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Commerzbank: Gold ETFs Post Largest Inflow In 11 Months

Kitco News

“Massive demand” for gold exchange-traded funds lately reflects a surge in safe-haven buying of the metal, says Commerzbank. Global ETFs posted inflows of 14.6 tonnes Wednesday, the most in 11 months, analyst point out. Almost 10 tonnes were attributable to the world’s largest gold ETF, the SPDR Gold Trust. “Clearly investors are seeking to hedge against the numerous risks,” Commerzbank says. These risks include not only the U.K. election and a congressional hearing involving former FBI Director James Comey, but also events in the Middle East after two terrorist attacks in the Iranian capital of Teheran Wednesday. “Although IS was probably behind the attacks, Iran is also holding Saudi Arabia partly responsible,” Commerzbank says. “There is thus the risk of tensions escalating further between Saudi Arabia and Iran – the two leading powers in the region – in addition to the latent crisis surrounding the Gulf emirate of Qatar.”

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

 

UBS: Macro Conditions Support Higher Gold Prices

Thursday June 8, 2017 08:40

UBS says macroeconomic forces justify the strength in gold since mid-May. “In particular, lower rates, weaker  dollar and broader uncertainty provide [a] good foundation for the market to continue its journey higher,” the bank says. The uncertainties include central-bank meetings and global political risks, UBS explains. “We've argued gold's role as a diversifier in investor portfolios, and this is becoming increasingly relevant in the current environment,” UBS says. “Despite the rally from the lows printed in May, we think gold positioning is not crowded overall and there should be room for the move to extend. While a pause is understandable around key resistance levels and ahead of key events in the near term, we think the market should stay supported overall and would view dips as an opportunity to build/add to positions.”

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

 

UBS Expects Eventual Pickup In Chinese Official-Sector Gold Reserves

Thursday June 8, 2017 08:40

UBS looks for official-sector Chinese gold reserves to eventually rise again, even though they have been flat since October. News this week shows that the country’s official gold reserves remained at 59.24 million ounces, or around 1,843 tonnes, as of the end of May. “This creates downside risks to official-sector gold demand, considering China accounted for about 20% of buying last year,” UBS analysts said. “We maintain our base case that purchases should resume up ahead as overall official reserves stabilize, given that the diversification argument remains intact. Nevertheless, we acknowledge growing risks to this view considering that the pause in buying has gone on longer than what we initially expected.”

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