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Precious Pulse
Official sector update
Feature article
The activity by the official sector in bullion markets remains keenly followed,
with recent press via wikileaks around Chinese buying and questions around
European bond sales remaining pertinent to investors.
Trends remain positive; it is unlikely we will see substantial sales from CGBA
signatories in the foreseeable future, while central banks without substantial
holdings have made large purchases in the year thus far.
Market Comment – looking for a weaker dollar to propel longer
term gains
Over the past few weeks, economic data has been more mixed rather than
unrelentingly negative. The payrolls report was poor compared to
expectations, but other key data releases such as the PMIs and durable
goods order in the US were a little better than anticipated.
The highly anticipated speeches from central bankers at the Jackson Hole
conference didn’t provide a decisive shift in thinking on the current policy
settings, although Chairman Bernanke’s speech, coupled with the minutes of
the last FOMC meeting, suggest the FOMC is leaning more towards further
stimulus measures rather than not. In Europe, concerns rose about whether
Greece will meet the requirements to receive the next tranche of loans,
putting pressure on sovereign debt markets across the region. Spanish and
Italian bond yields crept a little higher over 5%, which may prompt larger
buying from the ECB.
Gold saw swings in both directions as markets moved on the incoming news,
first falling sharply and then pushing higher at the end of the week. In the end
it finished last week around 2% below the most recent high at $1875/oz.
Platinum saw some outperformance when gold prices fell, but gave that up
when gold bounced at the end of last week, while palladium quietly shifted up
~4 ½% to $785/oz on the PM fix.
The Commitment of Traders Report (COTR) saw length taken off at the end of
August, with non-commercial net longs on gold down by 5.66moz or 19.5%
from the peak at the start of the month. Palladium net longs are also
substantially lower than at the start of August, while platinum and silver have
seen a 15% and 3% increase in net non-commercial longs, respectively, since
2 August.
While we would not discount gold moving to new peaks in the not too distant
future, we think we may have to see some greater US$ weakness for gold to
shift higher. We wonder whether the appetite for safe havens will increase in
the near term, with interest rates on inflation adjusted bonds again shifting into
negative territory on the back of the poor non-farm payrolls report. While
nominal yields may fall further, this perhaps may be at the expense of inflation
expectations, which are currently fairly steady at 2%. This would keep real
interest rates steady, or may even rise if markets were concerned about
deflation (which we think is unlikely)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Precious Pulse
Official sector update
Feature article
The activity by the official sector in bullion markets remains keenly followed,
with recent press via wikileaks around Chinese buying and questions around
European bond sales remaining pertinent to investors.
Trends remain positive; it is unlikely we will see substantial sales from CGBA
signatories in the foreseeable future, while central banks without substantial
holdings have made large purchases in the year thus far.
Market Comment – looking for a weaker dollar to propel longer
term gains
Over the past few weeks, economic data has been more mixed rather than
unrelentingly negative. The payrolls report was poor compared to
expectations, but other key data releases such as the PMIs and durable
goods order in the US were a little better than anticipated.
The highly anticipated speeches from central bankers at the Jackson Hole
conference didn’t provide a decisive shift in thinking on the current policy
settings, although Chairman Bernanke’s speech, coupled with the minutes of
the last FOMC meeting, suggest the FOMC is leaning more towards further
stimulus measures rather than not. In Europe, concerns rose about whether
Greece will meet the requirements to receive the next tranche of loans,
putting pressure on sovereign debt markets across the region. Spanish and
Italian bond yields crept a little higher over 5%, which may prompt larger
buying from the ECB.
Gold saw swings in both directions as markets moved on the incoming news,
first falling sharply and then pushing higher at the end of the week. In the end
it finished last week around 2% below the most recent high at $1875/oz.
Platinum saw some outperformance when gold prices fell, but gave that up
when gold bounced at the end of last week, while palladium quietly shifted up
~4 ½% to $785/oz on the PM fix.
The Commitment of Traders Report (COTR) saw length taken off at the end of
August, with non-commercial net longs on gold down by 5.66moz or 19.5%
from the peak at the start of the month. Palladium net longs are also
substantially lower than at the start of August, while platinum and silver have
seen a 15% and 3% increase in net non-commercial longs, respectively, since
2 August.
While we would not discount gold moving to new peaks in the not too distant
future, we think we may have to see some greater US$ weakness for gold to
shift higher. We wonder whether the appetite for safe havens will increase in
the near term, with interest rates on inflation adjusted bonds again shifting into
negative territory on the back of the poor non-farm payrolls report. While
nominal yields may fall further, this perhaps may be at the expense of inflation
expectations, which are currently fairly steady at 2%. This would keep real
interest rates steady, or may even rise if markets were concerned about
deflation (which we think is unlikely)
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