News

Citi lowers gold price forecast for 2015 and 2016

Date Aug 19 2015 09:03:48 Source:
Aug.19,2015(SHMET)--

Citi lowered its average gold price forecasts for this year and 2016 as weak macro themes and short-term fundamentals dominate the market, it said on Tuesday.

 

The bank now forecasts gold prices to average $1,090 per ounce in the third quarter of this year, slipping further into the fourth quarter to $1,050. The bank forecasts an annual average price this year of $1,140 and $1,050 in 2016.

 

The spot gold price was last at $1,111.2/1,111.5, down $5.80 on the previous close.

 

After testing $1,080 in the first week of August, gold prices rallied 1.7 percent last week after a surprise devaluation of the Chines yuan sparked renewed safe-haven buying and prompted short-covering in gold, which had recently reached all-time lows in COMEX money manager net length.

 

But despite recent market volatility, Citi said the Fed will look past international macro developments, focusing instead on positive trends in US labour data, and therefore continue to see September Fed interest rate lift-off as the most likely scenario.

 

Citi said it sees continued strength for the dollar as the Fed begins tightening, with the dollar index expected to breach 104 over the next several quarters.

 

“If this appreciation manifests, then we are likely to be in for more pain in gold markets even after the first hike takes place,” it said in the report.

 

“On the other hand, while there may be a risk-on/risk-off argument to be made for supporting bullion prices, our analysis indicates that in the absence of a severe crisis in global financial markets, gold should find little sustained support from risk-off flows,” it added.

 

Aside from last week, safe-haven gold-buying has been notably absent through most of the second and third quarter, particularly during the Chinese equity sell-off and at the height of the Grexit crisis, it noted.

 

“Macro factors alone cannot inform an accurate prediction of gold returns, given our results and the dollar strength expected over the coming quarters, in our view the bias for gold still remains strongly to the downside,” it added.

 

 

Edited by SHMET

Harmony Q4 gold output up four pct, but posts full-year loss

Date Aug 19 2015 08:58:42 Source:
Aug.19,2015(SHMET)--

South Africa’s Harmony gold production in the fourth fiscal quarter of the financial year ending June 30 increased four percent from the third quarter, it said in its full year results today.

 

Gold sold increased by 12 percent quarter-on-quarter, while total production for the year was 1.08 million ounces.

 

Harmony recorded a net loss of 4.5 billion rand ($396 million) in the full year, due to a total impairment of 3.5 billion rand ($303 million).

 

The impairments were due to the restructuring of operations for profitability and in response to low commodity prices and high operating costs, which resulted in a reduced life-of-mine, it said.

 

“We have restructured each of our operations to ensure that our company is profitable even in a tough gold price environment,” Graham Briggs, Harmony’s chief executive officer, said.

 

“Our focus is therefore on increasing our margins – not only through capital curtailment and cost reductions, but most importantly through increasing our production,” he added.

 

 

Edited by SHMET

Gold begins week in positive territory, physical demand growing

Date Aug 18 2015 09:14:01 Source:
Aug.18,2015(SHMET)--

Gold prices increased to begin the new trading week as market participants try to gauge the impact of Chinese currency intervention, while seasonal buying bolsters demand.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange rose $5.70 to $1,118.40 per pounce. Trade ranged from $1,112.90 to $1,122.20.

 

In ongoing currency news, the People’s Bank of China (PBoC) devalued the yuan to 6.3939 against the dollar – a continuation from last week’s cut of 4.6 percent to the lowest point since 1994.

 

The bank is trying to jumpstart slowing exports and equity markets that have grown increasingly bearish.

 

Lask week, the PBoC announced that it bought 19 tonnes of gold last month when prices were at five year lows. Total gold holdings were at 1,677 tonnes at the end of July, up one percent.

 

“The week has started calmly for gold, as the market continues to digest the implications of last week’s depreciation of the RMB and the PBOC’s more open information policy with respect to its gold reserves,” ICBC Standard Bank said.

 

“On the physical side, however, while buying interest has eased back from last week’s high volumes, have been generally solid so far. The end of Ramadan has triggered the start of a seasonal upturn in Middle Eastern demand, though the speed of the 6 percent rally in gold in rupees is likely to make Indian dealers cautious over the next few days,” the bank added.

 

Meanwhile, the net long fund position (NLFP) in gold increased by 2,542 contracts, or nine percent, to 32,442 from 29,900 contracts in the week ending August 11, according to the latest CFTC statistics.

 

The increase in the net length for the second consecutive week was driven by long accumulation – up 2,986 contracts- that was slightly counterbalanced by a small increase in short positions of 444 contracts. The net length is down about 72 percent in the year-to-date.

 

In data today, the NAHB housing market index in August was 61, just below the 62 forecast. However, the Empire state Manufacturing Index in August declined to -14.9, a staggering miss from the 5.0 consensus.

 

Turing to US equities, the Dow Jones industrial average and S&P were each up 0.4 percent, while the dollar was 0.3 percent stronger at $1.1077 against the euro.

