Physical Gold Demand On Price Pullbacks May Stem Further Losses

Frankfurt (Aug 1) There are signs of Chinese physical demand for gold picking up after the recent price decline, says HSBC. “Bullion’s premium on the Shanghai Gold Exchange, a gauge on China’s gold appetite, rose to USD3.20/oz, the highest since 13 May,” the bank says in a late-Thursday report. “Despite a seasonally weak period for gold buying, physical buyers have reacted positively to cheaper prices. This may help stem further price losses, in our view.”

Deutsche Bank Upbeat On Industrial Metals But Sees Risk Of Correction Lower

Deutsche Bank sees potential for more medium-term gains by industrial base metals but warns of the potential for a correction first. “Industrial metals have proved to be the most resilient of the five broad commodity sectors during the third quarter,” the bank says. “Indeed it has been the only sector able to post positive returns since the end of June. Signs that China will avoid a hard landing and the tendency of the sector to do well as the Fed prepares to tighten monetary policy suggest that the sector is likely to outperform relative to energy and precious metals over the coming year.” However, the firm also says, “whilst we remain positive on the medium-term outlook for the complex, we view the recent price rally as having run ahead of current supply-demand fundamentals. In our view, this raises the risk of short-term price corrections.”

Source: KitcoNews