Gold bears revived as rout resumes after coin rush

Central Banks

Central banks may help boost demand for bullion as they expand reserves. Nations from Brazil to Russia added 534.6 tons last year, the most since 1964, and may buy 450 to 550 tons this year, according to the World Gold Council. TD Securities Inc. estimates consumers will sell about 1,550 tons of used gold this year, the least since 2008, curbing a source that typically accounts for about one in every three ounces of global supply.

Almost two-thirds of the likely drop in ETP holdings has probably already happened because most institutional investors have made their sales, Deutsche Bank AG said in a May 14 report. Hedge funds and other managers cut bets on higher prices on Comex by as much as 80% since October, U.S. Commodity Futures Trading data show.

In other commodities, six of nine people surveyed expect raw sugar to fall next week and three were neutral. The commodity slid 14% to 16.86 cents a pound on ICE Futures U.S. in New York this year.

Lower Corn

Fourteen of 29 surveyed anticipate lower corn prices next week and nine said the grain will gain, while 15 said soybeans will fall and eight expect higher prices. Fifteen traders predicted declines in wheat and seven were bullish. Corn slid 8.1% to $6.4125 a bushel this year in Chicago as soybeans added 1.3% to $14.28 a bushel. Wheat is down 12% at $6.8375 a bushel.

Eight traders and analysts surveyed expect copper to drop next week, six were bullish and two were neutral. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, slipped 7.8% to $7,317 a ton since the start of January.

While the S&P gauge of raw materials fell 7.4% since Feb. 14, it’s still above the five-year average. More than half of those contacted in a May 14 survey of investors, analysts and traders who are Bloomberg subscribers said the U.S. will be among the markets offering the best returns over the next year.

“There seems to be a view that growth is picking up in U.S. but inflation is not picking up,” said John Toohey, the San Antonio, Texas-based vice president of equity investments at USAA Investments, which manages about $54 billion of assets. “That is the worst for gold. Prices will remain under pressure unless we see something that leads people to think there is inflation in the system or there is going to be more monetary easing or you see a large institutional buyer of gold.”

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