Standard Chartered: 'Gold Has Fulfilled Its Role'
Gold “fulfilled its role” by providing liquidity when investorsneeded it during a recent sell-off in global equities, says Standard Chartered.Whereas such stock-market sell-offs sometimes lead to safe-haven buying, golddeclined in this instance, with a number of analyst saying some investorsliquidated their gold holdings to raise needed cash. “While gold’s price weakness may reflect alack of conviction and some uncertainty over the relevance of gold exposure inthe current environment -- as indicated by the surge in short interest in GLD,the largest gold-backed exchange traded product -- in our view gold hasfulfilled its role,” Standard Chartered says. “Investors turn to liquid assetsin order to meet margin calls amid market volatility, and gold exposure wasredeemed as a readily available asset.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Standard Chartered: India’s Budget Good For Gold In Long Term
Wednesday February 14, 2018 09:18
India’s annual budget is good for gold but only in the longer term,as authorities did not deliver the cut in duties that market participants hadbeen lobbying for, says Standard Chartered. “However, in our view, twoannouncements in particular will support the evolution of the industry andboost demand longer term,” the bank says. “First, the government proposed tofocus on growth in rural income and infrastructure, aiming to double farmincome by 2022.” Much of the country’s gold demand is driven by buying frompeople living in rural areas. “The second is the initiative to formulate acomprehensive gold policy, including establishing a regulated gold exchange anddeveloping gold as an asset class,” Standard Chartered says. Back in 2013,India increased the import duty on gold to 10% in an attempt to reduce itscurrent-account deficit that in turn is driven by the country’s dependence onoil imports. Analysts note that the World Gold Council estimates that India’sgold demand reached 726.9 tonnes last year, recovering from the 2016 low of666.1. “The budget does not provide a short-term boost; instead pricevolatility, inflation and weather effects will be key,” Standard Charteredsays. The bank says it looks for India’s gold demand to continue to recover andhit 760 tonnes in 2018 and breach 800 tonnes in 2019.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: ETFGold Outflows Come To Halt
Wednesday February 14, 2018 09:18
Gold holdings byglobal exchange-traded funds finally rose again on Tuesday, points outCommerzbank. These products trade like a stock but track the price of thecommodity, with metal put into storage to back the shares. “The gold ETFstracked by Bloomberg ended a seven-day phase of outflows totaling 22 tonnesyesterday,” Commerzbank says. “Holdings were increased by almost six tonnesyesterday.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Metals Focus: UAE Gold-Jewelry Imports ‘Severely Depressed’
Wednesday February 14, 2018 09:18
Higher taxes appear to be a growing issue for gold-jewelrywholesalers in the United Arab Emirates, although other issues are also at play,says Metals Focus. The consultancy cites two tax changes in recent years -- a5% import duty on jewelry at the start of 2017 and a 5% value-added tax thisyear. “This has accompanied a slump in gold jewelry imports into the UAE, withlast year’s inflows roughly half those in 2014,” analysts report. Gold jewelryconsumption in the UAE has been fallen from just over 64 tonnes in 2013 tounder 43 tonnes last year, Metals Focus says. Drivers include politicaltensions and armed conflicts in the region, weak energy prices, lowergovernment revenues, rising living costs and deteriorating consumer sentiment.However, analysts say they also believe that the UAE has, to some extent,declined in importance as a hub for wholesaling. For instance, jewelry importsinto Iran and Iraq are thought to have grown last year, while Italian data showthat through October, Italian gold-jewelry shipments to Turkey rose 35%year-on-year and to Lebanon by 75%. Further, there has less buying by Indiansvisiting the UAE due to reduced price differentials between purchases at homeand in the UAE. “Industry sources...inform us that jewelry imports into the UAEthis year so far are severely depressed,” Metals Focus says. “To an extent,this is partly due to some importers pulling forward imports into December lastyear to beat the 1st January deadline [for higher taxes]. Some are hopeful thatthe worst damage has now passed and that a tentative recovery could soon start,in part as wholesalers and their customers adjust to the new regime. However,it seems highly likely that imports will remain sluggish for the entire firstquarter and perhaps for the whole of 2018 due to further market share loss toother wholesaling hubs, greater purchasing at home by Indian consumers and poorsales within the UAE itself.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: ‘Unease’ Hangs Over U.S. Equity Market
Wednesday February 14, 2018 09:18
Brown BrothersHarriman says that an “unease” continues to hang over the stock market afterlast week’s downdraft. “It is as if a shoe fell last week, and mostinvestors seem to be waiting for the other shoe to drop,” BBH says. “It is hardto imagine the kind of body blow that the equities took last week without somekind of follow-through and knock-on effects.” There are worries about inflationafter a rise in January average hourly earnings, although BBH says the focus onthe Consumer Price Index Wednesday morning may be “too much.” Analysts say they look for U.S. inflation toedge higher this year, but see it as beginning later in first quarter andrunning through early in the third quarter. Further, they point out that themarket has “nearly fully discounted” another 25-basis-point U.S. rate hike nextmonth, with a 60% chance of a follow-up hike in June.
By Allen SykoraFor Kitco News
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asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.