GFMS: gold Demand in September continued to decline
Last week the price of precious metals continued to decline, only palladium showed an increase. The main influence on the markets has had a strong data on the labor market in the United States and the speech of the fed’s George W. Bush. Powell, marking the possible target level of inflation of 3%. However, inflation data in the US, which will be released this week, already can show the figure to that level.
Moreover, the U.S. fed is increasingly mention the need to prepare measures against the possible onset of the recession in the economy. On the eve of the IMF has lowered its assessment of the forecast growth in the world economy, although more due to the slowdown in the EU and in developing economies. However, the gradual increase in interest rates, the fed will continue, and another rise is expected in December 2018 While the target level of inflation can increase up to 4%, and to introduce targeting the price level.
These actions of the fed led to a sharp rise in us Treasury yields, while having a negative impact on the gold market. The gold is getting good support as an insurance asset, balancing portfolios, especially in light of the outbreak of the declining stock markets.
Last week, investors have reduced reserves in gold, platinum, and especially palladium ETF funds, but increased the reserves at the silver ETF-funds.
According to GFMS, investment demand for gold in September continued to decline: the ETF backed by gold funds showed a decrease in inventory of 1% compared to August to 2329,1 so the Largest drop was observed in the Asian ETF funds decreased by 7.7%. Maximum growth showed stocks iShares Gold Trust, increased by 4.1 ton or 1.6%.
Trading on the Shanghai stock exchange SGE last week were not held in connection with the celebration of “Golden week”. On Monday, the prices of precious metals have shown growth, with increased volumes and the weakening of the Chinese yuan.
Bank of China had lowered the reserve requirement ratio for banks by increasing liquidity in the banking system. International China’s foreign exchange reserves declined in September to $3,087 trillion to the weakening of the Renminbi. Gold reserves fell in value terms to $70,327 billion, which is about 9% lower than that of the Bank of Russia.
The Chinese authorities support a bunch of the yuan with gold, that could make the Chinese currency anchor currency for Asian economies. It is noted that while the decline of regional currencies against the US dollar was quite strong, the yuan a regional currency remained fairly stable. If the situation continues to develop in the same spirit, China to make significant progress towards the creation of a new Asian monetary zone based on RMB.
Award for delivery of gold in China last week has not changed, remaining at $6.5/8 per ounce, resulting from the celebration of “Golden week”.
Award for the supply of gold in Singapore remained at level of $0,8/1,3 per ounce in Hong Kong of an award made $0,7/1,3 oz. Gold in Tokyo is trading at parity with London.
The discount on gold sales in India fell sharply to a level of $6.5/oz in connection with the sharp growth of domestic prices due to the weakness of the Indian rupee. The Central Bank of Bangladesh started the regulation policy import and export gold bullion, appointing authorized dealers of metal.
Gold prices in the past week have grown to $1210, and then decreased again to the level of $1189 under the impact of the strengthening of the US dollar.
If prices fall below the psychological level of $1200 activates the demand for physical gold. In General, there is continued consolidation of the market in a wide price range of $1150-1350. The price of silver last week in correlation with the gold market had grown to $14,93, and then decreased to the level of $14,32.
The ratio of gold to silver is 82,70 points. The ratio of platinum to silver is 56,94 points. Prices for platinum last week has grown to $838 in correlation with the gold market, and then decreased to the level of $815. The spread between gold and platinum is $370/ounce. The spread between platinum and palladium is $257,5/oz. The palladium market last week tested the level of $1076, but the weakness of the US stock market contributed to the price correction down.
Analyst of commodity markets,