Gold: Jon Case, Portfolio Manager, Sentry Investment on BNN.ca Market Call Friday May 30 @ 1300ET
The gold price has been under pressure because of:
Optimism in other asset classes, such as the U.S. Market, and concern over a tapering of QE, has caused investors and speculators to more out of gold into other asset class.
The selling, mostly out of the ETF, has come at a time when one of the largest consumers in India has implemented an import ban on gold to take pressure off the current trade account, so they have been unable to buy. China is buying every increasing amounts, but growth in China cant offset the removal of India on its own.
Seasonal Weakness
We believe the current supply-demand dynamic as temporary. On the supply side, the ETF sales are already reduced, and at these prices mine supply is not sustainable.
On the demand side India has a new government in power which has stated they will relax the ban, and we are seeing a stronger rupee, which should help bring demand back Indian demand back up.
We don’t see a scenario where gold can stay down here.
Right now, we see demand down 300t but supply off 400t, so we believe there is a 100t deficit, and as Indian demand comes back up we think that deficit will rise.
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