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UBS Sees Gold At $1,450 By End Of 2019

Kitco News

UBS looks for low yields to continue underpinning gold prices, calling for $1,450-an-ounce gold by year-end and $1,500 in 2020. “Beyond a period of near-term consolidation we think gold should rise again,” UBS said. “Over the longer term, the dollar and real rates are the two key drivers for gold prices. While the dollar may not provide much help, yields remain skewed to the downside, and should support the yellow metal. We expect gold to hit $1,450 by end 2019 and to rise modestly to $1,500 by end 2020….” Institutional investors have been driving gold prices higher lately, with the metal also supported by central-bank demand, UBS said. Low to negative rates suggest falling cost of holding gold at a time when elevated trade and geopolitical uncertainty strengthen the case for diversification,” the bank said. “Over the past few years, the percentage of official gold holdings to total reserves has been increasing in countries where holdings of U.S. Treasury securities have been falling. We see ample room for the trend of diversification into gold to extend.”

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

 

Metals Focus: Higher Tax Could Curb Gold Demand In India

Tuesday July 9, 2019 10:04

An increase on duties on gold imports into India will raise the price in the local currency and could cool demand, at least in the near term, said the consultancy Metals Focus. The Indian government hiked the tax Friday in the 2019-20 union budget. Metals Focus described the 2.5-percentage-point increase a surprise move since the “shocked” gems and jewelry industry was expecting an import duty cut. This is the highest tax on gold since the opening up of the gold market and liberalization of the Indian economy in the early 1990s, Metals Focus said. Over the years, the government has put a duty on gold imports in an attempt to control the rising current account deficit. Gold is the second-largest category for imports in the country, trailing only oil. With the news of increased duties, the local gold price surpassed 34,500 rupees per 10 grams, taking the price close to its all-time high, Metals Focus said. “Anecdotal evidence suggests that whenever prices jump sharply, consumers tend to hold back from making purchases until the price stabilizes,” the consultancy said. “A similar reaction appears likely, which could therefore hit near-term demand. That said, the next few months are a seasonally weak period and so consumers could well become accustomed to higher prices before the onset of the festive season in September.”

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

 

Commerzbank: Gold Prices Decline; 'We Blame Profit-Taking'

Tuesday July 9, 2019 8:38

Gold prices have fallen back below $1,400 an ounce. “We blame profit-taking for the latest price weakness in the wake of Friday’s U.S. labor-market data,” said Commerzbank. “In our opinion, there was and still is considerable potential for profit-taking. Since early June and until last Friday, gold ETFs [exchange-traded funds] had registered inflows of around 110 tonnes and speculative financial investors had expanded their net long positions by more than six-fold.” Still, the bank suggested gold’s rally is not over. “In view of the ultra-loose monetary policy pursued by many central banks and the numerous (geo)political risks, we expect gold to continue or resume its upswing,” Commerzbank said. As of 8:33 a.m. EDT, spot gold was $1.10 lower to $1,394.40 an ounce.

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

 

FXTM: Gold Prices On Wild Ride To Nowhere

Tuesday July 9, 2019 08:38

The gold market, once again was unable to hold $1,400 an ounce, continues to endure some of the steepest moves since 2016, said Han Tan, market analyst at FXTM. “Safe-haven assets are expected to hold less appeal should the Federal Reserve step back from its easing stance,” the analyst said. “With scant signs of an immediate deterioration on the U.S.-China trade front, investors are seizing the opportunity to ease off on the risk-aversion pedal.” Still, Tan added, “markets cannot discount the possibility of an unexpected surge in trade tensions, which means that markets have to remain fleet-footed or risk falling behind in the ensuing selloff from risk assets.”

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

 

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