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Nichols: Gold Rally Could Become 'Self-Fulfilling Prophecy'

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Analyst Jeffrey Nichols sees potential for upward momentum in gold – in essence a “self-fulfilling prophecy” that means still-higher prices. “In particular, fund managers and traders don’t want to miss the party if gold is, indeed, going higher,” says the managing director of American Precious Metals Advisors and senior economic consultant for Rosland Capital. “We could see, at least briefly, a ‘self-fulfilling prophecy’ here as a rising gold price spawns further interest in the yellow metal. At the same time, the loss of upward momentum on Wall Street is making it easy for managers to shift funds from equities into gold — with a small shift away from equities not having much effect on stock prices but giving gold a firm upward kick. In addition, investors and speculators in these markets will continue to benefit from questionable economic data and bumbling among policymakers in Washington.”

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

 

INTL FCStone: Precious Metals Higher Although Gains May ‘Flatten Out’

Friday March 17, 2017 09:16

Gold and silver are higher although the pace of gains is slower than mid-week after a meeting of the Federal Open Market Committee, says INTL FCStone. “In the precious-metals markets, prices are up across the board, but the gains are fairly modest and we expect the rapid appreciation we saw over the past two days to flatten out going into early next week,” the firm says. “The group continues to draw support from a weaker dollar, now trading a touch above 113 against the yen, although the greenback is holding up better against both the euro and sterling, now at $1.0740 and $1.2355, respectively.” As of 9:12 a.m. EDT, Comex April gold was $2.60 higher at $1,229.70 an ounce, May silver was up 3 cents to $17.36, Nymex April platinum was up $2.30 to $960.70, and June palladium was $11.55 higher to $778.20.

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

 

Price Group’s Flynn: Gold ‘A Much Better Investment’ After Fed

Friday March 17, 2017 08:08

Federal Reserve commentary this week that U.S. interest-rate hikes should continue to be gradual portends more gains ahead for gold, says Phil Flynn, senior market analyst with Price Futures Group. He points out that a post-Fed rally this week included the biggest single-day gain for gold since the U.K. Brexit vote last summer. “It went up…mainly because the interest-rate increase (announced Wednesday) was already priced in and because the Federal Reserve used the word ‘gradual’ when it came to raising interest rates,” Flynn says. “That seems to suggest that the market’s fears that the Fed was going to be have a more aggressive path on interest rates were overplayed. It changes the complexion of the dollar and the perception that the Fed was going to tighten too quickly. So now, gold looks like a much better investment as we go forward.” Further, investors may start looking at gold as a potential hedge if the rising stock market should falter, he adds.

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

 

BBH: Dollar Index Headed For Big Weekly Loss

Friday March 17, 2017 08:08

The U.S. dollar index is heading for what may be its biggest weekly loss since November, says Brown Brothers Harriman. “The combination of the Federal Reserve not signaling an acceleration of normalization…and perceptions that the ECB (European Central Bank) and BOE (Bank of England) can raise rates earlier than anticipated weighed on the dollar,” BBH says. China also lifted some interest rates, all contributing to the sense that the divergence theme, which had favored the dollar, has run its course, BBH says. Still, BBH says, “We are somewhat skeptical of the sustainability of that new narrative, but recognize it has emerged while the short-term market was carrying significant long dollar and short Treasury positions.” BBH looks for European headline inflation to peak in the coming months and for U.K. data to soften, meaning no compelling reason for a U.K. rate hike. “Next week, numerous Fed officials are speaking, including (Chair Janet) Yellen,” BBH says. “Given the market's reaction to the statement and forecasts, it would not be surprising to see some push against the dovish hike interpretation.” Around 7:40 a.m. EDT, the June dollar index was nearly steady for the day but was down 0.917 point for the week so far to 100.190.

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

 

Silver Institute: Institutional Investors Buying Silver

Friday March 17, 2017 08:08

Silver prices are up 9% for the year to date, and the Silver Institute says this is largely due to improving sentiment toward the precious metal among institutional investors. Changing expectations towards the outlook for U.S. interest rates and the proliferation of negative policy rates across other key reserve currencies has rekindled institutional investor interest in precious metals, says the Silver Institute. An improvement in silver industrial offtake is also helping, the organization says. These factors have fueled investment inflows into silver futures, options, exchange-traded products and over-the-counter products, the Silver Institute says. “We expect that the factors that buoyed institutional silver investment over much of 2016, and have carried over into the early months of 2017, will remain relevant for the remainder of this year,” says Michael DiRienzo, executive director of the Silver Institute.

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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