 

As for the other precious metals, Comex silver for September delivery was up 7.7 cents at $15.290 per ounce. Trade has ranged from $15.180 to $15.375.

 

Platinum for October delivery on the Nymex rose $5.8 at $999.80 per ounce, while the most-actively traded palladium contract was at $613.95 per ounce, down $3.55.

 

 

 

Edited by SHMET

Gold gains as US data disappoints

Date Aug 18 2015 09:13:46 Source:
Aug.18,2015(SHMET)--

Gold continued to climb higher on Monday afternoon as disappointing US data weighed on the dollar.

 

The spot gold price remained above the psychologically important $1,100 per ounce level – last at $1,118.4/1,118.8, up $3.60 on Friday’s close. Trade has ranged from $1,114.0 to $1,122.9 so far today.

 

In today’s data from the US, empire state manufacturing index missed the mark at -14.9, well below the 5.0 forecast and its weakest since 2009, while the NAHB housing market index also disappointed at 61.

 

“The Empire State Manufacturing Index was far below market expectations for August. Market participants are likely to reassess negatively their views about the timing and the speed of the US monetary policy normalisation,” Boris Mikanikrezai, FastMarkets analyst, said.

 

“Accordingly, the US dollar is weakening, which seems to provide some support to metals, especially the precious metals complex,” he added.

 

Elsewhere, Japan announced its second quarter preliminary quarter-on-quarter GDP at -0.4 percent, a decline from the previous quarter’s one percent growth.

 

Out of the eurozone, the region’s trade balance came in better than expected at 21.9 billion.

 

Meanwhile, the net long fund position (NLFP) in gold increased by 2,542 contracts, or nine percent, to 32,442 from 29,900 contracts in the week ending August 11, according to the latest CFTC statistics.

 

The increase in the net length for the second consecutive week was driven by long accumulation – up 2,986 contracts- that was slightly counterbalanced by a small increase in short positions of 444 contracts. The net length is down about 72 percent in the year-to-date.

 

In the other precious metals, silver was little changed at $15.31/15.36. Platinum at $993/998 was $4 higher and palladium at $613/618 was down $2.

 

 

Edited by SHMET

Gold rally limited by soft physical demand

Date Aug 18 2015 09:13:34 Source:
Aug.18,2015(SHMET)--

Gold futures posted small gains on Monday as speculative investors gingerly waded back into the water; however, lacklustre physical demand could cap the gains.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $3.10 at $1,115.80 per ounce. Trade has ranged from $1,112.90 to $1,119.30.

 

In last week’s big news, the People’s Bank of China (PBoC) surprised the market by devaluing the yuan for three straight days.

 

“The PBoC’s move can potentially delay a Federal Reserve rate hike in September, and thus is viewed as supportive for gold prices. Physical demand, however, remains weak,” Barclays Capital, noted.

 

The World Gold Council last week reported that second quarter gold demand totalled just 914.9 tonnes, which is the lowest level in six years. However, total physical supply also dropped five percent year-on-year, led by the drop in recycled supply.

 

“Although mine supply rose three percent, recycled supply dropped eight percent,” Barclays said. “We estimated marginal cash cost for mine supply is around $1000 per ounce right now; however recycled supply can be much more price-sensitive. It is an early sign of supply response with recycled gold now at an eight years’ low.”

 

Meanwhile, the net long fund position (NLFP) in gold increased by 2,542 contracts, or nine percent, to 32,442 from 29,900 contracts in the week ending August 11, according to the latest CFTC statistics.

 

The increase in the net length for the second consecutive week was essentially driven by long accumulation – up 2,986 contracts – that was slightly counterbalanced by a small increase in short positions of 444 contracts. The net length is down about 72 percent in the year-to-date.

 

“The spec positioning has continued to improve after investors built short positions aggressively in the past two months,” Boris Mikanikrezai, FastMarkets analyst, said.

 

“Interestingly, the increase in the net spec length was driven by fresh buying rather than short-covering, suggesting that sentiment may have turned bullish. That said, fresh buying needs to continue in the next few weeks in order to underpin the current rally,” he added.

 

In data today, Japan announced its second quarter preliminary quarter-on-quarter GDP at -0.4 percent, a decline from the previous quarter’s one percent growth.

 

Out of the eurozone, the region’s trade balance came in better than expected at 21.9 billion.

 

Here in the, empire state manufacturing index missed the mark at -14.9, well below the 5.0 forecast. Later today will see the National Association of Home Builders (NAHB) index.

 

In the wider-markets, the dollar was 0.06 percent stronger at 1.1102 against the dollar, while Germany’s DAX was down 0.15 percent, while France’s CAC-40 rose 0.18 percent.

 

As for the other precious metals, Comex silver for September delivery was down 1.3 cents at $15.200 per ounce. Trade has ranged from $15.180 to $15.290.

 

Platinum for October delivery on the Nymex was down $1.00 at $993.00 per ounce, while the most-actively traded palladium contract was at $613.10 per ounce, down $4.40.

 

 

Edited by SHMET
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