Gold and silver may increase substantially in 2019
In the intervening period the price of precious metals has grown as a result of falling stock markets and rising yields in the debt market. The US dollar continued to strengthen. A slightly negative trend only showed the silver market, due to trade spreads.
Good statistics on the labour market in the US for October has strengthened the market’s confidence in fed rate hike at the December meeting. However, the market can get some clarification on the monetary policy following the US Federal reserve meeting to be held on 7-8 November, immediately after the elections in the U.S. Congress.
If the regulator continues to insist on raising interest rates, precious metals may get further support. During the November meeting, the rate increase is not expected.
According to published in the past period, “the Beige book” the fed, the pace of US GDP growth remains modest, and the company of some industries report labor shortages. Producer prices in the US are rising because of higher import duties, but inflation in the regions remains moderate.
ECB latest meeting left interest rates unchanged and confirmed the intention to curtail measures to stimulate the economy at the end of 2018, While Draghi said that the Eurozone economy started to lose momentum due to the increasing uncertainty in the trade, and in connection with the volatility in the markets. The head of the ECB believes that the confrontation between Italy and Brussels will end with a compromise.
The Bank of Japan during the last meeting left its monetary policy unchanged and slightly lowered its forecast for inflation in connection with the slowdown in the economy. The Bank of Japan remains committed to continue stimulus measures.
The Bank of England during the last meeting left the interest rates unchanged, but indicated they could rise in the future, warning about a possible increase in risk of adverse withdrawal of Britain from the EU.
In the past period, reserves in gold ETF funds continued to increase, and stocks in ETF funds other precious metals fell.
According to GFMS, investment demand for gold in October showed good growth backed by gold ETF funds have shown a growth in reserves by 1.8% compared to September to 2345,6 so the Largest drop was observed in the Asian ETF-funds, which had declined by 8.4%. Maximum growth showed inventories in the European funds, increased by 1.7%.
Stocks in the largest ETF-Fund SPDR Gold Shares increased by 11.8 tons (+1,7%), stocks ETF Fund iShares Gold Trust increased by 5 tonnes (+2%). Stock data ETF-funds are important investment ideas to buy.
According to the CFTC report, gold and palladium remains the preponderance of short speculative positions in silver and platinum remains the preponderance of long speculative positions. Last week there was a reduction in shorts in gold.
According to the assessment of Metal Focus, the price of gold in 2019 can on average grow to $1310/oz as a result of technical short covering, and palladium for the same reason, can rise to $1120/oz. Due to the correlation with the gold market the price of silver could rise in 2019 to $16,90/ounce and platinum to $920/oz. The closing of short positions may contribute to the decline in the stock markets.
In the intervening period, the prices for precious metals in Shanghai SGE showed growth on the background of weakening of the Chinese currency, trading volumes fell.
According to the China Gold Association, gold production in China, Q1-3 2018 fell by 7.5% over the same period to 289,75 t gold Consumption in China in Jan-Sep 2018 amounted to 849,7 tons, which was 5.1% higher than in the same period last year.
According to statistics, net import of gold from Hong Kong to China in September 2018 fell to the lowest level since March 2011 and amounted to 11,059 t Fall in imports took place due to restrictions by the Bank of China import quotas for commercial banks. Licenses on the import of gold has 13 banks. Gold imports to China from Switzerland in September amounted to 37 tons, which is 16% lower than in August 2018.
According to customs data, imports of gold to Switzerland in September 2018 amounted to 223,3 t, while exports from Switzerland 118 so Both figures are lower than last month and last year. The biggest supply of gold in Switzerland was carried out from Britain. Exports to India dropped to 16.5 tons, to China, to 37 tons, shipments to Hong Kong increased to 28.7 t estimates of the spread platinum/palladium will continue to grow in favor of palladium.
Bank UBS has expanded the range 3-month fluctuations of palladium to $1000-1250/oz in connection with the tightening supply of the metal. While prices may be affected by a slowdown in sales in the automotive markets USA and China.
Analyst of commodity markets,