Homepage
PR Newswire
23-08-2013, 12:07 PM
[SINGAPORE] The rout in gold that wiped out US$56 billion of value this year is spurring consumer demand in China and India, the biggest buyers, and leading JPMorgan Chase & Co and Bank of America Corp to say prices are bottoming.
Sales of jewellery, coins and bars will reach as much as 1,000 tonnes in India and China in 2013, valued at a combined US$87.6 billion, the World Gold Council estimates. Prices will average US$1,300 an ounce in the fourth quarter, or 5 per cent less than now, the median of 17 analyst estimates compiled by Bloomberg shows. Bank of America is the most bullish, predicting a fourth-quarter average of US$1,495, and JPMorgan anticipates rising averages in every quarter through the end of next year.
While investors from John Paulson to George Soros sold after the bear market began in April as some investors lost their faith in gold as a store of value, the slump boosted sales in Asia. Australia & New Zealand Banking Group Ltd, Deutsche Bank AG and UBS AG opened vaults in the region this year and UK bullion exports rose eightfold, a sign to Macquarie Group Ltd of the flow of metal from west to east.
Asian buyers are being attracted by prices that are now 29 per cent below the record US$1,921.15 reached in September 2011.
"Whenever we have a bit of idle cash, we think of buying a few pieces," said Wang Xiang, a 70-year-old from the eastern Chinese province of Anhui, as he bought a gold pendant for his grandson in Beijing's Caibai Jewelry store, the nation's largest by sales.
"We don't know how to invest otherwise and that's the traditional way of preserving wealth."
Gold tumbled 19 per cent to US$1,361.93 in London this year, poised to end a 12-year winning streak during which prices rose as much as sevenfold. It is the third-worst performer, after silver and corn, in the Standard & Poor's GSCI gauge of 24 commodities, which fell 0.4 per cent.
The MSCI All-Country World Index of equities climbed 8.6 per cent and the Bloomberg US Treasury Bond Index lost 3.5 per cent.
The metal rallied 15 per cent since reaching a 34-month low of US$1,180.50 in June as sales from exchange-traded products slowed and jewellery demand strengthened. Indian and Chinese consumer demand may be 900 to 1,000 tonnes each this year, the gold council said. That would beat China's 2011 record of 778.6 tonnes and be near India's all-time high of 1,006.5 tonnes in 2010.
Premiums paid by jewellers for physical supply rose to a record in India and jumped fourfold in China as the flow of metal to the region failed to keep pace. Purchases advanced 45 per cent to 571.2 tonnes in the first half in China and 48 per cent to 567.5 tonnes in India, the London-based gold council estimates. Global demand expanded 32 per cent to 2,040.2 tonnes.
ETP Holdings Investors sold 22.2 tonnes from gold-backed ETPs since the start of August, set for the smallest outflow since January, according to data compiled by Bloomberg. That took this year's drop to 682.7 tonnes, close to the 700 tonnes that Barclays plc expects to be sold in 2013. The bank predicts no change in ETP holdings in 2014.
Hedge funds and other large speculators reduced bearish bets by 17 per cent last week, US Commodity Futures Trading Commission data show. The 14 most widely held options confer the right to buy gold at prices higher than yesterday.
Gold will average US$1,350 in the fourth quarter next year, according to the median in the Bloomberg survey. Commerzbank AG and UniCredit SpA see prices at US$1,600, while Bank of America anticipates US$1,652.
Demand for jewellery, coins and ingots contrasts with record sales from ETPs, which at the peak in December held 2,632.5 tonnes, more than the official reserves held by all but three central banks. The funds now own 1,949.2 tonnes valued at US$85.4 billion, US$56.3 billion less than at the end of December, data compiled by Bloomberg show.
Danske Bank A/S, the most accurate gold forecaster tracked by Bloomberg over the past two years, raised its estimate for next year's average to US$1,138 from US$938 on Tuesday. Its fourth-quarter 2014 prediction of US$1,100 is still 19 per cent lower than prices yesterday. Credit Suisse Group AG, Citigroup Inc, ABN Amro Group NV and Macquarie also anticipate declines.
Societe Generale SA and Goldman Sachs Group Inc, both of whom correctly predicted the rout that began in the second quarter, are also bearish. The French bank expects a 2014 average of US$1,150 and New York-based Goldman says that prices will retreat to US$1,175 in 12 months.
Gold slumped this year in part because of investors' expectations the Federal Reserve will taper stimulus as the US economy strengthens. - Bloomberg
Sales of jewellery, coins and bars will reach as much as 1,000 tonnes in India and China in 2013, valued at a combined US$87.6 billion, the World Gold Council estimates. Prices will average US$1,300 an ounce in the fourth quarter, or 5 per cent less than now, the median of 17 analyst estimates compiled by Bloomberg shows. Bank of America is the most bullish, predicting a fourth-quarter average of US$1,495, and JPMorgan anticipates rising averages in every quarter through the end of next year.
While investors from John Paulson to George Soros sold after the bear market began in April as some investors lost their faith in gold as a store of value, the slump boosted sales in Asia. Australia & New Zealand Banking Group Ltd, Deutsche Bank AG and UBS AG opened vaults in the region this year and UK bullion exports rose eightfold, a sign to Macquarie Group Ltd of the flow of metal from west to east.
Asian buyers are being attracted by prices that are now 29 per cent below the record US$1,921.15 reached in September 2011.
"Whenever we have a bit of idle cash, we think of buying a few pieces," said Wang Xiang, a 70-year-old from the eastern Chinese province of Anhui, as he bought a gold pendant for his grandson in Beijing's Caibai Jewelry store, the nation's largest by sales.
"We don't know how to invest otherwise and that's the traditional way of preserving wealth."
Gold tumbled 19 per cent to US$1,361.93 in London this year, poised to end a 12-year winning streak during which prices rose as much as sevenfold. It is the third-worst performer, after silver and corn, in the Standard & Poor's GSCI gauge of 24 commodities, which fell 0.4 per cent.
The MSCI All-Country World Index of equities climbed 8.6 per cent and the Bloomberg US Treasury Bond Index lost 3.5 per cent.
The metal rallied 15 per cent since reaching a 34-month low of US$1,180.50 in June as sales from exchange-traded products slowed and jewellery demand strengthened. Indian and Chinese consumer demand may be 900 to 1,000 tonnes each this year, the gold council said. That would beat China's 2011 record of 778.6 tonnes and be near India's all-time high of 1,006.5 tonnes in 2010.
Premiums paid by jewellers for physical supply rose to a record in India and jumped fourfold in China as the flow of metal to the region failed to keep pace. Purchases advanced 45 per cent to 571.2 tonnes in the first half in China and 48 per cent to 567.5 tonnes in India, the London-based gold council estimates. Global demand expanded 32 per cent to 2,040.2 tonnes.
ETP Holdings Investors sold 22.2 tonnes from gold-backed ETPs since the start of August, set for the smallest outflow since January, according to data compiled by Bloomberg. That took this year's drop to 682.7 tonnes, close to the 700 tonnes that Barclays plc expects to be sold in 2013. The bank predicts no change in ETP holdings in 2014.
Hedge funds and other large speculators reduced bearish bets by 17 per cent last week, US Commodity Futures Trading Commission data show. The 14 most widely held options confer the right to buy gold at prices higher than yesterday.
Gold will average US$1,350 in the fourth quarter next year, according to the median in the Bloomberg survey. Commerzbank AG and UniCredit SpA see prices at US$1,600, while Bank of America anticipates US$1,652.
Demand for jewellery, coins and ingots contrasts with record sales from ETPs, which at the peak in December held 2,632.5 tonnes, more than the official reserves held by all but three central banks. The funds now own 1,949.2 tonnes valued at US$85.4 billion, US$56.3 billion less than at the end of December, data compiled by Bloomberg show.
Danske Bank A/S, the most accurate gold forecaster tracked by Bloomberg over the past two years, raised its estimate for next year's average to US$1,138 from US$938 on Tuesday. Its fourth-quarter 2014 prediction of US$1,100 is still 19 per cent lower than prices yesterday. Credit Suisse Group AG, Citigroup Inc, ABN Amro Group NV and Macquarie also anticipate declines.
Societe Generale SA and Goldman Sachs Group Inc, both of whom correctly predicted the rout that began in the second quarter, are also bearish. The French bank expects a 2014 average of US$1,150 and New York-based Goldman says that prices will retreat to US$1,175 in 12 months.
Gold slumped this year in part because of investors' expectations the Federal Reserve will taper stimulus as the US economy strengthens. - Bloomberg
