JP Morgan cuts gold price forecast following sharper than expected Q1 sell-off

Otmane El Rhazi from The Bullion Desk.

The dramatic dip in gold during February and early March has prompted JP Morgan Chase to cut its full year 2015 forecast by 3.6 percent to $1,188 per ounce with quarterly averages ranging from $1,150 to $1,190.

Gold futures on the Comex division of the New York Mercantile Exchange fell from a peak of $1,309 on January 22 to a recent bottom of $1,142.00 per ounce on March 17. The yellow-metal has since rebounded to $1,187.10.

“We still forecast prices will trend lower in the second and third quarters as US interest rate hikes approach but gold could receive temporary boosts from geopolitical events. Seasonal strength in physical buying in fourth quarter should provide price support,” JP Morgan said in a report released on Tuesday.

The bank underestimated the depth of the sell-off from end of January until the FOMC meeting in March. A strengthening dollar and shifting expectations of a less ‘patient’ Fed drove prices below $1,150, it said.

“As such, the rally we were expecting in March began at a much lower price level and our first quarter base case price forecast proved to be more than $80 per ounce too high,” in added.

Looking forward, tactical buying as a result of the FOMC meeting will subside as oil prices stabilize and concerns regarding global growth recede into mid-year, JP Morgan said.

“From a geopolitical perspective, gold prices could receive temporary boosts throughout the quarter from continued conflict in the Middle East, especially with the recent escalation of conflict in Yemen, as well as the ongoing nuclear negotiations with Iran,” JP Morgan said.

It forecasts gold will average $1,190 in the second quarter, down 2.4 percent quarter-on-quarter, before dropping another 3.4 percent in the seasonally weak third quarter to average $1,150.

“We believe the seasonally stronger – especially for physical demand – fourth quarter will provide some upward momentum to gold prices even as US interest rates are likely to begin their ‘gradually paced’ hikes and forecast prices to average $1,190,” JP Morgan said.

In 2016, JP Morgan expects the average prices will decline nearly two percent $1,168 but prices will likely find support against a larger move lower as US rates still remain low and likely negative in real terms.

As for physical supply/demand dynamics, JP Morgan said that Asian buying has been muted year-to-date.

“This is especially unexpected considering the sharp drop in gold prices in the first half of March and the fact that, unlike in Europe, exchange rates have largely not distorted the price declines. Gold priced in rupee and yuan dropped 5.4 percent and 6.7 percent, respectively, since the end of January, similar to the decline in the price of US dollar-denominated gold,” the bank said.

In India, gold imports have been relatively subdued so far this year, despite the removal of the 80/20 rule in November 2014. Furthermore, the government’s decision to maintain the 10 percent import duty on gold will also likely dampen physical demand and imports this year relative to our previous expectations, JP Morgan said.

“This trend has been echoed in China as investors are gaining more flexibility to switch into equities,” the bank said. “Yet, our strategists have closed their overweight on Chinese equities and if they are correct, we could see greater gold purchases going forward if equity markets cool off.”

“Overall, we still expect seasonality in Asian, especially Indian, purchasing to remain in place with demand picking up in fourth quarter but the muted first quarter has tempered our expectations on Asian physical demand and its corresponding support to gold prices through the coming quarters,” it concluded.

The post JP Morgan cuts gold price forecast following sharper than expected Q1 sell-off appeared first on The Bullion Desk.

Gold price ticks higher but dollar remains strong – BULLION AFTERNOON

Otmane El Rhazi from The Bullion Desk.

Gold price edged higher on Tuesday afternoon but remains below the psychological $1,200 level on sustained dollar strength in what has been a busy day for data.

The spot gold price was last at $1,187/1,188 per ounce, up around $1 on Monday’s close, having hit an intraday low of $1,178 earlier this morning. It has traded in an intraday range of around $13.

In currencies, the dollar remains strong – it was last at 1.0754 against the euro, a gain of around three-quarters of a cent. The single currency is under pressure from concerns surrounding Greece’s ability to meet EU bailout terms, while in the US the Fed moves ever closer to raising interest rates from near-zero levels, which would be supportive of the dollar.

“There seems to be a consensus amongst traders at the moment the dollar is set to resume its bull run in the short term, which should keep the upside capped for the precious complex,” MKS Finance noted.

“That being said although gold is looking soft at present, it is proving to be fairly resilient when comparing to other commodities – namely base metals, crude and the PGMs,” the broker added.

In data today, Japanese housing starts at -3.1 percent beat the forecast -7.0 percent and were up strongly from the previous -13 percent.

German retail sales and the country’s unemployment change were both better than expected, while French consumer spending undershot.

The unemployment rate for the eurozone as a whole fell to 11.3 percent from 11.4 percent but missed the expected drop to 11.2 percent. The CPI flash estimate was -0.1 percent, better than the forecast -0.3 percent, while the core CPI flash estimate at 0.6 percent was in line.

But the Italian monthly unemployment rate was also worse than expected at 12.7 percent and its preliminary CPI at 0.1 percent also undershot.

From the US, the Chicago PMI disappointed at 46.3, while the CB consumer index was better than expected at 101.3.

The Chinese HSBC flash manufacturing PMI and manufacturing numbers scheduled for Wednesday and Friday’s blockbuster US jobs data – the country is expected to have added 251,000 non-farm jobs this month, down from 295,000 in February – will be closely watched.

In the other metals, platinum was last $19 higher at $1,137/1,142 per ounce while silver was largely unchanged at $16.69/16.74 as was palladium at $728/733 – the metal hit a one-year low yesterday at $723.

“The technical picture has become even more gloomy, in other words, meaning that we cannot rule out further price slides in the near term,” Commerzbank said in a note.

(Editing by Mark Shaw)

The post Gold price ticks higher but dollar remains strong – BULLION AFTERNOON appeared first on The Bullion Desk.

Metals Focus forecasts gold price to average $1,190 in 2015

Otmane El Rhazi from The Bullion Desk.

Metals Focus sees a more stable gold price this year despite a forecast for a wider market deficit, it said.

It sees the metal averaging $1,190 in 2015 after bottoming out at $1,080, it said in a report on Tuesday, This suggests reduced volatility in the market this year, with gold currently trading around $1,180 per ounce, effectively unchanged since the start of the year.

Selling pressure will emanate from a forecast 73-percent drop in net investment in ETF holdings following a drop of 80 percent in 2014, it said. But pressure may well be limited by better prospects for gold bar sales in Asia, following a slump in demand in 2014 owing to a reversal in the Chinese market.

“Taken together, this is suggestive of overall stability if not a modest improvement in global investment demand for gold compared to 2014. Moreover, other supply and demand factors should also at least mitigate the decline in the US dollar gold price this year,” Metals Focus said.

On the supply side, the firm forecasts overall supply of 4,335 tonnes, with a 14-tonne drop in mine production in 2015 to 3,119 tonnes from record levels in 2014.

This suggests the huge growth in world mine output over the past two decades has come to an end.

“Further downside in mine production is expected in the medium term as low prices shorten mine lives and reduce the project pipeline,” it said.

“Little change year-on-year is also forecast for scrap supply, but in this case the more relevant comparison may be with the far higher levels of recycling experienced in 2010-12. Pressure on the price from old scrap supply has therefore been alleviated considerably,” it added.

On the demand side, the firm forecasts overall demand at 4,446 tonnes, giving a larger deficit of 112 tonnes following a deficit of 28 tonnes in 2014.

Jewellery consumption is expected to grow three percent. Metals Focus says that this healthier picture for demand will protect the downside on gold, with most of the demand expected to come from the key Chinese and Indian markets.

It sees overall jewellery consumption at 2,534 tonnes, with 1,058 tonnes coming from the East Asia region and 688 tonnes from the Indian sub-continent.

Support will also come from central bank purchases although Metals Focus forecasts another fall in net purchases in 2015 at 519 tonnes following the net drop of 60 tonnes in 2014 to 588 tonnes.

“Although net purchases dropped in 2014 they were still exceptionally high by historical standards. Moreover, gross sales were once again trivial, with buy-side interest dominating central bank activity. This is expected to remain the case in 2015, as a number of countries will want to build up their gold holdings for reserve diversification purposes,” it said.

On the predicted increase in US interest rates, which many believe will equate to downside pressure on gold, Metals Focus said that it will “paradoxically remove a major headwind for gold as an investment”.

“This is premised on the assumption that increases will be slow and modest, leaving real short-term rates in negative territory for some time to come,” it added, attributing this to the US economy’s dependence on high absolute levels of household debt and private consumption.

Authorities will therefore be hesitant to derail the recovery by allowing the debt service ratio to get too high.

Metals Focus is “cautiously pessimistic” on the dollar gold price for 2015.

“We believe that 2015 could well represent a bottom with a clearer turning point becoming visible in 2016,” it said. “In part, this is due to gold’s supply/demand fundamentals adjusting to the new price reality and providing a more stable foundation for an eventual investor-driven rebound in gold prices.”

Several potential sparks for a renewed gold bull market from 2016 include “potentially ‘gold-friendly’ developments in debt, inflation, foreign exchange, commodity and equity markets and the scope for a far more malign environment for international relations to develop over the next few years”, it added.

