The price of gold has shown significant growth after the soft rhetoric of the fed
In the intervening period the price of precious metals has shown significant growth, with the exception of showing a negative dynamics of the prices for platinum. The US dollar suspended to strengthen, and the us stock market has declined, which has provided support for precious metals.
Economic risks continued to grow under the influence of the unfolding trade war between China and the United States. Geopolitical factors show the increased military tension in the middle East, which also supports the demand for insurance assets. Political transformation in Europe increases the demand for physical gold.
However, the main influencing factor in the past period once again became the rhetoric of the U.S. Federal reserve, increasingly hinting at a possible reduction in interest rates to support economic growth. This week (18-19 June) will host the next meeting of the regulator.
The expectation of lower interest rates during this meeting, according to CME Group FedWatch tool, make up about 22%, but the results of the July meeting the expectations of a lower interest rate rose to 85%. The regulator notes the growing threat of trade wars for the U.S. economy and reports that it is ready to support the expansion of economic growth.
In addition, the increasingly dovish statements by the ECB, whose representatives are ready to resume programs to stimulate the economy. The expected duration of the rate hike was postponed to the end of the 1st half of 2020.
The ECB also announced that it will provide banks the possibility of financing at rates that are 10 basis points above the Deposit rate minus 0.4% (tiered Deposit rate at which banks are exempt from 0.4% per annum on excess reserves), if they exceed credit standards of the ECB under the new targeted long-term refinancing operations (TLTRO). Economists estimate the ECB interest rates will remain at current levels at least until 2021.
The second half of June-beginning of July will be very tight on important economic and political events that may increase the volatility of prices in the precious metals markets.
The price of gold and silver in Shanghai on SGE in the past, the company has grown significantly, the price of platinum was lower, trading volumes in platinum showed a sharp increase. The Renminbi to US dollar slightly weakened. The gold reserves of the Bank of China in may 2019 amounted to $79,83 billion, compared to $78,35 billion in April 2019.
Award for delivery of physical gold in China at the end of last week, rose to $10/us$12.5 per ounce, as demand increased amid growing economic uncertainty. The same factor contributed to the growth of premiums in Singapore up to $0.6/$0.8 per ounce in Hong Kong – up to $0,5/$1.2 per ounce. In Tokyo, gold was trading at parity with London prices since raised prices provoked selling.
Retail demand for gold in India in last period declined sharply in connection with the sharp growth of domestic prices. Dealers offered gold at a discount of $7,0/oz.
According to preliminary IMF data, Central Banks bought 34,1 tons of gold to reserves in April, 2019 the Bank of Russia in may 2019 added to the gold reserve of 6.68 tonnes of gold, increasing the total amount of up to 2190,2 T. Bank of Kazakhstan added to gold reserves of 4.34 tonnes of gold, increasing the total amount of up to 370,9 T.
According to the Finance Ministry, gold production in Russia in January-April 2019 amounted to 78,29 tonnes, silver production 303,51 so In the past period, reserves in gold, silver and platinum ETF-funds has grown, and stocks in palladium ETF funds continued to decline.
According to GFMS, in may 2019 outflow of funds from gold ETF-funds, which fell by 2.2 tons by April 2019 to 2421,3 so much of the drawdown was observed in the Asian ETF-funds, which had declined by 6%. North American funds decreased by 1.2%, while stocks of European funds increased by 1.3%. A particularly strong inflow was observed in the British ETF funds traded on the LSE, which is associated with political uncertainty in the UK.
The volume of stocks of gold ETF funds in the UK has reached a record high level 17.18 million ounces.
In silver ETF funds in may there was a slight outflow, but the rate of outflow has slowed to the lowest level since November 2011, According to the CFTC report, 11 June 2019, there was a significant reduction of long positions in gold and silver under the influence of profit taking.
In the intervening period the price of gold increased $1275 to $1358, coming up from long-term consolidation range. Currently, there is some slowing down of price growth, however, with a steady consolidation of the market at the level of $1350 possible further growth to the target levels by trend $1375-1435. The price of silver in the intervening period has grown from a level of $14,35 level $of 15.09, after which it was adjusted down to $14,87, in correlation with the gold market.
The ratio of gold to silver increased to of 90.39 points. The ratio of platinum to silver is 53,616 points.
The platinum market in the past period remained under pressure due to adverse predictions for global growth. Platinum prices rose sharply from a level of $793 to $831 in correlation with the gold market, followed by a significant correction down to $797 in anticipation of a decline in industrial demand. The spread between gold and platinum is $547/oz.
The spread between platinum and palladium has widened to $658/oz. The South African Association of miners and construction Union (AMCU) at the end of June, plans to start talks with the world’s leading producers of platinum group metals at the increase in wages to the workers. This Union has been very aggressive in their demands, which significantly increases the risks of a strike at mining companies South Africa and can lead to reduced production of PGE.
Production of platinum group metals in South Africa, according to the Bureau of statistics, in April rose 1.7% yoy against a decline of 0.5% in March. Prices on the futures market of palladium in the last period rose sharply from the level of $1335 to $1475, after which show a small downward correction.
Imports of palladium into Switzerland from Russia for 4 months. 2019 decreased about 2 times compared to the same period in 2018, While there was a reduction in imports of palladium into China amid a protracted decline of the automotive market, but also saw a sharp rise in imports of metals in Hong Kong.
Analyst of commodity markets,