Barclays: Palladium Shows Resilience As Precious Metals Retreat Friday September 5, 2014 12:51 PM Precious metals had a softer tone this week but palladium overall has held up relatively well after strong U.S. auto sales, says Barclays. All the metals corrected lower at the start of the week, hurt in part by a stronger U.S. dollar. Platinum dipped near $1,400 an ounce, a level last seen in April, while palladium remained the most resilient, testing only two-week lows, Barclays says. “It is of little surprise that palladium held up relatively well, given the latest trade data, which highlighted continued strength in palladium imports into China. Underlying demand from the auto sector remains robust, while shipments into Switzerland, a physical trading hub for PGMs (platinum group metals), dropped to their lowest in almost 20 years – highlighting a lack of spare inventory.” Meanwhile, U.S. light vehicle sales for August were at a seasonally adjusted annual rate of 17.5 million, the highest since January 2006, Barclays notes. “Our auto analysts note that Labor Day weekend promotions are likely to have boosted sales but believe that the pace of sales should remain healthy through the end of the year….” The increase in vehicle production lifts Barclays’ base case for North American auto-catalyst demand by 10,000 ounces. The bank adds that while this is “small for a market already in a sizeable deficit, it further cements palladium’s position at lofty levels.” By Allen Sykora of Kitco News; asykora@kitco Deutsche Bank Sees $1,200 Gold, Volatile Palladium, Upside For Nickel On Any ‘Supply Shock’ Friday September 5, 2014 9:56 AM Deutsche Bank looks for gold to slip some more, volatility in a palladium market that is sharply higher so far this year, and nickel as a metal that could benefit from a “supply shock.” In a weekly commodities report, the bank says “gold has been the casualty from the consistently strong U.S. data, which has fed through into U.S. Treasuries and the equity markets. We continue to forecast a price decline down to USD1,200/oz by year-end. Although palladium remains a structural preference, the metal will be subject to short-term volatility with Russia-Ukraine news flow impacting sentiment.” Among industrial metals, the bank says stronger U.S. macroeconomic data has continued to drive the performance of metals with favorable supply side dynamics, listing nickel, zinc and aluminum. “We continue to favor nickel as the metal with the largest ‘supply shock’ potential,” the bank says. “The proposed ore ban from the Philippines, although being some way off from approval, reinforced the metals supply vulnerability.” By Allen Sykora of Kitco News; asykora@kitco RBC’s Gero: Comex Gold Supported By U.S. Jobs Data, Short Covering Friday September 5, 2014 9:02 AM Comex gold hit its session higher in the immediate aftermath of a softer-than-forecast report on U.S. nonfarm payrolls, before paring its gains. The Labor Department said payrolls rose 142,000 last month when the consensus estimates of economists were for a gain of 223,000 to 226,000. This made August the weakest month of the year for job gains. “Gold (was) helped this morning by (a) weaker-than-expected jobs report and some short covering….,” says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. Short covering is when traders buy to exit positions in which they have previously gone short, or placed bearish bets. Gero also points to ideas that interest rates in Europe and the U.S. may stay lower for longer than previously expected by market participants. As of 8:59 a.m. EDT, December gold was $4 higher to $1,270.50 an ounce. It peaked at $1,274.80 an ounce a minute after the jobs report after trading at $1,266.10 a minute ahead of time. By Allen Sykora of Kitco News; asykora@kitco MKS: Some Physical Demand Emerges On Gold Pullback Friday September 5, 2014 7:58 AM Some physical demand has emerged in gold on the recent weakness, says MKS (Switzerland) SA. The metal eased Thursday on the combination of a rise in the U.S. service-sector Purchasing Managers Index, higher Treasury yields and weaker euro, the firm says. “Physical demand is on the up; however, it is nowhere near enough to solely support the market at present,” MKS says. Comex gold fell further in overnight screen trading when light sell stops were hit, dragging December gold below $1,260 an ounce, MKS says. “The daily low was touched not long after with some light physical interest from Asian names appearing to curb any deeper sell-off,” MKS says. “Tocom (Tokyo Commodity Exchange) opened shortly after to some light buying interest; however, despite this spot gold was unable to break back through $1260. Once the SGE (Shanghai Gold Exchange) came in they were notable buyers and the spot price quickly jumped $2….” Gold climbed back above the $1,260 region again, then traded mostly sideways in what MKS called a “classic” pre-U.S. nonfarm payrolls session with “most traders happy to sit and wait for clearer direction.” By Allen Sykora of Kitco News; asykora@kitco BNP Paribas Sees Potential Euro Consolidation, Then More Weakness Friday September 5, 2014 7:56 AM BNP Paribas looks for the euro to undergo a period of consolidation and then weaken further against a number of currencies. The euro Thursday fell to a 14-month low of $1.29200 after the European Central Bank cut key interest rates by 10 basis points and announced plans to purchase asset-backed securities, widely referred to as quantitative easing. The easing is negative for the euro for three reasons, says BNP Paribas. It highlights policy divergence between the ECB and other major central banks, including the U.S. Federal Reserve and Bank of England. Also, it moves rate differentials against the euro and encourages the use of it as a funding currency. And, it underscores the ECB’s willingness to act to prevent a further decline in inflation expectations, helping to cap real rates. “A period of consolidation may ensue given the big move lower since (ECB) President (Mario) Draghi’s Jackson Hole speech last week,” BNP Paribas says. “However, this morning’s better-than-expected July German industrial output data -- plus 1.9% m/m -- offered little support. And, our tech team notes no major support levels until the 2013 lows at $1.2754. We expect EUR to continue to lose ground in the near-term versus a number of crosses—we remain short EURGBP and EURCAD.” By Allen Sykora of Kitco News; asykora@kitco TDS: Aggressive Sanctions Against Russia Could Hurt Gold Friday September 5, 2014 7:55 AM Aggressive Western sanctions against Russia over the Ukraine crisis could ultimately hurt gold if Russia has to sell some of its gold reserves, says TD Securities. “While Russia still has plenty of scope to fund its international transactions for another year or so—even if Western sanctions stop it from selling new sovereign debt—its reserves are likely to continue to move lower,” TDS says. “This implies that the countrys 35.2 million oz of gold holdings will represent an increasing share of the Russian FX reserves. More effective sanctions could force Russia, who has been an aggressive buyer in recent years, to sell the yellow metal to secure FX liquidity.” In particular, TDS cites the issue of whether the European Union and U.S. would prohibit investors from buying new Russian sovereign paper. “As proposed by the U.K., we could also see Russia being barred from using the SWIFT banking network, which is the method that has been effectively used against Iran,” TDS says. By Allen Sykora of Kitco News; asykora@kitco
Posted on: Fri, 05 Sep 2014 22:00:10 +0000
Trending Topics
Recently Viewed Topics
© 2015