(Editing by Mark Shaw)

The post Metals Focus forecasts gold price to average $1,190 in 2015 appeared first on The Bullion Desk.

Gold price still under pressure from strong dollar, firm equities – BULLION MORNING

Otmane El Rhazi from The Bullion Desk.

Gold price remained below the psychological $1,200 level on Tuesday morning, under pressure from a strong dollar and increased appetite for risk.

The spot gold price was last at $1,180/1,180.9 per ounce, down $6.20 on Monday’s close and around its weekly low.

The dollar remains upbeat following the release of positive US data on Monday – it was last at 1.0728 against the euro, a cent stronger, with the single currency under pressure from concerns surrounding Greece’s ability to meet EU bailout terms.

“There seems to be a consensus amongst traders at the moment the US dollar is set to resume its bull run in the short term which should keep the upside capped for the precious complex,” MKS said in a note.

Speculation of additional policy easing in China supported global equities and risk appetite, which has probably weighed on gold, HSBC Securities said in a note.

People’s Bank of China (PBoC) governor Zhou Xiaochuan said over the weekend that the dollar could grow “too strong” and that there is more room for Beijing to ease monetary policy further to boost its economy if needed. Growth has slowed, he noted, but the central bank has room to act on interest rates or with fresh quantitative easing measures.

Chinese authorities also intervened to fight the slowdown in the housing market. On Monday, the finance ministry decided to reduce the threshold of the capital-gain tax exemption to two years from five years after the PBoC lowered the minimum down payment requirement for buyers of second homes to 40 percent from 60 percent.

In a busy day for data, Japanese housing starts at -3.1 percent beat the forecast -7.0 percent and were up strongly from the previous -13 percent.

German retail sales and the country’s unemployment change were both better than expected, while French consumer spending undershot.

The unemployment rate for the eurozone as a whole fell to 11.3 percent from 11.4 percent but missed the expected drop to 11.2 percent. The CPI flash estimate was -0.1 percent, better than the forecast -0.3 percent, while the core CPI flash estimate at 0.6 percent was in line.

But the Italian monthly unemployment rate was also worse than expected at 12.7 percent and its preliminary CPI at 0.1 percent also undershot.

From the US, the Chicago PMI and CB consumer confidence are due but the Chinese HSBC flash manufacturing PMI and manufacturing numbers scheduled for Wednesday and Friday’s US non-farm payrolls data will also be closely watched.

In the other metals, silver was largely unchanged at $16.50/16.55 per ounce while palladium at $734/739 was up $6 – the metal hit a one-year low yesterday at $723.

Although the metal had outperformed gold, silver and platinum since the start of the year, MKS expects “further liquidation on rallies back towards $750″ after it breached technical support last week.

Platinum was last at $1,119/1,124 per ounce, up $1.

(Editing by Mark Shaw)

The post Gold price still under pressure from strong dollar, firm equities – BULLION MORNING appeared first on The Bullion Desk.

Gold price pressured by stronger dollar, focus on risky assets

Otmane El Rhazi from The Bullion Desk.

The gold price stayed below the $1,200 with a stronger dollar weighing and more focus on risk assets this week.

Spot gold price was last seen at $1,181.70, about $5 lower than where it ended on Monday. Silver was lower too, declining almost 30 cents to the current $16.44 per ounce.

The release of better-than-expected data in the US overnight helped to buoy the dollar, in turn pressuring the precious metal.

Pending home sales far bettered expectations of 0.5 percent at 3.1 percent, as did personal income figures at 0.4 percent.

The dollar has sustained its higher position and was last seen at 1.0794 against the euro.

The stronger data also helped US equities to end in the green overnight – the three key indices, the Nasdaq, Dow Jones and S & P 500 were all up between 1.1 to 1.5 percent.

Comments made by the governor of the People’s Bank of China on the potential for additional monetary stimulus helped equity markets, especially Chinese stocks, to start the week on a positive note as well. Further announcement of a loosening policy to support the Chinese property markets further propped up stocks today.

“Speculation of additional policy easing in China supported global equities and risk appetite, which likely weighed on gold,” said a research note from HSBC Securities.

The PGMs fell together with gold, with palladium hitting a one-year low on Monday. The metal slipped to $723 per ounce yesteday, its lowest since February 2014. Current prices are stagnant at $730 where it ended yesteday.

Platinum was lower as well, dipping $7 to $1,114 per ounce currently.

“Platinum faces an important support level around $1,100 per ounce. Based on fundamentals, we believe this level should hold but investor sentiment is negative and be more influential short term, than underlying fundamentals,” HSBC Securities’ analyst James Steel said.

The post Gold price pressured by stronger dollar, focus on risky assets appeared first on The Bullion Desk.

Natixis forecast sees gold price averaging $1,150/oz in 2015

Otmane El Rhazi from The Bullion Desk.

The gold price could average $1,150 and $1,055 per ounce in 2015 and 2016 respectively as the normalisation of Federal Reserve monetary policy and further currency weakness in Europe and Japan drive the dollar higher, Natixis said in a report released on Monday.

The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first increase will happen in the second half of this year.

“As a result of the improving US economy and higher interest rates, so we expect that yields will continue rising. This raises the opportunity cost of holding gold which could in turn lead to an outflow from investors holding the metal,” the French bank said.

As a result, Natixis says that it “would not be surprised” to see a small acceleration in outflows of physically-backed ETPs as US interest rates rise.

The effect of central banks activity on the gold market should be neutral, Natixis says, with only modest outright purchases and small amounts of selling taking place, though more banks are expected to repatriate metal.

“While repatriation will not have a direct effect on gold prices, it could influence gold lease rates if less gold becomes available for lending,” the bank notes.

In the physical markets, the bank says that unless India reduces its 10 percent import duty, Asian demand will remain at weaker levels than in previous years.

The bank does however note that geopolitical tensions could drive up gold prices. “Although the tensions between Russia and Ukraine have already been factored into gold prices, further expansion of Russian ambitions in Ukraine and other Baltic countries could also raise the price of gold,” it said.

On the supply side, mining output growth will likely help to compensate for a drop in scrap supply of gold, Natixis says, with demand and in particular investor demand expected to weaken.

Though if the gold price does indeed continue to fall, prices will approach the all-in sustaining cash cost of production, which Natixis says could see more producers become inclined to hedge.

“In our worst case scenario, we could see gold prices averaging $1,050 per ounce in 2015, which could take fourth-quarter prices to as low as $950 per ounce, followed by an average of $825 per ounce in 2016, close to the average cash costs of production,” the bank said in its report.

“Looking at our high case scenario, in a situation where economic challenges in Europe continue to mount and Greece exits in a disorderly way, we could potentially see gold prices rising sharply,” it adds.

Natixis’ high case scenario sees gold average $1,350 per ounce in 2015 and $1,600 in 2016.

Gold futures on the Comex division of the New York Mercantile Exchange are currently trading at $1,187.00 per ounce.

(Editing by Tom Jennemann)

The post Natixis forecast sees gold price averaging $1,150/oz in 2015 appeared first on The Bullion Desk.

GOLD WEBCAST – Gold price fluctuating around $1,200 as dollar recovers losses

Otmane El Rhazi from The Bullion Desk.

The gold price has been fluctuating around the $1,200 on Friday afternoon, with a stronger dollar and a fading geopolitical premium weighing on sentiment. Gold was initially struggling to breach $1,200 for most of the week until news on Thursday that Saudi Arabia and several of its regional allies had initiated military action on rebel-held areas in Yemen, which saw the return of a geopolitical premium on t The effect now however is waning as we head into the weekend, with a close below $1,200 looking possible. Next week also sees a spate of metals-sensitive data, including manufacturing and inflation data, as well as the blockbuster non farm payroll report out of the US.

The post GOLD WEBCAST – Gold price fluctuating around $1,200 as dollar recovers losses appeared first on The Bullion Desk.

Gold price dips below $1,200 as dollar rebounds

Otmane El Rhazi from The Bullion Desk.

The gold price slipped back below the key psychological level of $1,200 on Friday morning, with a stronger dollar and a fading geopolitical premium weighing on sentiment.

Spot gold was last at $1,197.20/1,198.00 per ounce, down $5 on Thursday’s close – it hit a near-one-month high in that session at $1,119.90.

Other metals reacted similarly – silver was last four cents lower at $16.99/17.04 per ounce, while platinum was down $5 at $1,141/1,146 and palladium fell $7 to $758/764.

“Gold, silver and platinum have had strong rallies while palladium remains subdued,” FastMarkets analyst William Adams said. “We feel the strong rallies have run into profit-taking and some scale-up producer selling – the slight rebound in the dollar is also likely to have created more of a headwind.”

“We will see whether underlying sentiment has become more bullish by seeing how the market handles any price dips,” he added.

Brent crude oil was lower at $58.20 per barrel despite concerns that oil shipments out the Middle East may be affected by the military campaign against the Houthi militia in Yemen launched by Saudi Arabia and several of its regional allies.

Also weighing on the precious metals is a resurging dollar, which has powered to an intraday low of 1.0801 against the euro, having traded at near three-week lows on Thursday around 1.10, after several Federal Reserve officials alluded to the timing of am increase in US interest rates from near-zero levels

Fed policymaker James Bullard suggested that now would be a good time to normalise US monetary policy so that it is “set appropriately for an improving economy over the next two years” and Atlanta Fed president Dennis Lockhart also claimed that the economy is in a solid position for a tightening in monetary policy.

