Barclays: Gold confronts seasonal demand weakness

Price action was mixed across the precious metals yesterday with Gold and Silversurrendering some of their recent gains, while Palladiumedged higher but Platinum was unchanged on the day at $1720/oz. Following the Greek parliament’s approval of the austerity measures, gold 1 July 2011 4 prices initially closed above the $1500/oz mark, but lost ground yesterday to settle at $1499.6/oz.

However, the external environment still remains positive for gold despite the seasonally weak period for demand. Provisional data for June shows physical gold ETP holdings rose by 12.5 tonnes following a 0.6 tonne inflow yesterday.

Longer term investor interest remains sticky, coupled with the official sector swinging from a net seller of the metal to a net buyer. The latest IMF statistics show a modest 1koz increase in Greece’s Gold holdings (Dow Jones). Meanwhile, Mexico reported its gold and Silver production continued to grow in April. Silver production rose by 14.6% y/y to 334.8 tonnes and is up 21% for the year to date.

Gold production rose grew by 17.9% y/y to 6.7 tonnes in April and is up 15% y/y for the year to date. We continue to expect both gold and silver production to grow on a global basis; however, we expect gold production growth to slow y/y while the silver market is set to remain in significant surplus. Silver ETP holdings continue to dwindle, and fell by 46 tonnes yesterday to close the month at 13,599 tonnes. Holdings fell for the third consecutive month, by 319 tonnes, following the weakest month on record in June. – Source: CommodityOnline.com

Tags: Gold analysis, Gold investment, Gold news, Gold price forecast

Posted by VBN on Jul 3 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry