Will Precious Metals Shine Through Recovery – US-FOREX.US
Prices of both precious and industrial metals continued to climb during the second quarter, but with economic data gradually improving, sparking investors’ interest in recovery-related assets, precious metals could be losing their appeal. As economic indicators increasingly point to the early stages of a turnaround, investors shift from safe-haven-seeking mode to a recovery-minded approach.Gold and other precious metals pulled in the most commodity-related investments during the year’s first quarter, but inflows to precious metal exchange-traded products were only 800 million during the second-quarter, according to Barclays Capital analyst Suki Cooper. Energy and agriculture sectors were the second quarter’s stand-outs, grabbing 2.8 billion and 1.9 billion, respectively. Furthermore, redemptions of gold exchange-traded products were the second largest in July and inflows to the SPDR exchange-traded fund have stalled since the beginning of the month, said Barclays Capital analyst Natalya Naqvi, who noted that short-term speculative interest has held up and physical demand will likely emerge if gold’s price falls to around 900 an ounce. Lending support to gold’s investment appeal is the recent agreement to limit European central bank gold sales to 400 metric tons a year, reducing the bank’s sales quota by 100 metric tons a year. However, Barclay’s Naqvi notes that the new agreement should only be seen as mildly bullish for gold. Official sales under the current agreement remain low enough that sales could still increase under the new quota-even including the IMF’s intended sale of 403 metric tons of gold. Naqvi also expects gold mine supply to increase in 2009 but said any gains in supply would be offset by the reduction to official sales.On Tuesday, Vancouver Pan American Silver
is expected to report second-quarter earnings of 19 cents a share. During the first quarter, the company reported record gold production of 20,858 ounces-a 206% increase from last year’s first-quarter production. Silver production rose 8% to 4.9 million ounces.
Shares of mining companies closed Monday’s session’s broadly lower as gold futures slumped below the 950 level. Gold for December delivery trading on the Comex division of the New York Mercantile Exchange shed 12.60 to 946.90. The SPDR Gold Trust
exchange-traded fund closed Monday’s session down by 80 cents, or 0.9%, at 92.95. Pan American Silver’s stock shed 14 cents, or 0.7%, to 20.01, and shares of Hecla Mining
were 19 cents lower, or 5.7%, at 3.12. Silver Wheaton
lost 15 cents, or 1.5%, at 9.62 and Silver Standard Resources
was down by 1.09, or 5.5%, at 18.70.
Thomson Reuters contributed to this article.