Gold Silver Reports – Gold long term central bank buying is expected to boost prices amid continued demand, with Goldman Sachs predicting gold prices will rally from $1,300 to $1,450 an ounce over the next 12 months.
China’s on a bullion-buying friskines as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. Prices advanced back toward $1,300 an ounce.
The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.
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China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.
Last year’s bullion buying by emerging-market central banks was the most robust in a long time as countries diversified reserves, Ed Morse, Citigroup Inc.’s global head of commodities research, The bank’s positive on gold, targeting $1,400 by year-end.
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Spot gold fell for a second month in March even after the Federal Reserve signaled it would pause rate hikes, which led to a surge in equities instead. Still, the gold longer-term outlook is more bullish as central-bank demand should help support prices, with inflows running as high as last year, according to Goldman Sachs Group Inc., which expects a rally to $1,450 an ounce over 12 months. Bullion for immediate delivery was at $1,297 on Monday.
Governments worldwide added 651.5 tons of bullion in 2018, the second-highest total on record, according to the World Gold Council. Russia has quadrupled its reserves within the span of a decade amid President Vladimir Putin’s quest to break the country’s reliance on the dollar, and data from the central bank show holdings rose 1 million ounces in February, the most since November.
China has previously gone long periods without revealing increases in gold holdings. When the central bank announced a 57 percent jump in reserves to 53.3 million ounces in mid-2015, it was the first update in six years. The latest pause was from October 2016 until December last year.
Gold silver reports as a safe haven may well continue in light of the increased central-bank buying and as greater market uncertainty weighs on investors and governments globally. Gold will become more attractive in 2019, because of the the expansion of protectionist economic policies, according to the World Gold Council’s forecast.
Gold Positioning For $1,320 very very-soon — TD Securities says gold may be positioning for a move toward the low $1,320-an-ounce area sooner than anticipated and says it still looks for $1,360 in three months and $1,400 in 2020. “Ample risk appetite and a firm USD [U.S. dollar] prompted specs to aggressively cut their net exposure last week,” TDS says. “As such, with the USD range-bound, equities showing less strength and the with the market firmly believing anticipating that the upcoming FOMC [Federal Open Market Committee] minutes will cite chatter surrounding rate cuts, which would confirm Fed dovishness, the yellow metal has more upside. With President Trump’s two very politically politically-motivated appointees being have been proposed for the Fed’s two vacant spots seats, there sparking is concern the U.S. central bank may increasingly be getting politicized.” Meanwhile, analysts cited news that China’s central bank bought gold for the fourth consecutive month in March as yet another factor that could help lift prices. “We would not be surprised to see the yellow metal move toward the low $1,320/oz range in the not-too-distant future,” TDS says. “We suspect that there is the potential for aggressive CTA [Commodity Trading Adviser] buying at with prices level north of $1,290/oz, which could help support see a sharp rally given recent long liquidations and increases in short positioning. Longer term, we continue to be comfortable with our long gold trade which we entered when the yellow metal was $1,298/oz, with a three-month target of $1,360/oz, before a move toward $1,400/oz next year.”
China Demand Paves Way For Gold Breakout — Increased gold demand from China is making an upside breakout in the gold price later this spring a very real possibility. That’s the conclusion from the revelation this week that China’s central bank has added to its gold reserves. The news sent many short sellers of the metal scurrying and has helped to boost sentiment over the intermediate-term (3-9 month) outlook. In today’s report we’ll examine the latest figures from China and how it supports my outlook for a spring rally for gold. We’ll also take a look at the gold mining stocks and discuss the conflicting signals that have kept the miners from rallying.
Gold prices rose above the widely watched $1,300 level to start the week after threatening to break below the floor of a 3-month trading band just a few days ago. The latest rally gives gold some breathing room as the buyers try and regain their control over the immediate-term (1-4 week) trend. The latest rally still wasn’t enough to push the June gold futures price (below) back above its 15-day moving average, which means that buyers haven’t yet formalized their control over the immediate trend. The gold price is also still below the 50-day moving average, so there is still much work ahead for the bulls.
The latest attempt at a gold rally was attributed by one analyst to increased bullion demand from China. Stephen Innes of SPI Asset Management said that the revelation that the People’s Bank of China has raised its gold reserves by a notable margin in the last few months triggered short covering early this week. This ties in to what I wrote in my previous report about the intermediate-term gold price outlook being dependent on higher demand from the world’s number one gold consumer China. According to data from the People’s Bank, its gold reserves increased to 60.62 million ounces in March from 60.26 million in February.