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Adrian Day: ‘Potentially Good Move In Gold Over At Least The Next Month Or Two’

Money manager Adrian Day sees potential for gold to rally in the next month or two. Historically, “gold was higher a month following a (Federal Reserve) rate increase far more times than it was lower,” says the president and chief executive officer of Adrian Day Asset Management. The key, he says, was the level of “real interest rates,” defined as the interest rate minus the level of inflation. “So an increase from half a percent to one percent is not particularly damaging, nor higher rates lagging inflation,” he says. “Gold tended to fall after a series of rate increases when real rates rose to the 4% or higher level. We are a long way from that scenario at present. If we consider the propensity for the dollar to drop for one or two months after an initial hike, and add to that that we are entering a seasonally strong period for gold, we are set up for a potentially good move in gold over at least the next month or two.”

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

 

Walsh Trading’s Lusk: Any Stock Market Sell-Off Could Revive Gold Buying

Monday December 21, 2015 08:51

Any meaningful downdraft in global equities during 2016 could boost gold, says Sean Lusk, director of commercial hedging with Walsh Trading. He points out that gold rose sharply Friday as stocks tumbled, with the U.S. dollar also weakening. “As we get through the holiday season, I would like to see the Fed’s expectations of where inflation stands,” Lusk says. “Simply put, we have been stagnating in a deflationary environment where for the most part the biggest winner was the equity sector. That could be changing in 2016. A withdrawal in global equities could provide a floor in gold prices heading into 2016.” Should equities continue to weaken, he continues, gold futures could get back up to the 50-day moving average that stood at $1,106 as last week wound down or to the 100-day average that was at $1,114.90. The 200-day average sat at $1,147.80.

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

 

Barclays: ‘Downward Path For Gold Could Be Shallow’

Monday December 21, 2015 08:51

Analysts with Barclays say they look for any weakness in gold to be “shallow” as the Federal Reserve tightens U.S. monetary policy. The Federal Open Market Committee hiked by 25 basis points last week, the first increase in nearly a decade. “We believe in this hiking cycle, gold should underperform,” Barclays says. “However, the FOMC emphasized that hiking will be gradual. With some stabilization in the physical market, we think the downward path for gold could be shallow.”

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

 

Citi Research: Chinese Platinum Demand Rises Sharply In November

Monday December 21, 2015 08:51

China’s growing auto demand led to platinum imports rising nearly 50% year-on-year during November, with year-to-date growth of 7%, says Citi Research.  Palladium imports were up nearly 30% year-on-year, although they are down for the year to date. The two metals are used for auto catalysts. “Chinese auto production showed strong seasonal improvement in October and November, leading to improved demand for platinum,” the bank says. “Import volumes should remain strong in 2016 as China accelerates its transition from Euro 4 to Euro 5 in automobile emission controls, positive for platinum and palladium demand.”

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

 

Barclays: Gold Exchange-Traded Product Flows ‘Muted’ Lately

Monday December 21, 2015 08:51

Overall, flows in and out of gold exchange-traded products have been relatively “muted” lately, says Barclays. There were outflows of 5.04 tonnes from Dec. 4 to 9. Last Thursday, which was the day after a Federal Reserve rate hike, 4.8 tonnes of gold was sold from physical ETPs, Barclays points out. “Although the selling was sizable, it is not exceptionally big, indicate limited appetite from investors to change positions approaching year-end,” the bank says.

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

 

BBH: Spanish Political Uncertainty ‘Could Weigh On Euro’

Monday December 21, 2015 08:51

Uncertainty about Spain’s political future has potential to hurt the euro, says Brown Brothers Harriman. Prime Minister Mariano Rajoy’s People’s Party lost its majority although it remained the top vote-getter in weekend elections, leaving no clear governing majority, particularly with anti-austerity parties gaining strength. “Now begins the horse trading,” BBH says. “By law, the new parliament must be called by Jan. 13, and lawmakers then have two months to form a government. If not, then fresh elections must be called. This uncertainty could weigh on the euro.”

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

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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