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Bannockburn: coronavirus is 'overriding driver today' in markets

Kitco News

Global markets are focused on a spike in deaths and infections from China’s coronavirus, said Marc Chandler, managing director with Bannockburn Global Forex.The increase appeared to be in large part due to new testing methods. “There is one overriding driver today, and that is the incorporation of CAT scan diagnoses of the virus in Hubei, [which is] ground zero,” Chandler said. “This follows the arrival of WHO [World Health Organization] officials into China a couple days ago. Not only have the cases jumped, but so did the number of deaths.” There are fears that China’s figures are not reliable, and some observers are “incredulous” that Indonesia has reported no cases, he continued. “Investors have responded by taking a little risk off the table,” Chandler said, noting that most Asia-Pacific stock bourses fell and U.S. stock indices are also lower. As of 11 a.m. EST, the Dow Jones Industrial Average was down by 102 points. Against this backdrop, spot gold was up $10.20 to $1,576 an ounce.

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

 

Metals Focus: Germany ‘one of the few bright spots’ for retail gold demand

Thursday February 13, 2020 11:06

Analysts with the consultancy Metals Focus said this week that a recent trip to the Berlin World Money Fair confirmed “ongoing challenges” facing retail gold investment in Europe and North America this year. However, they also said, Germany is one country where the demand has been picking up. They pointed out that both European and North American gold retail investment recorded consecutive annual losses from 2017 to 2019, during which time volumes fell by 24% and 75%, respectively. However, Germany is “one of the few bright spots” to emerge from the World Money Fair, the consultancy said. “While the full-year figure for 2019 still points to a small decline in German retail investment, this was due to significant weakness early in the year,” Metals Focus said. “Net purchases then rebounded strongly in the final two months of 2019. While demand has eased since late January, volumes have (overall) remained healthy so far this year.” The improvement began with the federal government’s decision to lower anonymous cash purchases in Germany from €10,000 to €2,000, effective Jan. 1, Metals Focus said. They noted that Germany has a “deep historical affinity for cash.” Yet another factor supporting German retail investment is negative interest rates, Metals Focus added. And, analysts said, “record euro gold prices also boosted investor confidence in the yellow metal.”

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

 

Commerzbank: ‘virtually no upside potential’ for platinum this year

Thursday February 13, 2020 11:06

Platinum prices are unlikely to rise much this year and palladium could be due for a downward correction, said Daniel Briesemann, analyst with Commerzbank.He issued the assessments the day after Johnson Matthey published widely followed reports on platinum and palladium. Johnson Matthey said the global platinum market had a supply deficit of 203,000 ounces last year mainly due to record investment. Otherwise, auto and jewelry-related demand were lower. “According to Johnson Matthey, the platinum market is set to switch back into supply surplus in 2020 unless investment demand remains close to its previous year’s level,” Briesemann said. “We believe this is unrealistic. However, the platinum ETFs [exchange-traded funds] tracked by Bloomberg have at least seen inflows of a good 30,000 ounces since the start of the year. We see virtually no upside potential for the platinum price this year.” Meanwhile, Johnson Matthey reported a 1.2 million-ounce palladium supply deficit in 2019 due to strong demand for use in automotive catalysts. Johnson Matthey anticipates an even bigger deficit in 2020. However, said Commerzbank’s Briesemann, “Even if the global palladium market remains in deficit for the ninth consecutive year in 2020, we expect to see a marked price correction because the market has become overheated in our opinion.”

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