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Standard Chartered Sees Gold Rising After FOMC Meeting

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U.S. rate hike of 25 basis points. “Alongside the move in U.S. Treasuries, gold prices tend to come under pressure ahead of a rate hike, and rebound after,” Standard says. “But perhaps more importantly, the market has entered a seasonally strong period for demand. Buying in India has picked up amid lower prices and jewelers have restocked; festival-related purchasing should add to this.” Still, the bank says, there are some headwinds for gold, including some interest in establishing short, or bearish trades, in the SPDR Gold Shares exchange-traded fund, which hints at bearish sentiment. The bank also cites potential import duty hikes in India that could dampen demand during a strong period for consumption.

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

 

Standard Chartered: India Gold Market Worried That Import Duty Will Rise

Friday September 21, 2018 09:45

There is nervousness in the Indian gold market that import duties will be hiked again, says Standard Chartered. According to news reports, government officials and the finance minister are considering measures to halt weakness in the Indian rupee. When the government enacted measures to reduce the current-account deficit in 2013, gold was one of the imports to be targeted, with the metal viewed at the time as one of the largest contributors to the deficit, behind oil. The gold import duty was increased to 10% in an attempt to slow gold imports. “The import duty remains at 10%, and although imports initially fell, they subsequently bounced back,” Standard says. “While gold demand has slowed annually since 2013, local-market participants worry that the government may increase the duty 2-3 [percentage points] to 12-13% to curb imports; others believe the import duty on gold doré could be raised to 10% from 9.35% currently. If implemented before year-end, any changes would materialize during a seasonally strong period for demand.”

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

 

RJO’s Haberkorn: Gold Tends To Rally After Fed Announcements

Friday September 21, 2018 09:03

Gold tends to rally after Federal Reserve announcements on interest-rate hikes, so look for the same next week, says Bob Haberkorn, senior commodities broker with RJO Futures. A two-day meeting of Fed officials ends Wednesday, followed by a press conference by Fed Chair Jerome Powell. Markets have factored in another 25-basis-point rate hike. “At the beginning of the week, it [gold] will be quiet,” Haberkorn says. “After the Fed, there will be upside in gold.…Typically, you can buy gold going into any Fed announcement and it rallies afterward.” Longer term, he continues, the key will be whether the Fed makes any changes to past language in its communiqué that steered markets toward expecting further monetary tightening. “What do they say about inflation and rates moving forward?” Haberkorn asks rhetorically.

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

 

Commerzbank: Russian Central Bank Still Buying Gold

Friday September 21, 2018 09:03

Russia’s central bank remains a noted gold buyer while China remains conspicuous by its absence, says Commerzbank. “By its own account, the Russian central bank topped up its gold reserves by a further 1 million ounces in August,” Commerzbank says. “This equates to purchases of 31.1 tonnes. As per 1 September, its holdings totaled 64.3 million ounces (approximately 2,000 tonnes). A few days ago, the IMF had reported a similarly high rise in Russian gold reserves. Russia’s central bank thus remains the leading official buyer. By contrast, China has purchased no gold for almost two years now.” 

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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