Gold and silver should experience wider trading ranges and increased volatility in September with both likely to continue moving lower going into the Federal Reserve meeting on 17 September, before taking uncertain directions depending on the rate decision made then, said INTL FCStone in a report on Monday.
The broker sees gold trading at$1070-1,155 per ounce in September. Gold will move lower going into the Fed meeting as the dollar may get bid up in anticipation of a rate rise, while prices could fall even further post-Fed decision, especially if equities rally, the broker said.
The lacklustre state of retail physical demand of gold in China and India is also of concern, whereby Indian gold demand had fallen seven percent year-on-year in the first half of the year, it noted. “The second half looks iffy as well if rural spending does not pick-up in the wake of an uncertain monsoon season,” it added.
There also seems to be no let-up in exchange traded fund outflows, with the broad category haemorrhaging money for 25 months in a row (as of the end of June), it said.
The spot gold price was last at $1,122.2-1,122.6 on Monday, up $0.6 from Friday’s close.
INTL FCStone sees silver prices trading at $13.75-15.25 in September. For most of August, silver had followed gold’s trajectory, although at times it was influenced more by the struggling base metals markets where investors remained concerned about Chinese demand, it said.
On the physical side, the US Mint said coin sales in August had fallen 10.7 percent from July to 4.93 million ounces, although this was more than double the 2.1 million sold in August 2014. On the investment side, money continues to flow out of a variety of silver ETF – the overall category has lost some 2.9 million ounces year-to-date, bringing overall holdings at just over 525 million ounces, it said.
The spot silver price was recently at $14.61-14.66 on Monday, up $0.09 from its previous close.
For platinum, INTL FCStone expects September trading to range $940-1,040. Low prices continue to take their toll on key suppliers like Lonmin, with key South African mining companies, unions and the government planning to stem job losses and output cuts by promoting platinum as a central bank reserve asset. “We doubt this will go far in rectifying the problem of simply too much supply being in the market,” the report said.
The spot platinum price was last at $990-995 on Monday, up $6 from Friday’s close.
Palladium is expected to trade at $520-630 in September. The metal had rallied on account of a recovery in gold and platinum, but this cannot really make up for the fact that the fundamentals of the complex are looking increasingly grim, INTL FCStone said.
A sharp slowdown is setting in in the automotive sector in China, with the high end part of the market particularly weak and sales falling in other emerging markets as well, it said.
While limited production growth is expected in the near-term, “the problem now is demand, especially from China, which is why we continue to see prices remaining under pressure over the short-term,” it said.
The spot palladium price was recently at $578-583 on Monday, up $10 from its previous close.
The post Increased volatility for precious metals in September – INTL FCStone appeared first on The Bullion Desk.
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