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CIBC: Yellen Makes 'Nod' To Tightening But Takes 'Middle Of The Road'

Federal Reserve Chair Janet Yellen tried to “walk down the middle of the road” although her prepared remarks to a Senate panel Tuesday morning at least hinted at further tightening of monetary policy, says Avery Shenfeld of CIBC Economics. “Yellen's testimony comes after a meeting at which the FOMC chose to stand pat, so her attempt to walk down the middle of the road should come as no surprise,” Shenfeld says. “There's a nod to further tightening ahead and the risks of waiting too long, and there is a reference to the need at upcoming meetings to evaluate if the economy is evolving in a way that makes further hikes appropriate. Note the use of the plural on ‘meetings,’ so there was no specific allusion to a March hike in the statement, and Yellen also emphasized that hikes will be ‘gradual.’”  Yellen appeared to tread carefully on the topic of fiscal policy, citing benefits that would improve productivity but also the need to put budgets on a sustainable path, saying it will only be one of many factors that the Fed will take into consideration, Shenfeld says. The economist adds: “Nothing really hawkish in this, but markets have been pricing in very low odds of a March hike, and might at least have a more open mind on that until we see the next payrolls report.”

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

 

RBC’s Gero: Gold Gives Back Overnight Gains After Fed Comments

Tuesday February 14, 2016 10:43

Gold has retreated from its earlier highs after Fed Chair Janet Yellen indicated rate hikes at least remain a possibility and another Fed official, Richmond Fed President Jeffrey Lacker, called for higher rates, says George Gero, managing director with RBC Wealth Management. Gero says “all this back and forth” on interest rates “adds to volatility,” although the inflation outlook, crude oil, political developments and the U.S. dollar’s behavior will be important guides for traders. Around 10:35 a.m. EST, Comex April gold was nearly steady – down 30 cents to $1,225.50 an ounce – although well down from the high for the day of $1,236.

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

 

INTL FCStone: Political, Economic ‘Minefields’ To Prevent 2017 Gold Selloff

Tuesday February 14, 2016 09:40

INTL FCStone says there are too many “minefields” for a major sell-off in gold prices this year. Gold and other precious metals are higher in early-Tuesday trading as markets await congressional testimony from Federal Reserve Chair Janet Yellen. INTL FCStone says “gold will likely seek direction from Janet Yellen’s testimony. However, we think that 2017 is littered with so many political and economic minefields, that we cannot justify a major selloff in gold.”

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

 

Commerzbank: ETFs Add 51 Tonnes Of Gold In Last 10 Trading Days

Tuesday February 14, 2016 08:20

Gold holdings in global exchange-traded funds have risen by 51 tonnes in the last two weeks, and any retreats in prices are being viewed as buying opportunities, says Commerzbank. As an example, analysts note that gold dropped to $1,220 per troy ounce for a time Monday, before this sparked buying interest that took the metal back to the $1,230 area early Tuesday. “The pattern of trading yesterday is thus a good illustration of how price falls are regarded by market participants as a good opportunity to buy,” Commerzbank says. “Even the fact that stock markets are still riding high does not appear to be discouraging investors from putting their money in gold. This is also evident from the renewed purchases in gold ETFs, which saw additional inflows of 5.8 tonnes yesterday; for the most part, these were attributable to the world’s largest gold ETF, the SPDR Gold Trust. The gold ETFs tracked by Bloomberg have therefore seen inflows on 10 consecutive days of trading, totaling a good 51 tonnes.”

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

 

TDS: Gold Ready To Rise If President Trump Disappoints

Tuesday February 14, 2016 08:20

TD Securities sees potential for gold to quickly recover on any pullback if U.S. President Donald Trump should disappoint with his policies. Comex April gold hit a three-month high just above $1,245 an ounce last week as “political and economic uncertainty increasingly became fact in the U.S. and Europe” during the last several days, TDS says, citing a resurfacing of Greece’s debt issues, coming elections in Germany, France and Holland and “perceived delays” to Trump’s fiscal agenda. Still, while many traders were taking out bullish bets on gold, others made bearish ones after Trump’s promise of a “phenomenal” tax announcement, TDS points out. “While we don’t expect a rout, we do see gold sliding modestly toward support at around $1,220-30/ounce for now, with only slight risk of a move below than $1,205/ounce,” TDS says. “Any doubt that the U.S. administration can deliver on the promised tax cuts would no doubt hit equities hard, reduce yields, and force USD (the U.S. dollar) lower, which would be a good platform for a convincing move toward $1,250-64/ounce. Of course, any dovish signals from (Fed Chair) Janet Yellen would also help to move gold to these levels.”

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

 

BNP Paribas: Look For U.S. Dollar Strength If Yellen Hawkish

Tuesday February 14, 2016 08:20

BNP Paribas sees potential for the U.S. dollar to rise as markets eventually increase the pace of U.S. rate hikes, especially if Federal Reserve Chair Janet Yellen should be more hawkish than expected in congressional appearances this week. The greenback eased overnight after U.S. National Security Adviser Michael Flynn resigned only weeks President Trump’s inauguration. “Markets are now likely to refocus on fiscal and monetary policy rather than trade,” BNP Paribas says. In particular, Yellen is scheduled to deliver testimony before Senate and House panels Tuesday and Wednesday mornings. BNP Paribas says the dollar is “trading in line with key short-term drivers” against most major currencies. “However, with rates markets pricing just two (U.S. rate) hikes this year and only two additional hikes next year, risks are to the upside for U.S. front-end yields from current levels,” BNP Paribas says. “Our economists expect Chair Yellen to avoid sending significant new guidance, but markets would likely be quite sensitive to any suggestion that further tightening is possible in the first half of the year before fiscal plans are finalized. Our BNP Paribas positioning framework continues to show the market running short USD exposure, which could magnify impact on the USD of even a slightly hawkish message.” Metals traders closely monitor U.S. dollar moves since base and precious metals alike often move inversely to the U.S. currency.

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 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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