Standard: Central Banks Remain Gold Buyers; Indian Demand Picks Up
Central banksremain noted gold buyers and there are signs of demand picking up in India,says Standard Chartered Bank. Gold prices have fallen lately, which the bankblames on U.S. dollar strength. “Physical demand will be key to tracking howsolid the floor for prices is, but in the seasonally slow period for demand, itwill likely be fragile,” Standard says. “The exception here is potential demandgrowth in Turkey amid political and economic uncertainty. In an environmentlacking strong investment demand, physical demand sets the price. But noteveryone is selling gold - central banks added to reserves in May, demand inIndia has shown signs of life, and risk reversals suggest there is somehesitant appetite to establish long positions.” Gold prices started to edgelower in May and India’s gold imports rose by 36% that month compared to April,Standard says. Imports were down 31% year-on-year. However, Standard says, “Ifdemand does pick up significantly counter-seasonally, inventory will likely bedepleted quickly, pushing local premia higher.” Meanwhile, InternationalMonetary Fund data show that central banks continued to add to their goldreserves last month, Standard says. Russia was the largest buyer, adding 18.4tonnes, taking year-to-date purchases to 89.5 tonnes.
By Allen Sykoraof Kitco News; asykora@kitco.com
SP Angel:Future Gold Supply Declining, ‘Not Really A Substitute’
Thursday July 12, 2018 09:47
Commoditiesbrokerage SP Angel says comments from gold producers suggest that the futuresupply of freshly mined metal may be limited. “When 'peak oil' startedbecoming a problem 10 years ago, the industry developed new fracking andhorizontal drilling technologies,” the firm says. “And other industries, likesolar and wind, began developing better substitutes for oil. But there's not reallya substitute for gold. And the biggest players in the space are saying we'rerunning out.” SP Angel lists comments to this effect from several miningexecutives. The firm quotes Rudy Fronk, chairman and chief executive officer of Seabridge Gold, as saying last month: "Peak gold is the new reality inthe gold business with reserves now being mined much faster than they are beingreplaced." SP Angel quotes Nick Holland, CEO of South Africa's GoldFields, as saying: "We were all talking about how production was going toincrease every year. I think those days are probably gone." SP Angel alsoquotes Kevin Dushnisky, president of Barrick Gold Corp., as saying:"Falling grades and production levels, a lack of new discoveries, andextended project development timelines are bullish for the medium- andlong-term gold price outlook."
By Allen Sykoraof Kitco News; asykora@kitco.com
RBC’s Gero:Open-Interest Data Suggest More Bears
Thursday July 12, 2018 09:47
Comex gold isattempting to stabilize after recent data show the number of open futurespositions has risen, suggesting more bearish traders (also known as shorts),says George Gero, managing directorwith RBC Wealth Management. For now, he says, gold is attempting to rally, facing headwinds from a stock-marketrecovery but helped by a crude-oil rebound. As of 9:33 a.m. EDT, Comex Augustgold was $1.40 higher to $1,245.80 an ounce. Gero says the precious metal is “still looking for leadership as funds havebeen sellers lately. Many bears lately [have] shown [up] in open interest andoptions numbers.” He notes open interest has been rising as prices moved lowerrecently, meaning “there are plenty of shorts now.”
By Allen SykoraFor Kitco News
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