Copper futures and options average daily volume was up 31% to 98,000. For the recently completed second quarter, metals volume was up 41% year-on-year to 468,000 lots.
By Allen Sykora of Kitco News; asykora@kitco.com
Commerzbank Sees Potential For Correction In Silver After Huge Price Rise
Tuesday July 05, 2016 08:31
Silver has pulled back from Monday's sharp run-up and could correct some more, says Commerzbank. Spot silver has fallen back as far as $19.54 an ounce after running up to a two-year high of $21.132 on Monday while U.S. markets were closed for the Fourth of July holiday. "Silver had soared by nearly 19% at its peak since the beginning of last week without there having been any news to justify such a pronounced price rise," Commerzbank says. "Evidently speculative financial investors played a major part in the price increase – this at least is what is suggested by the latest CFTC (Commodity Futures Trading Commission) data, which showed that the already record-high net-long positions had been further expanded. In our opinion, however, there is now considerable correction potential from this side. If the 'hot air' were to dissipate, the silver price could come under more significant pressure."
By Allen Sykora of Kitco News; asykora@kitco.com
BMO: Base Metals Rally Overdone, But Stick With Silver
Tuesday July 05, 2016 08:31
BMO Capital Markets is upbeat on silver. Base industrial metals have soared lately and BMO looks for a profit-taking pullback in these, with copper, aluminum and others on the defensive in London trading so far Tuesday. In the case of silver, however, BMO says in a late-Monday research note: "We remain constructive on the precious metals this year due to ongoing global economic uncertainty, which is reinforced by talk of further stimulus in the U.K. and South Korea, as well as speculation of further stimulus in China, Europe and Japan. Silver tends to be the leveraged (and lagged) play to gold, so the recent increase in price does not surprise us; our price forecasts average $19/oz in Q3/16E, and $20.50/oz in Q4/16E."
By Allen Sykora of Kitco News; asykora@kitco.com
ICBC Standard Completes Acquisition Of London Precious-Metal Vault
Tuesday July 05, 2016 08:31
ICBC Standard Bank Plc announces the completion of its acquisition of Barclays' London precious-metals vaulting business, enabling the bank to expand its capabilities in clearing and storage services for precious metals. An agreement to acquire the vaulting business from Barclays was previously announced on May 16, making ICBC the first Chinese bank to have a vault in the U.K. "[T]his enables us to better execute on our strategy to become one of the largest Chinese banks in the precious-metals market," said Mark Buncombe, head of commodities at ICBC, in making the May announcement.
By Allen Sykora of Kitco News; asykora@kitco.com
