Analysts at BMO Capital Markets say they would favor buying silver on price dips. Their base-case outlook is for silver prices to remain range-bound, although with a greater downside risk than upside risk in the near term. Analysts say they are not revising their price forecasts for now, noting that silver and gold are not far from BMO’s second-half forecasts of $19.75 and $1,360 an ounce, respectively. For the metals to rise further, they would need a new structural catalyst, BMO says. Meanwhile, analysts continue, there is a downside risk from a potential Federal Reserve rate hike. “At this point, we would still be buyers on the dip given our global outlook,” BMO says. Still-high net-long positioning by speculators in the futures market means any sudden shift in market sentiment could cause a large number of positions to be unwound. However, “if our current view on weak global growth is maintained, we expect the ongoing uncertainty to remain supportive for precious metals and would buy on the dip.”

By Allen Sykora of Kitco News; asykora@kitco.com

SocGen: Platinum, Palladium To Benefit From Tightening Fundamentals

Tuesday August 23, 2016 10:27

Societe Generale looks for platinum and palladium to rise on tightening supply/demand fundamentals, with palladium likely to outperform. Investors are starting to pay more attention to these precious metals as gold consolidates, helping platinum and palladium rise last week to the highest level in more than a year, the bank says. SocGen cites a report from the GFMS team at Thomsen Reuters forecasting a platinum supply deficit of 200,000 ounces this year and a palladium deficit of 1.25 million. SocGen cites growing auto-catalyst demand, the resumption of U.S. Mint sales of platinum coins last month and news that the Mint is in negotiations to develop a first-ever palladium coin program. Additionally, current wage negotiations between South African unions and producers are also supportive for prices, SocGen says. “Looking forward, we predict that platinum and palladium will continue to benefit from their forecast tightening in fundamentals, with palladium leading the way,” SocGen says.

By Allen Sykora of Kitco News; asykora@kitco.com

TDS: Gold Should Hold Near $1,300 Even If Fed Hawkish At Jackson Hole

Tuesday August 23, 2016 08:34

TD Securities doubts gold prices would fall much below $1,300 an ounce even if Federal Reserve Chair Janet Yellen were to suggest a coming rate hike when she addresses a Jackson Hole Fed symposium on Friday, says TD Securities. “While we do think that Janet Yellen may point the Fed in a more hawkish direction on Friday, there is likely to be continued ambiguity surrounding future U.S. monetary policy,” TDS says. “This, in combination with the fact that some $13 trillion worth of fixed-income assets are yielding negative rates, should impact interest rates only modestly and neither the opportunity cost to hold the yellow metal or the carry costs should rise too much. Add to this risk of an equity correction and other systemic risks forming from the current experimental monetary policy practiced by the ECB (European Central Bank) and the BOJ (Bank of Japan), the demand for gold should remain firm. As such, gold is unlikely to drop much below $1,300/oz, even if we hear a more hawkish monetary policy tone emanating from the annual Jackson Hole, Wyoming gathering.”

By Allen Sykora of Kitco News; asykora@kitco.com

Credit Agricole: Don’t Expect Too Much Clarity From Data-Dependent Fed

Tuesday August 23, 2016 08:34

Credit Agricole says market participants should not expect Federal Reserve policymakers to provide too much clarity at their annual symposium in Jackson Hole this weekend. In particular, traders are awaiting a Friday speech by Fed Chair Janet Yellen for clues on when policymakers might hike U.S. interest rates again. “Indeed, previous symposia at Jackson Hole have been used by central-bank chiefs to make important pronouncements,” Credit Agricole says. “However, this year’s Jackson Hole symposium is about the long-term monetary policy framework and Yellen’s speech is on the Fed’s toolkit. Thus, we doubt it will provide any signals regarding the timing of the next hike, leaving only the incoming data to guide expectations.” Still, the symposium could support risk sentiment some by showing that the Fed retains the desire and is open to new tools to support the economy and stabilize financial markets if needed, Credit Agricole adds.

By Allen Sykora of Kitco News; asykora@kitco.com

HSBC: Gold May Be Restrained Ahead Of Jackson Hole; Then Hinge On Yellen Speech

Tuesday August 23, 2016 08:34

Gold could stay on the defensive until the annual Federal Reserve symposium at Jackson Hole near the end of the week, says HSBC. Markets in particular will be focusing on a Friday speech by Fed Chair Janet Yellen, with HSBC commenting that the market is unsure what to expect. “Recent Fed speeches have contained mixed signals regarding policy outlook,” the bank says. New York Fred President William Dudley suggested a September hike is a possibility, while San Francisco Fed President John Williams suggested instead it may be wise to raise the inflation target and nominal gross-domestic-product growth levels. Vice Chair Stanley Fischer then said over the weekend that the U.S. economy is close to the Fed’s targets, which markets interpreted as another hint of rate hikes. The Fed is likely to also discuss other issues that could ultimately have an impact on gold, such as what authorities can do to combat the next recession and where the “neutral rate of interest lies,” HSBC says. “How this will all play out for gold is unclear,” HSBC says. “We think the most likely case is that gold will be under modest pressure until Jackson Hole and that prices will take their lead from the tone of the symposium and in particular from Janet Yellen’s speech. Late August usually sees low volume with only modest buying or selling capable of moving prices.”

By Allen Sykora of Kitco News; asykora@kitco.com

Commerzbank: Swiss Data Show U.K. Still Large Gold Importer During July

Tuesday August 23, 2016 08:34

Swiss customs data show the country’s gold exports remained high last month and the U.K. remains a notable importer, says Commerzbank. Analysts cite data showing that Switzerland exported 192 tonnes of gold in July, the most since December. Only 37% was shipped to Asia. “Although gold exports to China and Hong Kong remained at the previous month’s level of 55.5 tonnes, they were nonetheless nearly twice as high as at the same time last year,” Commerzbank says. “By contrast, gold exports to India fell both month-on-month and year-on-year to 16.2 tonnes. The latter could be due among other things to the high gold prices in India itself; they climbed for a time in July to their highest level in nearly three years, which apparently led to consumer reticence.” As a result, Indian gold demand remains subdued in the run-up to the autumn festival season, Commerzbank says. “By contrast, Switzerland appears to have exported large amounts of gold once again to the United Kingdom, where a number of gold ETFs (exchange-traded funds) store their gold,” Commerzbank says. “Holdings in the gold ETFs tracked by Bloomberg were topped up by 55 tonnes in July.”

By Allen Sykora of Kitco News; asykora@kitco.com