Barclays: Q3 to be the weakest for gold, but some light possible at the end of a tunnel
“We see Q3 as the weakest quarter for gold, given rate hike expectations and weak price floor,” analysts at Barclays said in a research note published last week, adding that later on they expect gold to mildly recover.
In the second quarter, gold has stuck in a range between $1,170 - 1,220, says Kitco News.
The analysts meanwhile noted that despite low volatility in this period since before the financial crisis, they do not consider it to be the calm before the storm.
Barclays said that there is little sign that investor interest increased. Exchange-traded products flows for the year to date have dropped below 10 tonnes and there have been net outflows over the past two months, despite the Greek worries, they noted.
The gold market now await hints from the U.S. central bank which is expected to announce an interest rate liftoff later this year.
“In our view, U.S. monetary policy still holds the key for gold and prices are unlikely to move out of their recent trading range until the Fed’s path becomes clearer,” the analysts said.
Besides, the analysts also noted that physical demand in gold is weak, as usual during this time of year. There has been a steep slowdown in Indian purchasing, in line with seasonal norms, and local premiums have dipped to a discount of $7-10 /oz.
“Moreover, we think it unlikely that India’s new
gold monetization scheme or the introduction of a gold linked bond will
help much,” analysts said.
