Commodity Trade Mantra

Posts Tagged ‘Gold Demand’

Gold Jewelry Buying Expected to be Exceptionally Strong

Plentiful monsoon rains in India tend to drive up demand for gold & gold jewelry among rural, income-flush farmers, who make up a third of the country’s consumption of the yellow metal. Gold jewelry sales in India are expected to surge as much as 60% over last year, during this year’s festival season thanks to the fortuitously timed sharp drop in gold prices.

The Major Catalysts That Influence Gold Prices

Physical gold had its best quarterly gain in 30 years during the first quarter, and year-to-date, even with its recent swoon, physical gold is higher by roughly $200 an ounce. Gold has firmly reestablished itself as being in a bull market. The factors that move gold prices are largely unknown or overlooked. Let’s have a look at the seven most common factors that influence physical gold prices.

Gold Price And The Interest Rate Disconnection

We are entering a new phase in gold price action where expectations of Fed interest-rate policy becomes less important & other gold price drivers come to the fore. I believe the Fed will have little room to raise interest rates by anything more than a token increase. What’s more likely, the US & global economic news will continue to disappoint & this could be enough to support a rising gold price.

Gold Prices Poised to Leap as Love Trade Overtakes Fear Trade

India has pulled ahead of China. The economic output of India’s top 5 cities is expected to reach the size of 5 middle-income countries today. Mumbai’s massive $245 billion economy, could soon exceed the entire country of Malaysia. This presents a huge opportunity for the Love Trade to expand even more, as rising incomes & economic momentum have been a tailwind for gold demand.

Gold Bullion Flows Reverse Back into the West - What does it Mean?

U.S. has become a significant gold importer. Gold is flowing from vaults in London, Switzerland & even Dubai to the U.S. In May, U.S. imported over 50 times the monthly average amount of gold. Investor demand was the largest component of gold demand for Q1 and Q2 – the first time this has ever happened. This means that more U.S. investors are diversifying their assets into gold.

Are Gold and Silver still Trending up or Vulnerable to some Profit-Taking Yet?

Before you rush to buy into gold-backed ETFs, it’s wise to note that there are signs of profit-taking in gold. Gold and silver tend to move together. Investors monitor the gold-to-silver ratio to assess how expensive or cheap silver is, relative to gold, currently seen at around 70 – near the upper end of the range between 45 and 80. This tells us that silver is still cheap compared to gold.

Gold Prices Setting Up For A Major Advance Ahead

A decisive break above $1,400 an ounce could be just around the corner & would signal the start of gold’s next major advance. Near term, gold prices will continue to be dependent on the flow of economic news as it affects expectations of Federal Reserve interest-rate policies. The U.S. & global economic news will continue to disappoint & this could be enough to support rising gold prices.

Are You sure there will be Enough Gold to match the Exploding Demand?

Cracks are now visible in the central banks’ wall of deceit. Trillions of dollars of bonds now trade at negative yields. Helicopter money is in the cards. People the world over now sense the jig is up. So one important question hangs in the air: Will there be enough gold to match exploding demand? Supplies are drying up. So… Has the world reached peak gold? And what does it spell for gold prices?

Gold Demand Remains Stable During Sector Weakness

Gold demand peaked in the middle of 2010 & went sideways for a few years before succumbing to the bear market. That lack of strong demand in 2011 while Gold surged, was a warning sign. The amount of Gold in GLD can be a sort of an indicator for the sector. While Gold & gold shares are correcting now, the real time data coming from GLD suggests Gold demand is & should remain firm.

The Significance of the Massive Change in the Gold Market

The significance of the change in the gold market can be better seen by the average annual increase in total gold holdings during the 2009-2012 period which was 15 Moz compared to 25 Moz for the first half of 2016. If demand for gold continues as strong in the second part of the year, we could see upwards of 50 Moz move into these total gold holdings versus 45 Moz for the 2009-2012 period.

Unwinding of Excessive Gold Futures Longs - One of the Best Buying Opportunities

Gold sees major interim tops in bulls and bears alike whenever speculators’ long positions surge up to relatively-high levels. While these elite traders don’t control gold’s long-term trends driven by fundamentals, their collective trading can sure bully gold over the short term. The unwinding of speculators’ excessive gold futures longs offers some of the best mid-bull buying opportunities.

What Will Catapult Silver Demand & Price Much Higher Than Gold

While global gold scrap represents 26% of total gold demand, only 13% of total silver demand was recycled last year. Thus, 87% of total world silver demand did not come from recycled silver supply. Investors need to understand that the majority of silver will never come back on the market until we see insanely high prices. There still won’t be enough to meet the silver demand.

Negative Yields On Global Government Debt Drives Gold Demand

It’s unprecedented that a third of all global government debt has negative yields. Which drives gold demand. Effectively what we’re seeing is people’s pensions being decimated because the policymakers have had very few if any alternatives left. It is in this environment that gold will help satisfy need. It’s more about protection of wealth rather than creation. That’s where gold plays.

India's Gold Imports Drops 51% in May, Gold Demand Takes a Hit

Indian gold imports have tumbled for fourth straight month in May this year, while gold demand remains muted over the past several months. India’s gold imports during the month are believed to have dropped sharply by 51% year-on-year to 31 tonnes in May. But, when matched with the April ’16 imports of 22 tonnes, the monthly imports in May rose higher by over 40%.

American Gold Eagle - Gold Coin Sales Soar Over 200%

Gold futures ended May with the biggest monthly decline since November but physical gold demand saw a significant increase from last year. Sales data compiled by the U.S. Mint shows that a total of 95,000 ounces of gold were sold in May, up more than 206% from 31,000 ounces sold in May 2015. Looking at the physical markets you can see signs of long-term strength.

When Gold Confiscation Is a Personal Choice

The day government really wants your gold, it will simply offer a high price to coax it from you, paying with paper money freshly printed that morning. The offer would be high enough to outbid competing market expectations. Many gold owners would happily sell for overnight paper profits. Others, with no trust in government, would keep their gold, choosing to wait and see.

Physical Gold Demand Drops But Gold Prices Soar

Gold prices are looking strong again this week. But the most surprising finding is that physical gold demand was incredibly weak during the first quarter of this year. With overall physical buying down 23.8% as compared to Q1 2015 to 781 tonnes, down from 1,025 tonnes last year. While India’s physical gold purchases dipped 65%, China’s buying dropped 27.3% YoY.

Negative Interest Rates Positively Driving Gold Demand

Gold returns in periods of low rates are historically twice as high as their long-run average. Portfolio analysis suggests that gold allocations in a low rate environment should be more than twice their long term average. We believe that, over the long run, negative interest rates may result in structurally higher demand for gold from central banks and investors alike.

Gold Demand Surges As Chinese Seize The Golden Opportunity

Gold demand has surged in China over the last several weeks – a period generally considered out of season. Gold purchases in China are strongly associated with jewelry buying around the Lunar New Year holiday, which fell in early February. But the uncertainty confronting global economies has driven up demand from a different sort of buyer—the hard-nosed investor.

Owning Gold and Silver is Power to the People to Weather the Monetary Storm

The US still is one of the few nations on earth where it’s totally legal & easy to buy real physical money – gold and silver. That means Americans at least have the opportunity to weather the coming financial storm pretty well. Citizens of other nations with governments that have made it nearly impossible, or very expensive, to buy gold and silver are going to be in much deeper trouble.

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