China’s gold output, demand both fall in 2019

Environmental concerns have trimmed China’s gold production, while consumers have also cut buying in the country, said BMO Capital Markets. Analysts offered an assessment of a report Tuesday from the China Gold Association saying that 2019 production fell 5.2% year-over-year to 380.2 metric tons, while consumption was down 12.9% to 1,002.8 tons as an economic slowdown and high prices hurt demand. BMO noted that Chinese output has now fallen three years in a row, “which in our view reflects increased environmental pressure on the Chinese industry, a trend we do not expect to reverse,” BMO said. “China remains the world’s largest gold producer, but with a further drop expected in 2020, we see the current year as having peak mined gold for the coming years at least. Meanwhile, the high prices have been dissuading Chinese consumers, with consumption dropping 12.9% y/y. This is further evidence that as macro asset allocators have stepped into gold, the traditional retail consumer has pulled back in terms of purchases.”FXTM: gold could hit $1,600 if virus concerns escalate

Wednesday January 22, 2020 08:44

Gold has given up the recent gains that came following initial reports of the coronavirus outbreak in China, says FXTM. As of 8:16 a.m. EST, spot gold was down $2.10 to $1,555.70 an ounce. The virus outbreak was a financial focus of markets on Tuesday. “The case for gold breaching and staying above $1,600 will become stronger if there are more widespread cases of the coronavirus, coupled with lingering concerns over geopolitical risks,” FXTM said. “However, once such fears subside and investors can refocus on the global economic recovery, gold is then expected to moderate over the course of the year.”

Commerzbank: Indian gold consumers ‘price-sensitive’

Wednesday January 22, 2020 08:44

An Indian industry organization’s prediction that gold demand in the country will bounce may be “bold” since consumers tend to be affected by higher prices, said Daniel Briesemann, analyst with Commerzbank. India’s government previously said the country’s gold imports have fallen to a three-year low. “The All India Gem & Jewelry Domestic Council is confident that India will import considerably more gold again this year, explaining that consumers have now become used to the high prices,” Briesemann said. “This is a bold claim in our view, given that Indians have shown themselves in recent years to be very price-sensitive. What is more, the Indian economy looks set to cool further, and the gold import tax is also deterring some consumers.” As a result, he pointed out, there are efforts under way to convince government officials to roll back the import-tax increase from last year.

By Allen Sykora of Kitco News; asykora@kitco.com

Commerzbank: no sign of palladium reversal despite price decline

Wednesday January 22, 2020 08:44

Palladium corrected sharply lower on Tuesday, but it’s too soon to say the market trend has reversed lower after the recent run-up in prices, said Daniel Briesemann, analyst with Commerzbank. He noted the metal lost 5.6% Tuesday for the largest one-day decline since early August. “We attribute this to profit-taking after the price reached a record high the day before yesterday,” Briesemann said. “However, we would not read too much into yesterday’s price slide – after all, one swallow does not make a summer. There is no sign as yet of any trend reversal, and the price is already rising again this morning.” As of 8:16 a.m. EST, spot palladium was $33 higher to $2,319 an ounce.

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