This afternoon’s final GDP figure out of the US, forecast at 2.4 percent, will be monitored for its influence on the near-term direction of the dollar, which had until Friday been gradually retreating on dovish comments from Fed chair Janet Yellen regarding the pace of growth in the world’s largest economy.

Yellen is due to speak this evening on monetary policy at a Federal Reserve conference in San Francisco.

In other data, German import prices at 1.4 percent outperformed expectations at 0.5 percent, while Italian retails sales were as predicted at 0.1 percent.

(Editing by Mark Shaw)

The post Gold price dips below $1,200 as dollar rebounds appeared first on The Bullion Desk.

Gold price consolidates, geopolitical tension prompts safe-haven buying

Otmane El Rhazi from The Bullion Desk.

The gold price stayed afloat above $1,200 although it has fallen from the 3-week high seen on Thursday.

The buying in gold was thought to have been inspired by safe-haven seekers as tensions escalated in the Middle East following Saudi Arabia initiated military action on rebel-held areas in Yemen.

“Gold rose with crude oil in early trading from what we suspect was ‘safe-haven’ inspired buying…gold hisorically rallies during bouts of rising geopolitical tensions but these gains tend to be very fast moving and can be easily given back once the market shifts its focus away from the issues,” said analyst James Steel from HSBC Securities.

Spot gold price was last seen at $1,202 per ounce, just a dollar lower from where it closed yesterday. On Thursday it peaked at $1,219.90, its highest since March 2. Silver is two cents lower at $17.05 per ounce.

Gold was up overnight despite gains in the greenback – the dollar which saw recent sharp falls also started to rebuild gains, with the recent high in the euro prompting traders to re-establish long positions. The dollar index ended the day higher at 97.35 from 96.93

Supporting the gains was weekly unemployment claims at 282,000, better than the forecast 291,000, as was the flash services PMI at 58.6 against consensus at 57.2, the sharpest increase in business activity in the sector since September 2014.

The US fourth-quarter GDP figure, which is expected to be revised higher, is due today.

The PGMs pared back some gains this morning, with platinum $4 lower at $1,148 and palladium slipping $6 to $764 per ounce.

The post Gold price consolidates, geopolitical tension prompts safe-haven buying appeared first on The Bullion Desk.

US interest rate rise may not be bad news for gold prices – WGC

Otmane El Rhazi from The Bullion Desk.

Higher US interest rates may not be as negative for gold as many believe, the World Gold Council has claimed.

The relationship between gold and interest rates is more complex than it seems and weaker than it was previously, it said in a report on Thursday.

“Other factors influence gold – including some positively correlated to economic growth – highlighting its role as a key diversification and risk-management portfolio asset. This is an increasingly important role, as both stocks and bonds may deliver lower-than-average returns in coming years,” it added.

Speculation over when the US may choose to raise interest rates from near zero, where they have been since 2008, has been heated over the past 12 months.

While the Federal Reserve was initially expected to lift rates for the first time in a decade in June, a run of mixed data, low inflation and dovish comments from chair Janet Yellen on the country’s rate of growth has pushed back the timetable.

When rates do rise, the general consensus is that gold will come under heavy downside pressure on gold – the opportunity cost of holding the metal will rise, pushing investors to yield-bearing assets.

“However, jewellery and technology demand make up almost 60 percent of annual physical gold demand,” The WGC says. “For these markets, there is an indirect positive relationship to interest rates – higher interest rate cycles typically coincide with higher economic growth and consumer spending.”

Europe and North America account for only 17 percent of total gold demand, according to the WGC, of which only 60 percent is linked to investment.

As well, the US interest rate argument is not as strong as it once was – the case was built largely on an analysis of gold and interest rate performance during the 1970s and 1980s, when economic conditions were very different from today, the WGC said.

“The gold market is different too,” it said. “Developed-market gold demand has declined to less than 30 percent over the past decade from more than 60 percent in the 1970s. Emerging-market demand, which accounts for 70 percent per year, is less sensitive to US rate changes, and to a great extent jewellery and technology demand is pro-cyclical.”

On the investment side, the metal’s credentials as a portfolio diversifier will also endure.

“Gold has been reliably effective at diversifying investment portfolios and reducing risk at real interest rates even when interest rates are positive, up to 4 percent,” the WGC said.

Current short-term US real rates are still very low and far from that threshold. As of December 31, the three-month and 1-year US Treasury-bills were yielding -0.73 percent and -0.6 percent respectively in real terms, the council said

“Higher interest rates will not improve fixed-income’s prospects. At current yield levels, bonds are likely to have limited upside and… would therefore be less effective than gold in mitigating equity risk,” it said. “This will help gold demand because some investors will use gold to complement bonds in managing equity risk and diversifying their portfolios.”

(Editing by Mark Shaw)

The post US interest rate rise may not be bad news for gold prices – WGC appeared first on The Bullion Desk.

Gold price hovers around $1,200, benefits from risk-off sentiments

Otmane El Rhazi from The Bullion Desk.

The gold price once again tested the $1,200 level during the Asian trade today after not being able to hold the level on Wednesday. Growing risk-off sentiments in the market is helping to buoy the precious metal after a sharp sell-off in US equities overnight.

Spot gold price was last seen at $1,199.80 per ounce, up $4.80 from where it ended yesterday. Silver also touched its near term resistance of $17 after trying yesterday. The metal was last seen at $17.02, up nine cents.

In overnight news, February US durable goods orders fell 0.4 percent against a predicted increase of 0.3 percent. The poorer numbers could have triggered some risk-off ahead of unemployment claims data scheduled to be out today as well as the release of fourth quarter GDP figure on Friday.

Stocks indices in the US came off sharply on Wednesday, with the Nasdaq leading losses of 2.36 percent. The Dow slipped 1.62 percent while the S&P 500 is lower by 1.46 percent.

Asian equities were however mixed, with losses in the Nikkei 225 at 1.43 percent while the Shanghai Composite is up 0.34 percent.

Oil prices surged as well, with brent crude up nearly six percent on Thursday afer Saudi Arabia began military operations in Yeman.

“Gold and crude oil have a historical positive correlation as the two are most frequently traded in commodity indices. As crude oil tends to comprise the largest weight in these indices, portfolio rebalancing would thus lead to indirect support for gold in order for these indices to maintain the appropriate weight in each commodity,” said a market commentary from HSBC Securities.

The PGMs were steadier following gold’s move upwards – Platinum is $2 higher at $1,146 while palladium slipped $0.50 to $764.

The post Gold price hovers around $1,200, benefits from risk-off sentiments appeared first on The Bullion Desk.

Gold price stops short of $1,200, US goods orders disappoint

Otmane El Rhazi from The Bullion Desk.

The gold price stopped just short of the psychologically important $1,200 level early on Wednesday afternoon after forecast-missing US durable goods orders extended the dollar’s retreat.

The spot gold price was last at $1,196.50/1,197.30, up $5.50 per ounce, having hit a high of $1,198.50.

US core durable goods orders at -0.4 percent missed the 0.3 percent forecast – the third such undershoot in four months – which the report attributed to lower demand for large commercial aircraft and autos. Durable goods orders at -1.4 percent also fell short of the expected 0.3 percent.

Having weakened throughout the morning, the dollar hit an intraday low of 1.1014 against the dollar, providing gold with the impetus to move towards $1,200.

Earlier, a positive German IFO business climate figure this morning spurred the euro higher – at 107.9, it beat the forecast 107.4 and was at its highest since July 2014.

Companies were said to be more satisfied with the current business situation in Germany, the linchpin of the European economy, while also expressing greater optimism about future business developments.

Other metals also moved higher – silver was last up 15 cents at $16.03/16.08 per ounce, having peaked at $17.08, while platinum was up $12 at $1,145/1,150 and palladium was $5.50 higher at $765/770.

(Editing by Mark Shaw)

The post Gold price stops short of $1,200, US goods orders disappoint appeared first on The Bullion Desk.

HSBC says deflation may be good for gold, keeps $1,234 forecast

Otmane El Rhazi from The Bullion Desk.

Widespread deflationary pressures may be good for gold in the long run, HSBC’s James Steel said.

With the world currently experiencing a slew of deflationary pressures, gold prices have been falling – deflation is classically considered negative for bullion, he said in a note on Wednesday

But this may not always be the case if pressures intensify – heavy deflation typically forces central banks into introducing new monetary policy measures and/or negative interest rates.

Sweden recently became one of the latest central banks to react to deflation, introducing a -0.25 percent rate and expanding its quantitative easing programme. Switzerland and Denmark also have negative interest rates.

“Deflation, while ostensibly negative for gold, makes negative interest rates more likely as central banks move to combat falling prices,” Steel said. “Negative rates in turn encourage the holding of some hard assets, such as gold, as investors will be reluctant to have holdings in the non-cash financial system.”

Negative interest rates may also encourage investors to turn to gold as a safe haven, removing any opportunity cost of holding gold as opposed to financial assets, he noted.

