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Commerzbank note some nonsensical gold selling

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(Kitco News) - In the latest research note written by Carsten Fritsch commodities analyst, Commerzbank highlights gold got caught up initially in the downward spiral of the tumbling commodities markets. Its price dipped for a time below the $1,800 per troy ounce mark, apparently because the appreciating US dollar weighed more heavily than the decline in nominal and real bond yields.

He added, Gold found itself at a disadvantage versus the US dollar and bonds as a safe haven amid rising risk aversion. The 100-day moving average at a good $1,790 held firm, however. Gold recovered again during the further course of trading and closed at a good $1,810. It is initially making further gains today to just shy of $1,820. No matter how one attempts to explain it, however, yesterday’s weakness of the gold price doesn’t really make sense.

Fritsch then said "Ten-year yields in the US have fallen below the 1.2% mark for the first time since February. Market-based inflation expectations likewise decreased due to the risk aversion, though to a lesser extent. Consequently, real yields dropped for a time to nearly -1.1%, which last happened at the beginning of the year. At least ETF investors did not continue selling yesterday, which can be regarded as a positive sign. We view the latest weakness of the gold price as a temporary anomaly and expect it to recover noticeably just as soon as the headwind from the appreciating USD abates."

Adding to this there was some flow to take note of as The Swiss Federal Customs Administration published its gold export data for June this morning. They show that shipments to India totalled a muted 6.3 tons. Considerably more gold was shipped to China and Hong Kong, namely 19 tons and 12.7 tons respectively. By contrast, shipments to the US and the UK were unusually high, at 28.2 tons and 38.4 tons. June saw Comex gold inventories rise by just shy of 900,000 ounces or 27.8 tons, which may explain the shipments to the US. ETFs registered no net inflows last month, on the other hand, which makes the high shipments to the UK surprising.

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