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Commerzbank, BMO: Central-Bank Gold Purchases Continue

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Central-bank purchases of gold are continuing, said Commerzbank and BMO Capital Markets. “After the Chinese central bank already reported April gold purchases of approximately 15 tonnes two weeks ago, the Russian central bank yesterday reported the purchase of 15.6 tonnes of gold,” Commerzbank said. “What is more, according to the International Monetary Fund, other countries such as Kazakhstan and Turkey also bought gold in April.” That IMF data shows Kazakhstan raising holdings to 11.79 million ounces in April from 11.63 million in March, with Turkey also adding 50,000 ounces during the month, BMO reported. “Gold’s main source of demand support over the past year, central bank buying, remains strong,” BMO added. Central banks collectively bought 651.5 tonnes of gold in 2018, the second-highest total on record and a year-on-year increase of 74%, the World Gold Council reported earlier this year.

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

 

Commerzbank: Strong U.S. Dollar Keeps Lid On Gold Prices

Tuesday May 21, 2019 08:40

A muscular U.S. dollar keeps pushing gold down, according to Commerzbank. “Gold is failing once again to profit from the increased risk aversion among market participants,” the bank said. The metal was unable to benefit materially when stock markets were down for a while on Monday, and speculation about rate cuts “is also lending no buoyancy to gold,” the bank said. As of 8:33 a.m. EDT, spot gold was down $6.50 to $1,270.80 an ounce. “Apparently the dollar – not gold – is currently being seen as a safe haven in the trade dispute between the U.S. and China,” Commerzbank said. The dollar index was up 0.89 point to 98.022.

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

 

BBH: U.S. Dollar Index Boosted By Overseas Developments

Tuesday May 21, 2019 08:40

The U.S. dollar remains underpinned due to potential for an Australian rate cut and weak economic data overseas, said Brown Brothers Harriman. “The dollar rally has resumed,” BBH said, noting that the dollar index has hit its strongest level since April 26, when it posted a cycle high near 98.33. As of 8:19 a.m. EDT, the spot dollar index was 0.90 point higher at 98.023. “The latest bullish drivers are not emanating from the U.S.,” BBH said. “Rather, developments elsewhere suggest the divergence theme is alive and well. Today, Brexit concerns are weighing on sterling while an extremely dovish RBA [Reserve Bank of Australia is] pushing Aussie lower.  Weak data from Thailand and Korea underscore that divergence includes EM [emerging markets].” The governor of the RBA suggested that a rate cut may occur next month.

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