The possibility of further central banks acting on deflationary pressures supports HSBC’s “cautiously optimistic” view of gold, with the bank forecasting a trading range of $1,120-1,305 per ounce this year and an average price of $1,234.

Gold is currently up around one percent for the year at $1,194 per ounce, having started 2015 at $1,182, although the metal recently fell below $1,150 to hit a 2015 low of $1,142.90.

“Gold prices however are not entirely hostage to monetary developments. The recent price slump below $1,150 may be encouraging greater demand from price sensitive emerging market buyers, notably, but not exclusively, in India and China,” Steel added.

Low prices are also discouraging recycled scrap supplies, the second-largest source of new supply after mining, he said.

(Editing by Mark Shaw)

The post HSBC says deflation may be good for gold, keeps $1,234 forecast appeared first on The Bullion Desk.

Gold price poised to retest $1,200 if dollar remains weaker

Otmane El Rhazi from The Bullion Desk.

The gold price remained poised to retest the key psychological level of $1,200 on Wednesday morning, with the dollar’s weakness providing upward impetus.

The spot gold price of $1,191.00/1,191.80 per ounce was unchanged from the previous session’s close and around the middle of its sub-$8 intraday range. The metal peaked at $1,194.20 on Wednesday and $1,195 on Tuesday.

The other precious metals followed in gold’s footsteps – silver was last eight cents higher at $16.95/17.00 per ounce while palladium was up $7 at $766/771 and platinum climbed $5 to $1,139/1,144.

“While the dollar is on a back foot and with the rand strengthening, sentiment may well remain more positive for bullion and the PGMS. We still feel it will require the gold price to establish itself back above $1,200 to reduce the current vulnerable chart picture,” FastMarkets analyst William Adams said.

The dollar was last at 1.0951 against the euro, down almost half a cent. The US currency has been flirting with the 1.10 level since last week, allowing gold to move slowly towards $1,200, a level it has not breached in nearly three weeks. Any further dollar-negative moves could provide the impetus for it to do so.

“We seem to have a slight resistance at $1,195 on spot and I think if we can break that this morning, then we will see a move up to $1,200 and above. The dollar is off again, so this should aid the advance,” Marex Spectron’s David Govett said.

“Overall though, there is nothing exciting about the markets, they are still running somewhat short, hence my view that we can see higher prices if the dollar continues to slide,” he added.

A positive German IFO business climate figure this morning spurred the euro higher – at 107.9, it beat the forecast 107.4 and was at its highest since July 2014.

Companies were more satisfied with the current business situation in Germany, the lynchpin of the European economy, while also expressing greater optimism about future business developments.

In other gold news, central banks added small amounts of gold to their balance sheets in February, which may be gold negative in the near-term, International Monetary Fund data suggests. Russia failed to add any new stocks while Kazakhstan added just 2.6 tonnes and Tajikistan and Malaysia added just 0.6 tonnes. Turkey’s stocks dropped 4.6 tonnes.

In data still to come out of the US, core durable goods orders may trigger fluctuations in currencies.

(Editing by Mark Shaw)

The post Gold price poised to retest $1,200 if dollar remains weaker appeared first on The Bullion Desk.

Gold price holds steady after mass of data – BULLION AFTERNOON

Otmane El Rhazi from The Bullion Desk.

Gold price was little changed on Tuesday afternoon around two-week highs but trading sideways in a busy day for data.

The spot gold price was last at $1,190/1,191 per ounce, up $1 on Monday’s close and confined to a $10 intraday range.

Earlier today, gold shrugged off disappointing Chinese PMI numbers. The China flash HSBC/Markit PMI fell to 49.2 in March, below the 50-point level that separates expansion from contraction. This compared with a forecast 50.5 and February’s final PMI of 50.7.

“The poor reading is further evidence that Chinese economic activity continues to weaken despite two interest rate cuts, a reduction in reserve requirements and the ‘fast-tracking’ of several spending measures, illustrating the limits of the government’s ability to ‘manage’ an increasingly unwieldy economy,” INTL FCStone analyst Edward Meir said.

From the US, the core and full CPI both rose 0.2 percent in February. This is the first positive CPI reading since October when the QE taper ended, indicating a return to an inflationary environment.

The flash manufacturing PMI and new home sales were also better than the forecast at 55.3 and 539,000 respectively. But the HPI disappointed at 0.3 percent as did the Richmond manufacturing index at -8.

The US fourth-quarter GDP figure, which is expected to be revised higher, is due later this week.

In other data, the EU PMI at 51.9 beat the forecast 51.6 and the German reading at 52.4 was better than the expected 51.5 although the French indicator was 48.2 versus 48.9.

The dollar was last at 1.0922 against the euro, down two fifths of a cent and well below recent highs.

In other news, Greece said it will present a list of reforms to its eurozone partners by next Monday in order to unlock more funding and avert bankruptcy. Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin on Monday to discuss the outline of the reforms.

“All this looks good in terms of optics, but with no concrete proposals being discussed, we are still in wait-and-see mode,” Meir said.

In the other metals, silver was little changed at $16.92/16.97 per ounce, platinum at 1,136/1,141 was down $9 and palladium was $12 lower at $762/767.

(Editing by Mark Shaw)

The post Gold price holds steady after mass of data – BULLION AFTERNOON appeared first on The Bullion Desk.

Mumbai gold premium solid but storm damage could weigh

Otmane El Rhazi from The Bullion Desk.

The premium for gold in Mumbai remains solid, with demand ahead of the annual Akshaya Tritiya festival in April starting to pick up momentum.

Gold for immediate delivery in the Indian capital remains around $5 over the London spot price, sources said, though some have cited it at around $2 in some places.

The market is now entering a peak demand season and jewellers are already busy, Metals Focus’ Chirag Sheth said.

Still, farmers are reportedly assessing potentially widespread damage to crops following unseasonal hailstorms in North and West India around two weeks ago.

Smaller harvests may weigh on gold demand over the coming months – India’s 120 million farmers account for around 60 percent of domestic consumption.

The country’s monsoon season, which accounts for around 70 percent of annual rainfall, is not due to start until June.

With Akshaya Tritiya fast approaching, demand should push premiums to around $7-8 in Mumbai, Sheth said. The festival is of the most auspicious periods of the year to gift gold.

As much as 60 tonnes of the yellow metal may have entered the country during March after 55 tonnes in February to support pre-festival demand, sources estimated.

Elsewhere, the premium for gold in Shanghai also remained high, sources said, despite the climb in price to $1,190 following dovish comments from US Federal Reserve chair Janet Yellen last week on the state of the US economy.

Gold for immediate delivery in Shanghai was quoted at $5 over the spot price by MKS, with demand said to be stable.

Withdrawals from the Shanghai Gold Exchange – a useful barometer for wholesale demand – for the week ending March 13 were 51.46 tonnes. More than 500 tonnes have passed through the vaults in 2015 so far.

In Tokyo, assessments of market conditions have been contradictory. While some sources suggested that the metal is at a slight discount of around 50 cents-$1 due to the forthcoming end of the financial year – many companies are keen to get the metal off their books – others have suggested that the metal is at a slight premium of $1.

In Turkey, the market remains at parity, according to Troy Precious Metals GoldTakas system. Demand should pick up in May or June on the favoured .995 LBMA 1kg gold bar when the annual Turkish wedding season begins – premiums of $2-3 are expected, it said.

In Dubai, premiums are up to $1 on the .9999 bars, while .995 is slightly cheaper, sources said.

In other locations, Hong Kong sources suggested that the premium is at $1 over spot, while in Singapore it is at $1.50 and at around $1.50-2 in Bangkok.

(Editing by Mark Shaw)

The post Mumbai gold premium solid but storm damage could weigh appeared first on The Bullion Desk.

Gold price steady, shrugs off disappointing Chinese PMIs – BULLION MORNING

Otmane El Rhazi from The Bullion Desk.

Gold price was steady on Tuesday morning, ignoring disappointing Chinese PMI numbers and ahead of further data from around the world.

The spot gold price was last at $1,190/1,191 per ounce, up $7 on Monday’s close and around its highest in more than two weeks.

“The gold price rally has not been derailed by the Chinese PMI data, although prices have paused across the precious metals complex, but after some strong moves of late that is not such a bad thing,” FastMarkets William Adams said.

The China flash HSBC/Markit PMI fell to 49.2 in March, below the 50-point level that separates expansion from contraction. This compared with a forecast 50.5 and February’s final PMI of 50.7.

This reading is the latest in a string of disappointing data out of China that could “incite policy-makers to step up fiscal spending and carry out further cuts to the required reserve ratio and benchmark interest rates in order to prevent growth this year from slipping too far below their annual target,” MKS said in a note.

But the EU PMI came in at 51.9 against a forecast 51.6 and the German reading at 52.4 against an expected 51.5 although the French indicator was 48.2 versus 48.9. This afternoon, the US PMI will be issued as well as data on the HPI, new home sales and the Richmond manufacturing index.

In other markets, the dollar was little different at around 1.0955 against the euro but remains well below recent high amid the perception that the Federal Reserve will not now lift interest rates in the next few months; instead, an increase is seen later in the year.

The focus switches now to the US data, including PMI, CPI, HPI numbers and new home sales and the Richmond manufacturing index – these will be closely watched for any signs of improvement that may reignite speculation for higher interest rates from June.

