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Mitsubishi: Gold Headed For Quarterly Gain On Investment Demand

Gold is on track for its third straight quarterly price gain thanks to investment demand, reports Mitsubishi. While down from the July high for the year, spot gold is still higher than on the final day of the second quarter. “Gold is likely to register a third successive quarter of…gains – its best performance since 2011 when bullion was on the run-up to its all-time nominal high,” Mitsubishi says. “Though the pace of gains has slowed, its performance has remained impressive – it has remained above $1,300 throughout this quarter, a level that is roughly coincident with the 50% retracement of the 2008 low to 2011 high, and has remained above the 500-day moving average since February. What is remarkable about this year’s performance is that gold has been underpinned by investment flows, particularly ETF (exchange-traded-fund) buying and new long speculative futures positioning which collectively have added up to nearly 45 million ounces in the year to date. Physical demand in China and India – previously the mainstay of gold demand and a key driver of the price – have amounted to some 40% less than that in the year to date.”

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

 

Mitsubishi Sees Factors Limiting Any Pullback In Gold

Tuesday September 27, 2016 09:04

Mitsubishi sees factors at play that should limit any downside in gold even if the metal should be hurt by a U.S. rate hike or expectations for one. “Negative real interest rates in major markets will continue to provide a supportive backdrop for gold going into the final quarter of 2016, and further policy loosening by the BOJ (Bank of Japan) or European Central Bank will further lower the opportunity costs of holding gold,” Mitsubishi says. “One major cloud on the horizon for gold is the likely U.S. interest-rate hike in December, which will probably see bullion lose ground as the dollar strengthens. However, any weakening of U.S. employment and economic data will call into question the logic of a 2016 rate hike and could buoy gold. Downside for gold may also be limited by geopolitical and economic concerns centering on the U.S. election. Another supportive factor for gold can also be expected to re-emerge in the fourth quarter in the form of physical demand for gold surrounding China’s National Day holiday and ahead of the Lunar New Year in Q1 2017. Similarly Indian demand is expected to pick up in the final quarter around various religious and cultural festivals plus the wedding season and as rural incomes swell following a strong monsoon. These, combined with opportunistic buying on dips, should keep gold well supported in Q4 even if prices fall below $1,300.”

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

 

Analysts: Gold Market Range-Bound But Reacts To Debate

Tuesday September 27, 2016 08:31

Gold traded in a narrow range overnight but nevertheless showed signs of tracking the U.S. presidential debate, easing when Democrat Hillary Clinton seemed to have the upper hand and vice-versa, analysts say. “The tension on the gold market appears to have eased initially after most observers agree that the presidential candidate Hillary Clinton clearly came out on top in the first TV dual with her opponent Donald Trump,” says Commerzbank. “Gold is therefore trading somewhat more weakly at $1,335 per troy ounce again this morning, after having risen for a time to over $1,340 yesterday evening.” MKS (Switzerland) S.A points out that the debate began in the U.S. Monday night about the time trading began Tuesday on the Shanghai Gold Exchange. Initially, Trump came “out hard on issues such as employment, border protection and job creation, (and) the metal gained a bit of upward momentum,” says Alex Thorndike, senior precious-metal dealer with MKIS. “Interestingly there was not the same amount of selling volume we had seen over the past few days from China, at least initially. Later in the afternoon when Clinton appeared to have the upper hand, gold dived back towards $1,335 as Asian selling ramped up.” After conclusion of the debate, gold held in a tight range during Asian-Pacific activity, MKS added. As of roughly 8 a.m. EDT, spot metal had been in a narrow range of slightly more than $6 so far Tuesday, although this has widened to roughly $10 as U.S. trading kicked in.

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

 

Commerzbank: Palladium In Tug-Of-War Between Auto Demand, Investor Outflows

Tuesday September 27, 2016 08:31

Palladium – trying to get back over $700 per ounce – appears to be finding support from auto demand but held back by investor outflows, says Commerzbank. Nymex December palladium is just below $700 an ounce after previously trading up to $703.35. The bank describes the $700 level as “psychologically important” but appearing “difficult to overcome,” although palladium has risen by some $50 per ounce since the middle of the month. “We believe it is finding support from the continued robust demand from the automotive industry, (with) car sales having risen significantly of late in all key countries/regions,” Commerzbank says. The metal’s main industrial use is auto catalysts. “Investment demand, on the other hand, is very subdued. Palladium ETFs (exchange-traded funds) are recording further outflows and speculative financial investors have also been generally retreating from palladium in recent weeks.”

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

 

 

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