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Commerzbank: Investment demand continues to underpin gold

Kitco News

Inflows of gold into exchange-traded funds have now risen for 21 business days in a row as investment demand continues to underpin the market, said Commerzbank analyst Daniel Briesemann. Spot gold Thursday climbed to a seven-year high of $1,618 an ounce. Briesemann noted the metal’s gains are somewhat surprising considering recent strength in equities and the U.S. dollar. “The thinking behind this appears to be that China, and possibly other countries, will implement stimulus measures such as rate cuts to boost their economies after the Covid-19 virus,” Briesemann said. As of 9:44 a.m. EST, spot gold was up $3.80 to $1,615.10 an ounce.

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

 

SP Angel: coronavirus to ding car sales, may impact palladium

Thursday February 20, 2020 09:585

Commodities brokerage SP Angel say some analysts wonder how long palladium’s dramatic rise will continue due to the impact of the coronavirus on China’s economy. SP Angel reiterated some of the highlights of the recently released Johnson Matthey report, which put a palladium supply/demand deficit at more than 1 million ounces in 2019 and suggested the gap will be even wider than this year. Demand has been boosted by more stringent emissions regulations, meaning more palladium required for each auto catalyst. However, SP Angel pointed out, the chief executive of Faurecua, a French-based company that develops automotive technology, believes Chinese auto sales could fall by 1.2 million vehicles this year. Also, the chairman of the China Association of Automobile Manufacturers has said auto sales will drop by more than 10% in the first half of 2020. “The economic knock-on effects of the virus depend on the extent to which the virus spreads, and as it has not yet been contained, it is hard to predict how the auto market will be affected,” SP Angel said. “However as the death toll continues to rise and more people don’t go to work, buyer demand will continue to fall and supply chains in the auto industry will continue to be disrupted.” Palladium topped $2,800 an ounce for the first time ever Wednesday. As of 8:44 a.m. EST Thursday, the metal was down $18to $2,597 an ounce.

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

 

CIBC looks for U.S. dollar to eventually weaken

Thursday February 20, 2020 09:585

Canadian bank CIBC looks for the U.S. dollar to give up some of its recent strength. The U.S. currency has attracted buying as a safe haven amid worries about the coronavirus in China. “However, so long as coronavirus fears dissolve over the next few months, the greenback should give back that strength,” CIBC said. Europe’s economic picture remains “murky” and the factory sector remains weak. Thus, bank said an eventual recovery in both the euro and sterling (as Brexit unfolds) will therefore be later and shallower than CIBC’s prior forecasts. Still, the strengthening of other major currencies “should then see the dollar weaken in the medium term. In the long-run, the U.S.’s inferior current account balance relative to other countries, such as Europe’s and Japan’s, should favor those currencies and accordingly see the dollar weaken.”

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

 

Commerzbank: Asian gold demand muted

Thursday February 20, 2020 09:585

Gold demand in Asia remains muted, said Commerzbank analyst Daniel Briesemann. He cited data from the Swiss Federal Customs Administration showing that the country exported “only” 40.6 metric tons of gold to China and Hong Kong in January, and as little as 9 tons to India. “And demand in the two leading gold-consumer countries is likely to remain subdued given that gold prices there are very high (at nearly a record high in India and at their highest level in 7½ years in China),” Briesemann said. “The situation in China is currently compounded by the Covid-19 virus, as a result of which many jewelers are still closed.”

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.