Meanwhile, Greece said it will present a list of reforms to its eurozone partners by next Monday in order to unlock more funding and avert bankruptcy. Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin on Monday to discuss the outline of the reforms.

In the other metals, silver was unchanged at $16.96/17.01 per ounce, platinum was last at $1,141/1,146, down $4, and palladium at $770/776 was also $4 lower.

“Palladium has been under considerable pressure of late, having been one of the stronger performers before that – it appears the market is reacting to reports that Russia’s central bank has agreed in principle to sell some of its palladium to a group of investors led by Norilsk,” Adams said.

(Editing by Mark Shaw)

The post Gold price steady, shrugs off disappointing Chinese PMIs – BULLION MORNING appeared first on The Bullion Desk.

Gold price steady, dollar direction is key

Otmane El Rhazi from The Bullion Desk.

The gold price was steady around the $1,185 levels after the US dollar retreated following disappointing US home sales data overnight.

Data out overnight showed total existing home sales at 4.88 million were short of the forecast 4.91 million, albeit up from the previous month’s 4.82 million. New home sales data is due later today alongside manufacturing data – these will be closed watched for any signs of improvement that may reignite speculation for higher interest rates from June.

Spot gold price was last seen at $1,185.60, about $4 lower than Monday’s close. Prices are seen consolidating around this level although analysts say price movement will largely depend on how the dollar performs.

“Gold’s rally has taken place in the context of short-term dollar weakness in an environment that should, in the longer-term, see more upside for the greenback,” said IG market’s analyst Chris Beauchamp.

The dollar pared Friday’s gains to retreat to 1.0930 against the euro on Monday – the US currency had been softening before home sales data fell short of the annual rate of five million units for the second consecutive month, pushing the greenback to an intraday low of 1.0945. The dollar was last seen at 1.0912 against the euro.

“The bullion market may focus on the upcoming release of US CPI data on 24 March, especially if the data show an increase in deflationary pressures, we believe. The gold rally looks intact and we believe the market is firm, but it is close to running into upside resistance at the $1,200 per ounce, a clear psychological level,” said James Steel, analyst at HSBC Securities.

For the other precious metals, silver which came close to $17 on Monday fell 13 cents to the current $16.86 per ounce. Platinum is $7 lower at $1,140 while palladium is also $6 lower at $770.

The post Gold price steady, dollar direction is key appeared first on The Bullion Desk.

Gold price in subdued start as Chinese premium drops

Otmane El Rhazi from The Bullion Desk.

Gold got off to a modest start on Monday morning when a weaker dollar and selling pressure out of China left the metal unchanged from the pre-weekend close.

The spot gold price was last at $1,182.00/1,182.80 per ounce although the metal touched near-two week highs at $1,187 earlier.

The dollar’s sustained retreat to 1.0821 against the euro is providing most commodities with a degree of respite following suggestions from the US Federal Reserve last week that growth in the US economy is not as strong as many initially thought.

This may have extended the probable timetable for the raising of US rates and a slower pace than previously thought.

But a waning in Chinese demand has dampened any prospects of an immediate push in gold towards $1,200.

“After being decent buyers continuously for last few weeks the Chinese opened up today on the sell-side, evident from the significant drop in the premium from $5-6 late last week to about $2 this morning,” MKS’ Alex Thorndike said in a note.

But turnover was “impressive”, with around 54,000 kilograms of the popular Au (T+D) contract changing hands, according to the daily quotes from the Shanghai Gold Exchange.

“The precious metals are undergoing a strong rebound, at least gold, silver and platinum are, while palladium, which has not suffered to the same extent as the others on the downside in recent weeks, is consolidating,” FastMarkets analyst William Adams said.

“Although the rebounds have been sharp, we feel the gold price will need to establish itself above $1,200 if it is to break the back of the overall downward trend,” he added.

Despite a quiet day for data today, developments over the Greek debt crisis will be monitored as concerns over whether the country can reach an agreement with its creditors continue.

Greek Prime Minister Alexis Tsipras is meeting with German Chancellor Angela Merkel today to discuss the matter but early indications are that, unless Greece produces a comprehensive list of reforms, no further funding will be provided.

In other data, eurozone consumer confidence figures are due, as is a testimony from ECB president Mario Draghi, as well as US existing home sales.

Other metals were similarly quiet – silver was last two cents lower at $16.67/16.72 per ounce, while palladium at $772/777 was up $1 and platinum was unchanged at $1,135/1,140.

(Editing by Mark Shaw)

The post Gold price in subdued start as Chinese premium drops appeared first on The Bullion Desk.

Gold price steady, weaker dollar and Chinese demand to support gains

Otmane El Rhazi from The Bullion Desk.

The gold price was steady around the $1,180 levels after rising on Friday on support of a weaker greenback and some bargain-hunting from China.

Spot gold price was last seen at $1,181.10, about $1.80 lower than Friday’s close. Prices are seen remaining steady around this level, consolidating gains made last week after the dollar fell following Wednesday’s FOMC meeting.

“The USD has already rallied more than its typical move historically, and many of the arguments currently bring used to justify an extension are likely already in the price,” said a report from HSBC.

“Part of the reason for gold’s rapid gains this week may be its heretofore steep losses. Gold has been on the defensive for the bulk of this year and much of this week’s rally can be attributed to rapid short covering,” said analyst James Steel from HSBC Securities.

Supporting gold prices was also steady premium on the Shanghai market, implying good demand from China. Analysts say that this may be a bullish sign for gold as China dmand usualy drops after the Lunar New Year.

For the week ahead, there are plenty of macro data to watch – The main focus will be on Greece still, with German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras meeting in Berlin tpday to discuss conditions around the extension of Greece’s bailout plan.

On Tuesday, the flash PMIs for the main Eurozone economies as well as for China will be published. With uncertainties around growth in these regions, these numbers should be closely watched. In the US and the UK,

Other preciouos metals traded similarly in ranges but were biased towards the downside – silver was last nine cents lower at $16.65, platinum was down $5.50 at $1,133 and palladium was $4 lower at $772.

The post Gold price steady, weaker dollar and Chinese demand to support gains appeared first on The Bullion Desk.

GOLD WEBCAST – Gold price holding just short of 2 wk highs

Otmane El Rhazi from The Bullion Desk.

In a week that many predicted that gold would be sent into freefall, currently we’re up around 1 and half percent for the week. As predicted, the Fed removed the word “patient” from the monetary policy statement, which ultimately gives them flexibility over the coming months on raising the rate. It did however, signal that an April hike is unlikely while also suggesting that economic growth had moderated somewhat over the past month, which is a significant downgrade from “growing at a solid pace”, in the previous month. The first LBMA gold price via new administrator ICE took place this morning, with the six participants setting the price at $1,171.75 per ounce. The six banks taking part currently are Scotiabank, UBS, Société Générale, Barclays, HSBC and Goldman Sachs.

The post GOLD WEBCAST – Gold price holding just short of 2 wk highs appeared first on The Bullion Desk.

Gold holds near 2-wk highs, renewed Grexit fears support

Otmane El Rhazi from The Bullion Desk.

Gold was holding up well near two-week highs on Friday morning, with renewed concerns over a possible Grexit offsetting the dollar’s gains.

The spot gold price of $1,172.50/1,173.30 per ounce was up $1.20 on the previous session’s close and just short of two-week highs at $1,178.

“The pullback in the dollar saved the gold price from testing the all-important November low but, if the dollar continues to rebound, the precious metals are likely to struggle again,” FastMarkets analyst William Adams said.

The US currency has dollar regained 1.0660 against the euro, having hit lows of 1.10 earlier in the week after the US FOMC suggested it had a longer timeline for rate rises.

“The next few days are likely to be crucial in seeing whether the market is taking a potential delay in higher US interest rates in its stride or whether it thinks the Fed is finding one excuse after another not to rock the boat. If the latter, we would expect some dollar weakness – at least for a while,” Adams added.

Still, renewed concerns that Greece may exit the eurozone are providing an element of safe-haven support this morning, with the country expected to submit further reforms to receive further aid and avoid a default later today.

Early expectations are that Greece could run out of money within just a few weeks should a deal not be brokered.

“In other words, the uncertainty over whether Greece will remain in the eurozone remains, which should make gold attractive as a safe haven,” Commerzbank noted.

Greece Prime Minister Alexis Tsispras is due to meet German Chancellor Angela Merkel on the sidelines of an EU summit today in what is being described as showdown talks alongside French President Francois Hollande.

In other news, the first LBMA gold price via new administrator ICE took place this morning, with the six participants setting the price at $1,171.75 per ounce. The six banks taking part currently are Scotiabank, UBS, Société Générale, Barclays, HSBC and Goldman Sachs.

The data calendar today is light. Earlier, the German PPI at 0.1 percent fell short of forecasts while the eurozone current account at 29.4 billion euros bettered consensus at 21.3 billion euros.

Other metals were also up – silver was last six cents higher at $16.17/16.22 per ounce, platinum gained $3 to $1,122/1,127 and palladium climbed $6 to $768/774.

(Editing by Mark Shaw)

The post Gold holds near 2-wk highs, renewed Grexit fears support appeared first on The Bullion Desk.

