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Standard Chartered Sees $1,450 Gold Price In Fourth Quarter

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Standard Chartered figures gold was due for a correction lower, but nevertheless sees prices rising to an average of $1,450 an ounce in the fourth quarter. “Gold prices have rallied to test levels last seen six years ago, and we believe the combination of dovish central banks, continued trade tensions, falling yields, geopolitical tensions and central-bank buying poses further upside risk to prices,” Standard Chartered said. However, In the near term, “speculative investor positioning and technical indicators suggest gold may face a short and shallow correction.” Speculators in the futures market have increased their bullish positioning sharply over the last month, and investors have also been buying gold-backed exchange-traded products.  On the flip side, Standard Chartered added, retail demand has “lagged” and thus could be the key factor to sustain a move higher. “We therefore revise our gold forecast higher and, barring near-term corrections, expect prices to average $1,450/oz in Q4 -2019 from $1,325/oz previously.”

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

 

Commerzbank: Chinese Gold Imports Weak In May

Wednesday June 26, 2019 08:45

The most recent Swiss and Hong Kong data suggest China imported small quantities of gold in May, said Commerzbank. According to statistics from the Census and Statistics Department of the Hong Kong government, net gold imports into China from the former British colony plunged by 62% year-on-year to 21.7 tonnes. In the first five months of the year, Chinese gold imports from Hong Kong totaled just shy of 174 tonnes, which is 28% lower than the same period last year. Statistics from the Swiss Federal Customs Administration paint a similar picture, Commerzbank said. Switzerland exported only 13 tonnes of gold to China in May, down 66% year-over-year. From January to May, exports amounted to some 78 tonnes, a year-on-year decrease of 63%. “Besides the higher gold prices in May, market observers believe that the weak imports are due to banks having exhausted their import quotas and no longer being able to import more gold,” Commerzbank said. “Because the gold price has risen further in June – and significantly more sharply into the bargain – imports are likely to be subdued for price reasons this month, too.”

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

 

Analysts: Fed May Be Less Dovish Than Markets Thought

Wednesday June 26, 2019 08:45

The Federal Open Market Committee is likely to cut interest rates next month, yet may not be as dovish as markets may have previously thought, analysts said. Fed Chair Jerome Powell on Tuesday appeared to cool expectations. “We believe the Fed is prepared to cut rates in July,” said Brown Brothers Harriman. “However, it seems clear from the most recent Fed comments that it is starting to push back a bit on the market’s ultra-dovish take on its policy. We do not believe the Fed will meet market expectations of 75 bp [basis points] of easing this year and nearly 50 bp next year.” Marc Chandler , chief market strategist with Bannockburn Global Forex, pointed out that the Chicago Mercantile Exchange’s federal funds model continues to price in about a 25% chance of a 50-basis-point move at the end of next month. “This seems way too high, given an economy that still appears to be growing faster than the Fed's estimate of the trend, even if slower than in the first quarter,” Chandler said. “Job growth has also slowed, but it is still quick enough to keep the unemployment rate at a generation low and to pull down the underemployment rate. Inflation is below target, but it is not that far from it.”

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

 

Standard Chartered: Gold ETPs On Pace For Strongest Month Since 2016

Wednesday June 26, 2019 08:45

Holdings of gold by exchange-traded products are on pace to post their biggest increase in three years, pointed out Standard Chartered. The amount of gold held by physically backed ETPs has risen to levels last seen in April 2013, the bank said. They climbed by 32 tonnes on Friday alone, the largest daily increase since July 2016. Analysts said inflows for June are set to exceed 100 tonnes for the first time since June 2016, which followed the U.K.’s Brexit vote.

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

 

SP Angel: Russia Benefits From Added Gold Reserves

Wednesday June 26, 2019 08:45

Russia has been upping its gold reserves for several years now in response to sanctions, and the tactic “appears to be finally paying off” as the precious metal this week climbed to the highest level since 2013, said commodities brokerage SP Angel. “Since being stung by sanctions for its aggression against Ukraine in 2014, Russia has been actively diversifying the composition of its international reserve,” SP Angel said. “The Kremlin and the Bank of Russia consider the risk of further restrictions unpredictable and dependent more on U.S. domestic politics. Russia added 274 tonnes to its reserves in 2018, bringing the total reserves to 2,113, analysts continued. “Gold appreciation in June has added about $7 billion to Russia’s international reserves, and if the price increase holds, gold will account for some 20% of Russia’s half a trillion dollars in international reserves, approaching the dollar’s share,” SP Angel concluded.

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