Despite gold’s bounce above $1,100 last week, analysts at Triland Metals say they expect prices to weaken. “The key thing for the financial markets is that a relative sense of calm is returning to the equity markets and this is one of reasons we are seeing a softer precious price,” they said in a research note Wednesday afternoon. “Gold slipped to $1080 today not too long after every man and his dog believed that things were changing in the gold space last week up at $1,110.” Gold is back in “no man’s land below $1,100,” the firm said in a research note. “The metal bounced $10 from this area and there is a chance we could rally back up to $1100 but expect resistance there at the 61.8% [retracement]. February comex gold futures traded were last quoted up $1.50 at $1,086.70 an ounce.
By Sarah Benali of Kitco News; sbenali@kitco.com
Global Central Bank Gold Buying Accelerates; China On Radar – Capital Economics
Wednesday January 13, 2016 13:14
The World Gold Council’s gold reserve data for November is out, showing that global central banks continued to be on a buying spree, and one UK-based research firm expects it to continue, particularily from China. “Buying of gold by global central banks accelerated in November, with China and Russia once again particularly active,” noted Simona Gambarini, commodities economist for Capital Economics. “We expect further official purchases to be one of several factors supporting the price of gold in the next few years.”According to the WGC’s data, 55 tonnes of gold were added to central banks’ reserves in November, up almost 90% from the prior month. “China and Russia were once again the biggest buyers with 21 tonnes and 22 tonnes added to their respective reserves,” she said, adding that the People’s Bank of China (PBoC) released data last week that showed 19 tonnes were added in December as well. Gambarini suggested that central banks from developing economies will be the main source of demand from the official sector moving forward. “Indeed, the amount of gold held by the PBOC still only accounts for around 1.7% of its total reserves,” she said. “This is very low by the standards of other central banks, suggesting that there will be more buying to come.”
By Sarah Benali of Kitco News; sbenali@kitco.com
Commerzbank: Investors Continue To Move Into Gold Exchange-Traded Funds
Wednesday January 13, 2016 09:46
Investors have continued to move into gold exchange-traded funds, unfazed by the recent pullback in prices, says Commerzbank. “Holdings in the gold ETFs tracked by Bloomberg were topped up by an additional 4.9 tonnes yesterday – the fourth sizeable daily inflow in a row,” Commerzbank says. “During this time, inflows have totaled 24.5 tonnes.” The ETFs trade like a stock but track the price of the commodity, with metal put into storage to back the shares.
By Allen Sykora of Kitco News; asykora@kitco.com
UBS: Commodity Index Rebalancing Plays Role In Capping Gold, Silver
Wednesday January 13, 2016 09:45
The annual rebalancing of funds in commodity indexes is under way and could be one of the factors capping gold and silver for now, says UBS. Based on settlement prices on Jan 6, around 1.44 million ounces of gold and 15.84 million ounces of silver are going to be sold during this year's rebalancing for both the Bloomberg Commodity Index and the S&P GSCI, UBS says. The rebalancing began Friday and ends on Thursday. “To put 1.44moz worth of gold futures contracts into context, the average weekly change in gold net longs last year was around 1.98moz,” UBS says. “Alternatively, it is similar to the net outflow in gold ETFs back in November (around 1.48moz). It is a sizeable amount that could weigh on the market. However, given that index rebalancing is a well-anticipated event, many market participants could have already positioned themselves accordingly.” For silver, 15.84 million ounces worth of futures contracts is also “quite chunky even though it is 45% lower than the average weekly change in Comex positioning,” UBS says.
By Allen Sykora of Kitco News; asykora@kitco.com
HSBC: Silver, Platinum Group Metals Should Find Support
Wednesday January 13, 2016 09:45
HSBC looks for silver and platinum group metals to start finding support after recent weakness. In fact, all are up so far Wednesday. The bank suggests any further declines in silver will be limited since retail investor demand, such as for coins, appears good. “This does not necessarily mean there will be an immediate turnaround for silver, but we do think physical demand will help put a floor on prices,” HSBC says. “PGMs experienced further losses (on Tuesday) but both platinum and palladium benefited from bargain hunting and odd-lot buying, which helped stabilize prices. We suspect that more buying will greet any further losses as both markets look increasingly oversold.”
By Allen Sykora of Kitco News; asykora@kitco.com
TDS Sees Gold In Range While ‘Ambiguity’ About Next Fed Move Persists
Wednesday January 13, 2016 09:45
TD Securities looks for gold to trade in a range of roughly $1,070 to $1,113 an ounce while there is “ambiguity” on whether the Federal Open Market Committee will hike interest rates again in March. Policymakers upped rates for the first time in nearly a decade last month, but minutes of the meeting have been construed as dovish. “However, there seems to be some disconnect between what the Fed is saying and the market is pricing in; the Fed is talking four hikes this year and the market is pricing in two with a decreasing likelihood of an increase in March,” TDS says. “If U.S. macro numbers continue to exhibit strength and global markets stabilize, the recent gold rally may well post a robust reversal.”
By Allen Sykora of Kitco News; asykora@kitco.com
MKS: Gold Backs Down From 100-Day Moving Average
Wednesday January 13, 2016 09:45
On the technical charts, gold has undergone a pullback after hitting the 100-day-moving average around $1,108 an ounce multiple times last week and Monday, says MKS (Switzerland) SA. The next downside support level rests around $1,080, which is the 50% retracement of the move from the December low to the January high, and the 50-day average near $1,076. Resistance sits at $1,097-98, then the 100-day average. With China’s currency seeming to stabilize, there could be some more unwinding of long gold positions in the short term, MKS says. “We believe this should be absorbed by increasing physical demand from Asia in the lead-up to Chinese (New Year) and believe dips towards $1,070-80 present a decent buying opportunity,” MKS says. “If the metal can sustain a break through the $1,107-1,113 area, a move towards the 200 DMA (day moving average) at $1,136 is likely.”
By Allen Sykora of Kitco News; asykora@kitco.com
Metals Focus: Bullish On Palladium In Long Term; Near-Term Concerns Remain
Wednesday January 13, 2016 09:06
Metals Focus has a bullish long-term view on palladium, but adds this doesn’t mean that concerns about the near term persist. The commodity was down some 17% for the year so far as of Tuesday, even though most analysts anticipate a supply deficit in 2015. The main driver appears to be weakness in U.S., Chinese and other equities, Metals Focus says. Also, while there may be an annual supply-production deficit, there is nevertheless a persistent inventory overhang, the consultancy continues. “We estimate that by end-2015, there were 13.7Moz of palladium stocks in the market, accounting for 16 months of demand,” Metals Focus says. This leaves palladium prone to investor whims. Still, the consultancy anticipates growth in auto-catalyst demand for the metal, with the above-ground inventory likely to be halved by 2020. “With this in mind and given our belief that eventually market fundamentals will reassert themselves, we remain palladium bulls in the long run,” the consultancy says. “At the same time though, it would be misleading to say we are not concerned about the near-term prospects for the metal. Western investor attitudes towards China and other emerging markets are so negative they are reminiscent -- and indeed the mirror image -- of their over-exuberance only a few years ago.”
By Allen Sykora of Kitco News; asykora@kitco.com