SocGen forecasts gold to average just $925/oz between 2016-2019

Otmane El Rhazi from The Bullion Desk.

The gold price has fully given away its early year gains and should head lower as the dollar continues to strengthen and the US Federal Reserve inches closer to tighter monetary policy, Société Générale said in a report.

The French Bank sees gold averaging just $1,150 per ounce in the second quarter, with weakness extending into the fourth quarter wherein it will average $1,050.

For the full-year, SocGen did lift its 2105 forecast to $1,130 per ounce from a previous $1,025, but that’s only due to some unexpected strength during the first quarter.

Gold for April delivery on the Comex division of the New York Mercantile Exchange is currently trading at $1,170 per ounce.

“We continue to expect that the Fed will raise interest rates by 25 basis points in June 2015, with this more likely followed by another hike of a similar magnitude later this year,” SocGen said.

“As the labour markets gain traction and with the forecast for GDP growth at 3.5 percent this year, we see a high probability of a more aggressive rate hike during next year, to an extent that the interest rate cycle could peak at four percent by the end of 2017,” it added.

Meanwhile, key consuming nations such as India and China have not rushed in the physical markets because they still have lower price expectations.

“Thus, until an uptrend gets established, consumers and investors are likely to only ‘test’ the market at various lows, meaning high volume purchases are unlikely,” SocGen said.

In terms of supply/demand fundamentals, gold production from mines should decrease this year by around nine percent, while global demand will grow at near six percent, eventually leading the market to a supply surplus of some 100 tonnes.

“That said, we believe the macro environment will steer the gold price this year as opposed to supply and demand dynamics,” the report said.

“We expect the gold price to continue to fall, as the dollar strengthens further and the gold bear market continues, leading to the metal averaging just $925 between 2016 and 2019,” it concluded.

(Editing by Tom Jennemann)

The post SocGen forecasts gold to average just $925/oz between 2016-2019 appeared first on The Bullion Desk.

Gold’s rise runs out of steam, Fed statement supports

Otmane El Rhazi from The Bullion Desk.

The gold price was in negative territory on Thursday’s morning, giving up some of the ground it made in the aftermath of the yesterday’s Federal Open Market Committee (FOMC) meeting.

The yellow metal had surged after the FOMC warned of slowing US growth, peaking to $1,178 – its highest since March 6. It has since pared some of those gains and was last at $1,166/1,166.80 per ounce, down $5 on Wednesday’s close but off the four-month lows hit earlier this week.

In the keenly awaited FOMC statement on Wednesday, the US central bank removed the term ‘patient’ as widely expected but said that an increase in interest rates is unlikely next month. It also noted “economic growth has moderated somewhat” over the past month, which is a significant downgrade from its last statement in which it said activity rose “at a solid pace”.

“By dropping the word ‘patient’, the FOMC has the flexibility to consider a rate hike on a meeting-by-meeting basis, dependent on macro data, though it stated that higher interest rates were unlikely at the upcoming April meeting,” Credit Suisse said.

The longer timeline for rate rises and a lower rate trajectory helped boost commodities and stocks prices – market participants interpreted the statement as implying that the environment of easy monetary policy will last longer.

“Gold direction will depend heavily on how the currency markets continue to interpret and react to the Fed statement. The US dollar has been trading at multi-year highs against almost all of the world’s freely floating currencies, many of which are adopting more accommodative monetary policies,” James Steel at HSBC said.

The dollar has been fairly volatile today – having hit a low in early Asian trading of 1.0919 against the euro, it has since recovered slightly to 1.0655.

“The markets have overshot somewhat and we could be in store for some ‘backing and filling’ in the days ahead, which means slightly lower prices going into the next week,” INTL FCStone analyst Edward Meir said

“Conciliatory as the Fed statement was, the fact of the matter is that the US economy remains relatively strong (especially on the labour side), just as practically all other economies – with the exception of India – are slowing or are dead in the water,” he said.

In today’s data, the market awaits an ECB economic bulletin, while the EU economic summit kicks off today. From the US there will be unemployment claims, the current account, the Philly Fed manufacturing index and the CB leading index.

Silver at $15.87/15.92 was down slightly at $15.94 per ounce while the PGMs have recovered from multi-month and multi-year lows. Platinum, which on Tuesday had dived under $1,100 to its softest since July 2009, was last at $1,117/1,122, albeit down $7 on Wednesday’s close, while palladium at $770/780 was $10 lower.

“The PGMs have been trading more on bearish investment sentiment than on underlying fundamentals, we believe. If equities remain strong and other commodities beside gold continue to make gains, the PGMs have a good possibility of extending gains,” Steel said.

(Editing by Mark Shaw)

The post Gold’s rise runs out of steam, Fed statement supports appeared first on The Bullion Desk.

Gold price gains on weaker dollar after Fed cautioned weaker economic growth

Otmane El Rhazi from The Bullion Desk.

The gold price jumped to one-and-half week high after the Fed cautioned a weaker US growth and suggests more patience to Fed rate hikes.

Spot gold price was last seen at $1,174.50, climbing up $2.50 from where it concluded on Wednesday. The precious metal rose more than two percent after the FOMC statement was thought to be more dovish than expected.

While the FOMC did removed its pledge to be “patient” with its monetary policy, it also said that an April rate hike is unlikely.

“The overall tone of the Fed statement was cautious in its approach to rate normalization and markets interpreted that as dovish. Dropping the pledge to be ‘patient’ marks a shift away from the explicit calendar-based guidance on the future policy path to be more data-dependent guidance,” said economists from United Overseas Bank.

What was noteworthy was that the central bank noted “economic growth has moderated somewhat” over the past month, which is a significant downgrade from the last statement wherein it said that activity rose “at a solid pace”.

“Traders were cautious ahead of the FOMC but were quick to accumulate immediately following the announcement. The prospect of continued low interest rates in the US pushed the greenback sharply lower and therefore boosted most asset prices denominated in USD,” said broker MKS Capital.

The dollar was significantly lower overnight, with the dollar index sliding close to two percent lower from 99.62 to 97.7. The weaker dollar gave traders impetus to bargain-hunt on recent lower bullion prices, especially since rate hikes are deemed less imminent.

In the other precious metals, silver was last up five cents to $15.99 per ounce. The PGMs were mixed, with platinum up a dollar to $1,128 while palladium slipped $3 to $782 after its three percent gains overnight.

The post Gold price gains on weaker dollar after Fed cautioned weaker economic growth appeared first on The Bullion Desk.

Gold, equities rally on doveish FOMC statement

Otmane El Rhazi from The Bullion Desk.

Gold, copper and equities jumped on Wednesday after the Federal Reserve downgraded its view on the US economy, whiich could indicate that interest rates might rise more slowly that previously expected.

The Federal Open Market Committee (FOMC) today removed its pledge to be “patient” with its monetary policy, but it did say that an April rate hike is unlikely.

“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its two percent objective over the medium term,” the FOMC statement said.

“This change in the forward guidance does not indicate that the committee has decided on the timing of the initial increase in the target range,” it added.

The members of the Fed’s policy board are locked in what’s become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first hike will happen sometime in the second half of this year.

But perhaps more interestingly, the FOMC noted that “economic growth has moderated somewhat” over the past month, which is a significant downgrade from the last statement wherein it said that activity rose “at a solid pace”.

“Compared to expectations, this is a strongly doveish statement and that’s why we’re seeing most markets head higher. They really did backtrack a little today – I would say that a June increase is still possible but it’s now less likely,” a US-based future trader told FastMarkets.

In the markets, gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose to $1,172.10 per ounce, which is $20 higher than the pre-FOMC level.

The most-actively traded Comex copper futures contract rose by about three cents following the statement to $2.5905 per pound, while light sweet crude (WTI) futures were at $43.11 per barrel, which was still deep in the red but well above the session low of $42.03.

The dollar has moved sharply lower – it was last down 1.56 percent at 1.0762 against the euro, while the Dow Jones industrial average and S&P 500 reversed earlier losses, climbing by 0.72 percent and 0.55 percent respectively.

The post Gold, equities rally on doveish FOMC statement appeared first on The Bullion Desk.

Gold off 4-mth low but Fed statement may be downward catalyst

Otmane El Rhazi from The Bullion Desk.

The gold price was lower again ahead of the much-anticipated Federal Reserve statement on monetary policy, recovering only slightly from the previous session’s four-month lows.

Spot gold was last at $1,146.90/1,147.70 per ounce, down $2.20 on Tuesday’s close – it hit its lowest since November at $1,142.90 in that session.

A surge prior to the New York open on Tuesday softened the blow – prices bounced from the lows to around $1,160 in a few minutes, briefly pushing the SGE premium to $27 over spot in the overnight session, MKS said in a report this morning.

“We saw a big rally all the way up to $1,159.30, admittedly on the back of fairly light volume, given the size of the move,” Marex Spectron’s David Govett said. “There was no real reason behind the moves other than a market which is being pushed this way and that by a trading mentality that is akin to a herd of sheep.”

Heavy downside pressure on tanking oil prices and pre-FOMC positioning saw platinum suffering also – it moved below $1,100 for the first time in six years. Silver was the only metal not to take a proportionally similar hammering, though it remains susceptible to falling through $15.

