Monday, November 18, 2013

Heraeus Weekly Commentary

Week Ending Nov 17

Those hoping for a recovering last week in gold, after its recent correction, were disappointed. In fact the metal dropped by the middle of the week to 1,265 $/oz; it’s lowest in four weeks. By the end of the week it had recovered somewhat and closed at 1,287 $/oz. The trigger for this move was again the discussions centred around the potential tapering in the USA, which one FED-member feels could be a possibility this year. However, on Wednesday, Janet Yellen, Bernanke’s successor as chairperson of the FED, propagated to the contrary: her statement that the US economy would get monetary-policy support till such time that stable growth and corresponding job-market strength had been achieved was supportive for gold. Nevertheless the largest of the gold ETF’s, SPDR Gold Trust, saw further erosion of stocks which have now fallen to a 4-year low of 865 t.
The World Gold Council (WGC) came out with the demand summary for gold for the third quarter. The jewellery industry, with 487 t, has been responsible for the larger part of this demand. Though total demand in the period July to September, compared to previous year, fell by 21% to 870 t, demand for the first three quarters has gone up, whereby a shift is seen from the West to East. Bar and coin demand has increased by 6% compared to Q3 2012. There was again the discussion that China would overtake India as the largest gold consumer but according to the WGC the difference would possibly be much smaller than anticipated by some (China: 1,000 tonnes / India: 900 tonnes). The supply side shows a year-to-date mine production increase of 70 t whilst recycling fell to its lowest level since 2008 (385 t).
With no significant impulses expected we foresee a sideway movement in a range of
1,280 - 1,295 $/oz for the next few days.