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Market Nuggets: Triland Cautions That Gold Could Retreat After Any Attack On Syria

Wednesday August 28, 2013 2:10 PM

Triland Metals offers caution about the potential for gold to retreat if or when the U.S. and its allies attack Syria over allegations about the use of chemical weapons, since the market already has been rising on the prospect. Often, once markets factor in expected news, they then move the other way on profit-taking when the event actually occurs. Triland cites a famous quote from writer George Santayana: "Those who cannot remember the past are condemned to repeat it." Triland then continues: "There is a good chance that this quote is apt with regard to people getting long of gold on the back of the Syrian situation. The first Gulf War resulted in a collapse of the gold price once hostilities commenced after weeks of increase as 'the rumor' was bought. This time it may be different. Then again it may not. Gold has had a long streak to the upside and is now encountered strong resistance between $1,430 and $1,435, which is also the top end of the recent up-channel." Triland puts support between $1,390 and $1,395.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: NationalFutures.com's Person Sees Potential For $1,500 Gold In Month

Wednesday August 28, 2013 1:20 PM

John Person, president of NationalFutures.com, sees potential for gold to hit $1,500 an ounce by the end of September, a month when the market tends to be seasonally strong. "We still have not eliminated quantitative easing (or) money printing," Person says, also citing potential for inflation with higher energy and food costs. While gold has fallen since the peak in 2011, the metal has held onto the majority of its gains from the last decade. "There will be glitches (for gold) along the way," Person says. "But I think gold has a very strong possibility of hitting $1,500 by the end of September, especially if we see more unrest in the Middle East and if we see more uneasiness with the U.S. equity market and doubtful economic conditions here and abroad."

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: BBH Sees Potential For Safe-Haven Assets to Rise More In Near Term

Wednesday August 28, 2013 8:28 AM

So-called safe-haven assets could rise some more in the near term while the world waits to see whether the U.S. and its allies conduct a military strike against Syria over alleged use of chemical weapons, says Brown Brothers Harriman. "While it remains to be seen just how much lasting impact the Syrian tensions will have on the markets, developments have given a bid this week to traditional safe-haven assets," BBH says. Gold and the dollar are higher so far Wednesday. "News reports suggest that Western countries are indeed moving closer to a military strike against Syria," BBH says. "However, the situation is delicate as the Arab League fell short of condoning a strike on Syria, which would have given President Obama better cover to initiate action. Given continued uncertainty, we see scope for these safe-haven assets to continue gaining near term."

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: Commerzbank: Syrian Tensions Keeping Markets On Tenterhooks

Wednesday August 28, 2013 8:26 AM

The threat of a military strike against Syria continues to underpin crude oil and gold, says Commerzbank. Whereas base metals have fallen, the decline has been limited. "Though it may have taken some time for the oil market to respond to the threat of a military strike against Syria, it has now done so with a vengeance," the bank says. Nymex crude has been above $112 a barrel for the first time since 2011. Meanwhile, gold is in "considerable demand as a safe haven" and spot metal hit a peak of $1,433.85 that is the strongest level in 3 ½ months. "Admittedly, the geopolitical uncertainty does justify the current high gold and silver prices – in our opinion; however, a certain potential for correction has also built up in the meantime," the bank says. Meanwhile, three-months copper on the London Metal Exchange was down $50 to $7,265 a metric ton as of 8:15 a.m. EDT. "The geopolitical risks and the resulting increase in risk aversion among market players are also influencing base metal prices," Commerzbank says. "In view of weak global equity markets, however, metals are holding their own relatively well. Copper, for instance, has fallen only slightly this morning and is trading at just shy of $7,300 per ton."

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: INTL FCStone: Gold Likely To Hold Up Until Any Syrian Strike

Wednesday August 28, 2013 8:12 AM

Any corrections lower in gold may not last as long as geopolitical tensions surrounding Syria persist, says Edward Meir, commodities consultant with INTL FCStone. As of an overnight research note, he pointed out that the Relative Strength Index reading on silver was over 80 and looked "particularly frothy," while gold's reading was 72. "However, we think that any decline will likely prove to be short-lived, at least until the Syrian strike is out of the way," Meir says. "In addition, we may be seeing a new trading paradigm setting in of the next few days, one whereby investors sour on stocks and file back into commodities, with oil and gold likely being the two favorites in the group." Comex December gold pulled back for a while overnight but then went on to a peak of $1,434 that is its strongest level since May 14. October crude oil peaked at $112.24 a barrel. On a spot continuation chart, this is the strongest level since May 2011.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: Weakening Rupee Could Hurt Indian Festival Gold Demand

Wednesday August 28, 2013 8:10 AM

The Indian rupee is in a freefall, which makes gold more expensive for buyers in the country in their own currency, analysts say. "In India, the plunge of the rupee by close to 10% in August has pushed up gold prices, which went from 24,830 rupees per 10 gram(s) on 28 June to a high of 33,824 on 27 August," Sharps Pixley says. "The surge in gold prices, however, will likely hamper the upcoming festival gold jewelry demand." The U.S. dollar has been as strong as 68.93 so far Wednesday, a fresh record high against the Indian currency. "The decline in the rupee will almost certainly raise fresh doubts about Indian gold demand going into the wedding season, especially now that the impact of a weaker currency is being mag¬nified by sharply higher gold prices," says Edward Meir, commodities consultant with INTL FCStone.

By Allen Sykora of Kitco News; asykora@kitco.com


Market Nuggets: TDS: 'Sensible' Hedging Can Be Useful Tool For Mining Companies

Wednesday August 28, 2013 8:08 AM

TD Securities says hedging by gold-mining companies got a “black eye” around the turn of the century, but says this “doesn’t necessarily have to be a poor choice” and can help producers with their cash flow at a time when spot gold prices approach all-in sustainable costs. However, TDS offers what it considers to be “sensible ways” to approach hedging. This means avoiding the use of margin agreements, unless companies are certain they can meet the potential cash requirements from adverse price adjustments. TDS favors selling no more than 25% to 50% of annual production, using simple “vanilla” options, and using hedging to ensure cash flow rather than generating profits. “Educate yourself on what the worst case scenario is,” TDS continues. “What happens if a mine shuts down? If energy costs soar? The shorter the liability (call sold or forward hedged), the easier it will be to manage the unthinkable scenario.” The firm describes the outlook for gold as “not promising” due to anticipation that quantitative easing will wind down in the U.S. “As such, miners need to be in protection mode, looking to take advantage of rallies in gold, to layer into protective hedges.”

By Allen Sykora of Kitco News; asykora@kitco.com

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