So far today, platinum has retested $1,100 but it was last $1 lower at $1,088/1,093 per ounce, while silver was down four cents at $15.46/15.51 and palladium climbed $6 to $763/768.

But attention is now firmly on the Fed’s statement on monetary policy. With the US central bank supposedly close to raising interest rates, the language in the statement will be heavily scrutinised for clues as to when it will do so.

“Gold seems to be being guided by the sirens’ song emanating from the lows at $1,131.60 – whether gold bounces off the rocks or breaks up on them remains to be seen. Again today’s FOMC statement may well decide that,” FastMarkets analyst William Adams said.

According to speculation, the term ‘patient’ in regards to raising rates will not appear in the statement following a run of strong data and slack in the labour market continuing to lessen, which would ultimately give the bank the opportunity to be flexible over the coming months.

“If ['patience' is removed], this should spell further downward moves for precious metals, although the market is short down here and may not have the ammunition for a sustained move lower. If, however, patience remains, I would look for a short covering rally, which to my mind would be a good opportunity to sell,” Govett added.

Investors will also look for any changes to the language concerning data dependency, particularly while limited wage growth remains a concern.

In other data today, the Italian trade balance for January disappointed at 0.22 billion euros – a reading of 4.32 billion euros had been expected after the previous month’s 5.76 billion euros.

(Editing by Mark Shaw)

The post Gold off 4-mth low but Fed statement may be downward catalyst appeared first on The Bullion Desk.

Gold price hits 4-mth low ahead of Fed statement – BULLION AFTERNOON

Otmane El Rhazi from The Bullion Desk.

Gold price moved lower on Tuesday afternoon, coming under renewed pressure from the US dollar and ahead of a keenly anticipated statement from the Federal Open Market Committee (FOMC).

Spot gold, which earlier in the session sank below $1,146 – its lowest since November 7 – was last at $1,447.70/1,448.50 per ounce, down $8.30 on Monday’s close.

The FOMC meeting remains the key focus this week. The accompanying statement will be scrutinised for any indication of the timing of an increase in US interest rates from 0-0.25 percent, where they have been since the 2008 financial crisis.

The expectation is that the reference to the word “patient” will be removed from the communiqué, indicating that the central bank will raise interest rates either in June or September this year.

The strong dollar also continues to put pressure on the price of gold – it was last at 1.0595 against the euro, albeit off Monday’s 12-year highs.

“There is potential impact of short position holders in the dollar, which, combined with new shorts in gold, particularly heading into what it actually pretty good physical demand at the moment from India perhaps increasing the risk of a short-covering rally,” Standard Bank’s Leon Westgate said.

In data today, German ZEW economic sentiment disappointed at 54.8 and the eurozone final CPI and employment change were as expected at -0.3 percent and 0.1 percent respectively. But ZEW economic sentiment at 62.4 was better than forecast as was the final core CPI at 0.7 percent.

From the US, building permits beat expectations at 1.09 million – a level last seen in October – but housing starts fell further than expected to 0.9 million, their lowest since October 2013.

“Both the dollar and gold have drifted higher on this data, highlighting the FOMC effect on markets – an indication of maintained strength in the sector lifts the dollar and concerns over whether this will influence the FOMC’s decision on rates sustains safe-haven demand against currency risk,” FastMarkets analyst Tom Moore said.

In the other metals, silver was little changed at $15.54/15.60, platinum at $1,092/1,097 was down $14 – a fresh low since July 2009 – and palladium at $762/767 was $16 lower.

(Editing by Mark Shaw)

The post Gold price hits 4-mth low ahead of Fed statement – BULLION AFTERNOON appeared first on The Bullion Desk.

Gold drifts in monotonous pre-FOMC trade

Otmane El Rhazi from The Bullion Desk.

The gold market flatlined on Tuesday, with most traders inactive ahead of tomorrow’s policy statement from the Federal Open Market Committee (FOMC).

Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down $1.40 at $1,151.80 per ounce. Trade has ranged from $1,151.10 to $1,156.10 in light trade.

“The monotony continues in the precious complex with prices once again moving lower during the day after an Asian rally, which seems to have become the norm for the last few days,” Marex Spectron’s David Govett said, adding that the yellow metal is stuck between $1,145 and $1,165.

“We hope that today and tomorrow’s meeting of the FOMC in Washington will provide us with some form of impetus, but we will have to wait until tomorrow evening to find out,” he added.

The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008. The current market consensus is that the first increase will happen sometime in the second half of this year.

“The only debate it seems regarding the FOMC meeting is whether the Fed shall remove the now infamous word ‘patient’ from its post- meeting communique tomorrow,” Dennis Gartman, editor of the Gartman Letter, said.

“One now apparently needs to be a linguist rather than an economist when it comes to measuring Fed policy. The drive for transparency put into effect several decades ago has become perverted and pedantic,” he added.

Elsewhere, German ZEW economic sentiment disappointed at 54.8 and the eurozone final CPI and employment change were as expected at -0.3 percent and 0.1 percent respectively. But ZEW economic sentiment at 62.4 was better than forecast as was the final core CPI at 0.7 percent.

In wider markets, the dollar was 0.52 percent softer at 1.0624 against the euro, while Germany’s DAX and France’s CAC-40 were down 1.37 percent and 0.72 percent respectively.

Light sweet crude (WTI) oil futures on the Nymex were down 98 cents, or 2.23 percent, at $42.90 per barrel, while the May Comex copper contract was at $2.6145 per pound, down 5.3 cents.

As for the other precious metals, Comex silver for May delivery was down 9.7 cents at $15.520 per ounce. Trade has ranged from $15.480 to $15.645.

Platinum for April delivery on the Nymex was down $5.70 at $1,102.20 per ounce, while the most-actively traded palladium contract was at $775.30, a drop of $4.80.

(Editing by Mark Shaw)

The post Gold drifts in monotonous pre-FOMC trade appeared first on The Bullion Desk.

Gold little changed, all eyes on FOMC meeting

Otmane El Rhazi from The Bullion Desk.

Gold was little changed on Tuesday morning, with investors on the sidelines of the market ahead of the Federal Reserve meeting that kicks off later today.

The spot gold price was last at $1,155.00/1,155.70 per ounce, down $1 on Monday’s close. It has traded in a very narrow range of around $5 so far today.

The FOMC meeting remains the key focus this week. The accompanying statement will be scrutinised for any indication of the timing of an increase in US interest rates from 0-0.25 percent, where they have been since the 2008 financial crisis.

“If the Fed removes the ‘patient’ from its statement regarding interest rate hikes gold should head lower (although some of this will have been priced in as this is the consensus view),” MKS said in a note. “For now and up until the FOMC it seems gold will continue to range trade between $1,150 [and] $1,165.”

Higher interest rates would push investors away from gold toward more yield-bearing assets such as bonds. As well, a first rate rise could presage other increases, putting significant downside pressure on the yellow metal.

“The real risk will be that the Fed does not remove the word ‘patient’ from the statement and sounds out concern over the rate of the rise in the greenback – which may alter the timing of a potential cut. If this were to happen, especially considering the substantial increase of shorts over the past few weeks, gold could rocket higher back towards $1185-90 resistance,” MKS added.

The dollar remains strong at 1.0601 against the euro albeit off 12-year highs.

In data, Chinese foreign direct investment disappointed at 16.4 percent. Chinese Premier Li Keqiang warned over the weekend that the domestic economy faces what he called “considerable” downward pressure on growth and may struggle even to meet its annual GDP target of around seven percent.

Keqiang also hinted that the country could turn to “relatively big” stimulus measures if the economic slowdown were to hit the employment sector or fall to the “lower limit”.

In other data today, German ZEW economic sentiment disappointed at 54.8 and the eurozone final CPI and employment change were as expected at -0.3 percent and 0.1 percent respectively. But ZEW economic sentiment at 62.4 was better than forecast as was the final core CPI at 0.7 percent.

Building permits and housing starts are due from the US this afternoon.

In the other metals, silver was little changed at $15.60/15.65 per ounce, down three cents. Platinum at $1,105/1,110 was down $1 and at its lowest level since July 2009 while palladium was $2 lower at $776/782.

“Robust European car registrations in February, up seven percent from a year earlier, with year-to-date registrations up 6.6 percent… suggest the auto industry is holding up better than the general economy,” FastMarkets’ William Adams said.

(Editing by Mark Shaw)

The post Gold little changed, all eyes on FOMC meeting appeared first on The Bullion Desk.

Gold price little changed, focus on FOMC meeting – BULLION MORNING

Otmane El Rhazi from The Bullion Desk.

Gold price was little changed on Tuesday morning, with investors on the sidelines of the market ahead of the Federal Reserve meeting that kicks off later today.

The spot gold price was last at $1,155.00/1,155.70 per ounce, down $1 on Monday’s close. It has traded in a very narrow range of around $5 so far today.

The FOMC meeting remains the key focus this week. The accompanying statement will be scrutinised for any indication of the timing of an increase in US interest rates from 0-0.25 percent, where they have been since the 2008 financial crisis.

“If the Fed removes the ‘patient’ from its statement regarding interest rate hikes gold should head lower (although some of this will have been priced in as this is the consensus view),” MKS said in a note. “For now and up until the FOMC it seems gold will continue to range trade between $1,150 [and] $1,165.”

