SWOT Analysis: Central Banks Continue to Show Their Love for Gold

Monday, June 24, 2019
By Paul Martin

By: Frank E. Holmes
Monday, 24 June 2019


The best performing metal this week was gold, up 4.26 percent. Gold traders and analysts were surprisingly neutral on their price outlook for the yellow metal after it hit a five-year high this week and broke above $1,400 per ounce. Bullion got a huge boost after the Federal Reserve kept interest rates unchanged on Wednesday and signaled a readiness to cut rates due to increased economic uncertainties.
Central banks continue to show their love for gold. Kazakhstan raised its gold holdings to 11.93 million ounces in May, up from 11.79 million ounces in April. Russia’s climbed from 70.2 million ounces to 70.42 in May. Turkey was also up to 16.03 million ounces in May from 15.99 in April. Additionally, Turkey saw its gold reserves rise $167 million this week from the previous week to now total $21.7 million worth of reserves, according to central bank data.
Illegal gold mining in Ghana is now being cracked down on. A veteran NASA engineer developed a software tool that is capable of identifying illegal mines from satellite photos, making it easier to find and shut down illegal operations. Refiners are also taking steps to reduce illegal mining. Reuters reports that Metalor, one of the world’s largest gold refineries, said on Monday that it would only work with gold from large industrial mines in order to reduce the risk of illegality in its supply chain of the metal. Gold Fields Ltd. announced that its mine in Western Australian will become one of the nation’s first mining operations to be predominantly powered by renewable energy.


The worst performing metal this week was platinum, up just 0.51 percent as hedge funds boosted their new bearish positioning to a 9-month high. Fed Chairman Jerome Powell regularly receives attacks from President Donald Trump on interest rates and Fed policy. The President has now threated to remove Powell as chair. Even though many think the president cannot outright fire Powell, White House lawyers have put together a framework for the president to demote Powell and leave him as just a governor.
Bloomberg reports that sentiment among U.S. homebuilders unexpectedly fell for the first time this year, suggesting that lower mortgage rates aren’t giving housing a boost. The Empire State manufacturing index plunged in June by the most on record, which adds to signs that continued tariffs are hitting manufacturers and the broader economy.
Barrick Gold continues its bid for Acacia Mining in what might not be the best deal in the space. Barrick was initially down 1.3 percent in the premarket on Wednesday after it said it is proposing to engage “intensively” with Acacia’s minority shareholders.

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