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Barclays: Investor Demand For Gold 'Likely To Persist'

Barclays anticipates investor demand for gold will persist on concerns about the global economy, with the bank also saying investment in commodities generally should hold up. The bank reports that some $54 billion has flowed into commodity exchange-traded products and index investments so far in 2016. “However, if expectations were to shift suddenly, then a rush for the exit could send prices sharply lower,” Barclays says, referring to commodities in general. “Although we cannot rule out that risk entirely, we think the key themes that have supported commodity investments in the year to date should ensure continued inflows over the next few years and that the risk of large-scale liquidation, even if commodity markets disappoint in Q4, is limited.” Analysts point out that much of the money invested in commodities has been strategic portfolio allocations, with investors unlikely to change their minds hastily even if performance is not as strong for the remainder of the year. Second, global yields remain low. “Third, the key factors that have boosted gold demand recently, i.e., investors’ concerns about the stability of the global economy, uncertainty in financial markets and a desire to hedge against unexpected events, are unlikely to dissipate any time soon,” Barclays says. “Consequently, investor demand for gold, at an all-time high this year, is likely to persist in our view.”

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

 

Citi: Silver ‘Overpriced’ Relative To Gold

Monday September 19, 2016 09:30

The strong silver price rally so far in 2016 could be losing steam, says Citi Research. The gold-to-silver ratio is now looking oversold, the bank says, after declining substantially since the first quarter, hovering around 66 to 69 since July after the year-to-date high of 84 hit in March. The ratio measures how many ounces of silver it takes to buy an ounce of gold, with a smaller number reflecting silver outperformance, and vice-versa. “At the current ratio, silver prices may look overpriced versus gold, leaving the market poised for a correction,” Citi says. “Fundamental factors also appear challenged as currency appreciation in key producing regions YTD has done little to curb longer-term supply growth. Pan American Silver recently announced that their $164 million mine shaft expansion in Mexico should increase output by 69% to 7.7 million ounces as early as 4Q’17. Thus, despite repeatedly testing $20/oz since the start of 2H’16, we believe silver prices are unlikely to see significant further upside from here.”

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

 

Mitsubishi: Break Of $1,300 Would Trigger Stop-Loss Selling In Gold

Monday September 19, 2016 09:30

There is a risk of stop-loss selling if spot gold falls through the $1,300-an-ounce level, says Mitsubishi. Stops are pre-placed orders activated when certain chart points are hit. “For now, immediate technical support for gold lies at $1,306, the 100-day moving average, which is roughly coincident with the 38.2% Fibonacci retracement of the May low to July high at $1,308,” Mitsubishi says. “Gold is vulnerable to stop-loss selling should it breach the $1,300 level, which has held since early June – if this level does break, then this potentially opens up a range down to $1,288 (50% retracement of May-to-July move). The overall medium term macroeconomic backdrop should remain supportive to gold after this week’s Fed and BOJ (Bank of Japan) policy meetings, though a range of possible outcomes will make for heightened volatility immediately before and after the announcements.”

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

 

MKS: Chinese Buy Gold Upon Return From Two-Day Holiday

Monday September 19, 2016 08:42

Chinese market participants were gold buyers on Monday as they returned from a two-day holiday at the end of last week, says MKS (Switzerland) S.A. That helped gold bounce in early Asia-Pacific trading after the metal fell Friday in the wake of a stronger-than-forecast report on U.S. inflation that boosted the U.S. dollar, MKS says. “With China back in for the first time since last Wednesday and last participating when we were trading at $1,320-25, it was a fairly safe bet they would be on the bid today,” says Alex Thorndike, senior precious-metals dealer with MKS. Gold initially ticked up a few dollars, but with Japan on holiday, demand waned leading into the Shanghai Gold Exchange open, he continues. “As widely anticipated, Chinese investors were on the bid from the onset, which helped propel spot gold back through $1,315 over the first half hour,” he says. “There was still some decent offers visible on December Comex, which countered the surge of Chinese buying and kept things contained, not able to run to far through $1,315. The SGE premium certainly reflected the improved demand today, pushing up from $3.50 initially to $4.50-5.50 over the loco London gold price at the conclusion of the a.m. session. The strong buying from the Chinese was also bolstered by a worrying report over the weekend from the BIS (Bank for International Settlements), which stressed the growing risks of China's mountain of debt.”

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

 

Commerzbank: ETF Holdings Show Gold Remains A Buy On Price Dips

Monday September 19, 2016 08:42

Exchange-traded-fund buying of gold while prices for the metal fell Friday shows that investors still view dips as buying opportunities, says Commerzbank. Global gold ETFs collectively posted an inflow of more than 10 tonnes on Friday, Commerzbank points out. Meanwhile, Comex December gold on Friday hit a two-week low of $1,309.20 an ounce. “It would appear that ETF investors are viewing the price slide as a good opportunity to buy,” Commerzbank says. “Perhaps gold is seen less as a jewelry metal or safe haven at present and more as a store of value in view of the still ultra-expansionary monetary policy pursued by the world’s central banks, the downsides of which more and more investors are coming to realize.”

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

 

 

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 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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