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Standard Chartered sees 'sustained upside risk to gold prices' in 2H

Kitco News

Standard Chartered has a positive outlook for gold prices, which appear to be bucking a seasonal trend by holding up after the Lunar New Year holiday. “Gold demand, and gold prices, tend to perform well at the start of the year, partly due to seasonal effects such as investors rebalancing portfolios, as well as physical demand in China firming ahead of the Lunar New Year,” the bank said. “Demand tends to ease as liquidity eases with the Lunar New Year holiday.” Still, Standard said, price action “has bucked this trend” as a flight to safety has prices near a seven-year high and equity markets have posted bouts of weakness. “We continue to see sustained upside risk to gold prices in H2-2020,” Standard said. In particular, “we believe lower yields, coupled with elevated geopolitical and political uncertainty towards the end of the year, are likely to buoy prices.” Standard’s foreign-exchange strategists are positive on the euro over the medium term. Gold’s correlation with the European single currency has weakened over the past year, with gold and the U.S. dollar at times both benefiting from safe-haven buying, Standard said. “But the relationship tends to strengthen as the USD weakens. While our positive outlook on gold is not predicated on USD weakness, USD weakness would add a string to gold’s bow.”

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

 

TDS: gold demand to rise as central banks suppress rates

Friday January 31, 2020 08:37

The amount of negative-yielding bonds in the world are rising again, and low rates should remain supportive for gold, said TD Securities. Analysts pointed out that “the reflation trade has prompted the global negative-yielding debt pile to grow by more than $2.5T [trillion] in the last two weeks. This should serve as a reminder of the scarcity in safe assets. With central bankers suppressing real rates across the globe, we think that investment demand for gold will continue to rise.”

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

 

Commerzbank: India’s gold demand should pick up again

Friday January 31, 2020 08:37

India’s gold demand may pick up in the second half of the year but the country likely will still trail No. 1 global consumer China in 2020, said Commerzbank. Analysts cited World Gold Council data showing that India’s gold demand fell 9% to 690 metric tons in 2019. The Gold Council looks for an uptick to 700 to 800 tons in 2020, but this would still be below India’s long-term average. “The WGC estimates that reforms being taken by the Indian government, such as tax cuts, will improve consumer confidence and drive up private spending,” Commerzbank said. “It also believes that Indians will in time get used to the higher gold price level. That said, gold demand is only expected to revive significantly in the second half of the year. Even if demand does increase, India will presumably continue to lag considerably behind China.”

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.