Higher interest rates would push investors away from gold toward more yield-bearing assets such as bonds. As well, a first rate rise could presage other increases, putting significant downside pressure on the yellow metal.

“The real risk will be that the Fed does not remove the word ‘patient’ from the statement and sounds out concern over the rate of the rise in the greenback – which may alter the timing of a potential cut. If this were to happen, especially considering the substantial increase of shorts over the past few weeks, gold could rocket higher back towards $1185-90 resistance,” MKS added.

The dollar remains strong at 1.0601 against the euro albeit off 12-year highs.

In data, Chinese foreign direct investment disappointed at 16.4 percent. Chinese Premier Li Keqiang warned over the weekend that the domestic economy faces what he called “considerable” downward pressure on growth and may struggle even to meet its annual GDP target of around seven percent.

Keqiang also hinted that the country could turn to “relatively big” stimulus measures if the economic slowdown were to hit the employment sector or fall to the “lower limit”.

In other data today, German ZEW economic sentiment disappointed at 54.8 and the eurozone final CPI and employment change were as expected at -0.3 percent and 0.1 percent respectively. But ZEW economic sentiment at 62.4 was better than forecast as was the final core CPI at 0.7 percent.

Building permits and housing starts are due from the US this afternoon.

In the other metals, silver was little changed at $15.60/15.65 per ounce, down three cents. Platinum at $1,105/1,110 was down $1 and at its lowest level since July 2009 while palladium was $2 lower at $776/782.

“Robust European car registrations in February, up seven percent from a year earlier, with year-to-date registrations up 6.6 percent… suggest the auto industry is holding up better than the general economy,” FastMarkets’ William Adams said.

The post Gold price little changed, focus on FOMC meeting – BULLION MORNING appeared first on The Bullion Desk.

Gold price slips lower ahead of FOMC meeting

Otmane El Rhazi from The Bullion Desk.

The gold price slipped slightly lower during Asian trading hours as investors await the key Fed meeting. Analysts expect prices to trade in a tight range during the session as gold market participants stay on the sidelines.

Spot gold price was last seen at $1,155.2, declining about a dollar lower from Monday’s close. The yellow metal was trading within a $5 range and not far from its recent four-month low of $1,147 per ounce. Silver was lower as well, falling seven cents to $15.58 per ounce.

Market participants are currently awaiting the start of a two-day FOMC meeting which will focus once again on the rate hike timeline.

“We expect markets to look for the removal of the word ‘patient’ from Yellen’s testimony, widely seen as a signal that the Fed will continue to hold back. Its inclusion would push the needle towards September; its removal would shift consensus to June,” Fastmarkets’ research analyst Tom Moore said.

Overnight, disappointing manufacturing data out of the US drove the USD off a fresh 11 years high of 1.0457 seen in recent days, with the greenback last trading around 1.0570.

For the day ahead, the market awaits more data out of US that could hint at what might be said at the Fed meeting today with regards to rate hike policy. Building permits are expected to come in at 1.07 million while and housing starts numbers are expected at 1.05 million.

“US data this week is therefore likely to gain additional weight while markets try and anticipate the FOMC’s tone… The recent run of US data has painted a deteriorating picture of the US economy, however – it has become a victim of its own success, with the dollar eroding the country’s global competiveness,” Moore added.

In the other precious metals, the PGMs suffered more overnight losses – Platinum is $5 lower at $1,104 and palladium fell $9 to $772 per ounce.

The post Gold price slips lower ahead of FOMC meeting appeared first on The Bullion Desk.

Indian govt could still cut gold import duty this year – WGC

Otmane El Rhazi from The Bullion Desk.

The Indian government may yet cut the 10-percent import duty on gold this year despite choosing not to do so in this year’s budget as many market observers had expected, Somasundaram PR, the World Gold Council’s managing director in India, said.

“They have not cut it because they said ‘let us evolve, let us pass a few bills’ but 10 percent is still a lot of money,” he told FastMarkets. “When push comes to shove, it will be reduced but they will wait for certain other things but, as I see it, things are moving in the right direction.”

The Indian government confounded widespread speculation for drop of 2-4 percentage points in the duty, which has stood at 10 percent since August 2013 – it was raised three times that year from the initial four percent.

The finance ministry opted instead for further measures to monetise the metal through the introduction of a gold-centric bond and an overhaul to its gold deposit scheme.

These are the latest state-led initiatives to tap into the vast wealth currently stored by Indian families. Should they prove successful, they could ease over the long term the need to import gold – though previous attempts have foundered, failing to find support among grassroots consumers.

The new bonds will carry a fixed interest rate and will be redeemable in cash pegged to the face value of gold at the time of maturity. As well as giving investors long exposure to gold, they will also earn a fixed interest rate – gold typically has no direct yield.

But Somasundaram doubted whether the schemes, particularly the gold-centric bonds, will find much traction with the Indian public.

“Say I have to pay 30,000 rupees today for 10 grams… without the duty, it would be 26,000 or 28,000 rupees,” he said. “So are you going to charge me 30,000 rupees for a bond and then lower the import duty in six months’ time?”

“I have said it personally before that none of the schemes will work because 10 percent [in import duties] is still a huge incentive for smuggling. As long as smuggling prevails, none of these schemes will work,” he added.

Smuggling has been an issue in the Indian gold market for some time, particularly prior to the removal of the 80:20 rule in November, which made it mandatory to export 20 percent of all imported metal.

Some 175 tonnes of gold entered India illegally last year, Somasundaram believes. India’s total demand in 2014 was 842.7 tonnes, a drop of 13.5 percent on the previous year’s total of 974 tonnes, according to WGC figures.

(Editing by Mark Shaw)

The post Indian govt could still cut gold import duty this year – WGC appeared first on The Bullion Desk.

Gold makes subdued start to week, Fed meeting eyed

Otmane El Rhazi from The Bullion Desk.

The gold price was holding above four-month lows on Monday morning, with all eyes on Wednesday’s Federal Reserve meeting for near-term direction.

Spot gold was last at $1,157.50/1,158.30 per ounce, down 10 cents on the pre-weekend close, with the metal continuing to trade in the $1,150-1,160 range that prevailed throughout most of last week.

Other metals were similarly subdued – silver was last six cents higher at $15.66/15.71 per ounce, platinum was up $1 at $1,113/1,118 although it hit another six-year low earlier at $1,111 and palladium was down $3 at $785/790.

Attention is now on Wednesday’s monthly Fed statement on monetary policy. With the US central bank supposedly close to raising interest rates, the language in the statement will be heavily scrutinised for clues as to when it will do so.

According to speculation, the term ‘patient’ in regards to raising rates will not appear in the statement following a run of strong data and slack in the labour market continuing to lessen.

“Focus will be squarely on the FOMC this week and will have big repercussions for the market in general,” MKS’ Alex Thorndike said in a note.

“This exclusion of ‘patient’ should have a downward emphasis for gold while no change to this language will likely see gold snap higher quite sharply – either way we think there will be fireworks around this announcement,” he added.

Higher interest rates will ultimately dampen gold’s credentials, with investors likely to seek more yield-bearing assets such as bonds in the face of higher US interest rates. Secondly, many believe that a rate rise would be the first of many, outing significant downside pressure on gold.

“Our economists expect the first rate hike in September,” Commerzbank said. “In the current market environment we believe that gold will have trouble achieving any significant or lasting price increases.”

The dollar remains near 12-year highs at 1.0535 against the euro although physical support out of China this morning was moderate, keeping prices buoyed above $1,150. The premium on the SGE was quoted at around $4 over the spot, according to MKS’ Thorndike.

The data calendar today is quiet in Europe while out of the US later will be industrial production figures, the capacity utilisation rate and the NAHB housing market index.

Elsewhere, Chinese Premier Li Keqiang warned over the weekend that the domestic economy faces what he called “considerable” downward pressure on growth, while reflecting on the difficulty that it faces in meeting its annual GDP target of around seven percent.

Keqiang also hinted that the country could turn to “relatively big” stimulus measures if the economic slowdown were to hit the employment sector or fall to the “lower limit”.

(Editing by Mark Shaw)

The post Gold makes subdued start to week, Fed meeting eyed appeared first on The Bullion Desk.

Bullion Market Report – RSBL

Otmane El Rhazi from The Bullion Desk.

The post Bullion Market Report – RSBL appeared first on The Bullion Desk.

GOLD WEBCAST – Gold price under heavy pressure from surging dollar

Otmane El Rhazi from The Bullion Desk.

Heavy downside pressure from a dollar, which is moving parity against the euro, is holding back any significant gains – the US currency was last at 1.0604 ahead of macroeconomic developments, having hit its highest since March 2003 in the previous session. The calendar gets busier next week, with the Federal Reserve’s monthly policy statement likely to affect markets should there be any indications of a move towards higher interest rates in the near term. Once again physical demand out of China this morning was reportedly unimpressive, with demand continuing to fade despite the cheaper gold price, which many believe suggests buyers are holding off in anticipation of further downside in the near term.

The post GOLD WEBCAST – Gold price under heavy pressure from surging dollar appeared first on The Bullion Desk.