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Standard Chartered Expects Big Jump In 1H Central-Bank Gold Buying

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Central-bank gold buying in the first half of 2019 likely rose more than 50% from the same period a year ago, said Standard Chartered. Analysts noted that a survey of central banks by the World Gold Council shows that emerging-market nations are adding exposure to gold. In a survey of 39 central banks, 31% said they expected the U.S. dollar share of global reserves to fall. While the majority expect gold’s share to stay the same, 21% expect it to grow from the current 11%, Standard Chartered noted. “The key reasons cited for holding greater total reserves were as a buffer against balance-of-payments crises, as a consequence of exchange rate policy, and for monetary policy considerations,” Standard Chartered said. Analysts pointed out that the World Gold Council listed similar expectations in 2018, when 651 tonnes were added to reserves. “We estimate that H1-2019 buying rose at least 56% y/y [year-on-year], implying that buying for the full year could be close to 500t [tonnes] at the current run rate.”

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

 

Bannockburn: Markets Expect Federal Reserve Rate Cut

Friday July 26, 2019 08:46

Financial markets expect a Federal Reserve rate cut next week, with the main question being the size, said Marc Chandler, chief market strategist with Bannockburn Global Forex, LLC. “The market remains convinced the Fed will cut the target rate by 25 bp [basis points] next week, and those that don't think so expect it to move by 50 bp,” he said. “The news yesterday drives home why many in the market may be skeptical of the need. Leaving aside near record-high equity prices, the current economic performance does not need lower rates.” He cited the 1.9% jump in June orders of durable goods, plus a fall of 10,000 in weekly jobless claims to 206,000. “Admittedly, next week's nonfarm payroll growth is expected to moderate to around 160k from 224k in June, but that is still sufficient to keep the unemployment rate near the lows in a generation,” Chandler said.

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

 

Commerzbank: High Prices Hurt Chinese Gold Imports From Hong Kong

Friday July 26, 2019 08:46

High prices in the local currency dinged Chinese gold imports from Hong Kong last month, said Commerzbank. Analysts cited data from the Census and Statistics Department of the Hong Kong government showing that China imported only 14 net tonnes of gold from Hong Kong in June. “That’s 83% down year-on-year, and is due to the high local prices,” Commerzbank said. “Net imports in the first half year totaled 187.5 tonnes, which is 42% lower than in the same period last year. Last week already saw Switzerland report very weak gold exports to Asia.”

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