Salient to Investors:
The World Gold Council data show that consumer buying of gold rose 53 percent in Q2 from a year earlier, almost making up for the record sales of gold ETPs. The Council sees a dampening of demand in the next few months in India due to restrictions on imports, but says 2014 consumption should be higher than last year in India and in China. The Council said countries added 534.6 tons to reserves in 2012, the most since 1964, and may buy 350 tons in 2013, Turkey’s bullion imports in 2013 through July were 80 percent higher than in all of 2012.
John Paulson, the biggest investor in the SPDR Gold Trust, cut his stake by 53 percent and George Soros and Daniel Loeb sold their entire SPDR stakes in Q2.
Mark O’Byrne at GoldCore said people buying physical gold are more about having a store of wealth in the medium to long-term whereas the ETP liquidations are more the speculative side, and cites robust physical demand as people see gold as good value at these levels.
Goldman Sachs predicts gold will fall to $1,050 by the end of 2014 as central-bank purchases won’t be enough to prevent further declines.
David Burns at Commerzbank said trading in physical gold is good this year, and interest increased as prices fell, while fabricators are buying and private clients are seeing a second opportunity to enter the market.
Adrian Day at Adrian Day Asset Mgmt predicts gold will rise to $1,600 by year-end because investors overreacted to speculation that the Fed will taper and as governments maintain efforts to boost economic growth.
James Bullard at FRB of St. Louis said policy makers should be careful in changing course based solely on economic forecasts.
Short positions gained ninefold since November and reached a record July 9, while hedge funds et al increased net-long positions by 54 percent from a 6-year low set in June.
65 percent of economists expect the Fed to taper in September.
The IMF predicts global growth of 3.8 percent in 2014, versus 3.1 percent in 2013.
Georgette Boele at ABN Amro said the main reason commodities markets have been improving is better data globally and overall improvement in sentiment, and base metals will be relatively OK in an environment where the economy is improving.
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