Mitsubishi’s Butler: Pace Of U.S. Rate Hikes To Be Key For Precious Metals

January 4, 2016

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The performance of precious metals in 2016 will strongly depend on the pace of increases in U.S. interest rates, which in turn impacts the U.S. dollar and the environment for Treasury yields, says Jonathan Butler, precious-metals strategist with Mitsubishi. “Decent growth in the jobs market is expected to be evident in Friday’s nonfarm payroll data, which would be supportive of a further rate hike as early as March or April,” he says. “In the short term, this could lead to a rebound in the dollar and a rally in U.S. Treasury yields, putting pressure on gold and its sister metals. If, however, the payroll data shows considerably less than 200K new jobs created in December or Wednesday’s manufacturing and private jobs data disappoints, the implication will be that the U.S. economy is not ready for further rate rises, and a bullion-benign ‘lower for longer’ rate environment could prevail.”

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

U.S. Mint: Gold, Silver Coin Sales Rise Sharply During 2015

Monday January 04, 2016 11:58

U.S. Mint sales of gold and silver bullion coins were sharply higher in 2015, the government reports. American Eagle gold bullion coin sales were 52.81% higher than 2014 with 801,500 ounces sold. American Buffalo gold coins closed the year 24.22% higher with 220,500 ounces sold. The Mint reported weeks ago that American Eagle silver bullion coins set a new all-time record for sales. The year-end tally shows that record stands at 47 million ounces, 6.8% higher than the previous record set in 2014.“America the Beautiful” five-ounce silver bullion coin sales were 1,063,000 ounces, 59.25% higher than 2014. The U.S. Mint says it will begin taking orders for the 2016 American Eagle gold and silver bullion coins and American Buffalo coins on Jan. 11.  

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

Mitsubishi’s Butler: PGMs Tumble Following Chinese Economic Data

Monday January 04, 2016 11:58

Platinum group metals are on the defensive despite the gains in gold that have been sparked by Middle East tensions and a stronger euro against the U.S. dollar, says Jonathan Butler, precious-metals strategist with Mitsubishi. As of 11:55 a.m. EST, Comex February gold was up $12 for the day. “Platinum and palladium were dancing to a different tune, however, falling early on this the first full trading day of 2016 after China’s Caixin purchasing managers’ index came in at 48.2 in December against a previous reading of 48.6 and forecasts of 48.9; this marked the 10th successive month that China’s manufacturing sector has been in contraction and bodes ill for offtake of PGMs in industrial and jewelry applications,” Butler says. Nymex April platinum was down $11.40 to $881.80, while March palladium was $18.50 weaker at $543.50.

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

RBC’s Gero: Gold Soars On Mideast Tensions, Steep Declines In Global Equities

Monday January 04, 2016 11:46

Gold futures are having a happy New Year so far, hitting their strongest level in nearly four weeks. The Comex February contract is up $16.80 to $1,077 an ounce and peaked at $1,083, the highest price since Dec. 9. “With the Middle East tensions, general stock sell-off in the world, China sneezing and all of us catching a cold, the gold up move was expected,” says George Gero, vice president with RBC Capital Markets Global Futures. “Technicals are still negative as we need a move over $1,100 to attract asset allocators and for investors to act positively after all the disappointments last year. Currency devaluations, possibly  Argentina, Brazil (and)China, may add to investors’ concerns and gold may attract attention soon.” Tensions have arisen between Saudi Arabia and Iran, and Chinese equities tumbled overnight after a weak manufacturing survey. The Dow Jones Industrial Average is down by around 422 points.

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

Commerzbank: Gold ETF Holdings Decline In 2015 But Should Rise In 2016

Monday January 04, 2016 08:24

The year 2015 was the third straight one with net outflows for gold exchange-traded funds, but this should reverse in 2016, says Commerzbank. Analysts cite data compiled by Bloomberg showing that gold ETFs were reduced in 2015 by around 133 tonnes, or 8.3%, which weighed heavily on gold prices, particularly in the second half of the year, the bank says. “We expect investors to return during the course of the year, which should lend support to the price,” Commerzbank says. Silver ETF holdings were reduced by 494 tonnes, or 2.6%. Investor withdrawals from platinum and palladium ETFs weighed heavily on these metals last year, the bank continues. Platinum ETFs tracked by Bloomberg shed 332,000 ounces, or 12%, last year, while palladium ETFs holdings were slashed by 723,000 ounces, or 24%.

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

MKS: January Is Historically Strong Month For Gold Ahead Of Chinese New Year

Monday January 04, 2016 08:15

Historically, January tends to be a seasonally strong month for gold due to buying ahead of the Chinese New Year and commodity index re-balancing, says MKS (Switzerland) SA. The firm notes that the onshore gold premium in China closed out 2015 at a “healthy” $5 above the loco London price and looks set to continue around that level into 2016, perhaps even improving on the approach of the Chinese New Year in the week of Feb 7-13. “Demand from China was fairly slow throughout December although we usually do see seasonal demand pick up from them through January and February, which could support the gold price this month,” MKS says. Ultimately, however, though the direction of the precious metals may still hinge on the U.S. dollar, the firm adds.

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

BBH: Global Markets In Turmoil After Saudi-Iran Tensions, Weak Chinese Data

Monday January 04, 2016 08:15

Global markets are starting 2016 in turmoil on a combination of weaker Chinese economic data and rising Middle East tensions, says Brown Brothers Harriman. Saudi Arabia broke off diplomatic relations with Iran after a senior Shi’ite cleric was among 47 people executed in the former, and Iranians attacked the Saudi embassy. Meanwhile, China’s official manufacturing Purchasing Managers Index remained in contraction territory, and China’s benchmark stock index fell sharply. “Global equity markets are sharply lower, dragging bond yields down,” BBH says. “The risk-off move has propelled the yen sharply higher. Its 1.4% advance has seen the dollar slump to JPY118.70, its lowest level since-mid-October.” The dollar is also weaker against the euro and British pound sterling.  Gold is stronger.

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

Category: Gold