Make Kitco Your Homepage

Walsh's Lusk: Comex Gold Around Long-Term Moving Averages

Kitco News

Comex August gold is trading right around a couple of key long-term moving averages, which are important chart support for the metal, says Sean Lusk, director of commercial hedging with Walsh Trading. The contract earlier Monday dipped below these levels, but not by much. Gold and silver fell last week in what Lusk terms “wild” trading, first rising on geopolitical uncertainty and due to soft U. S. economic data, before a mid-week reversal that “caught the bulls by surprise” due to hawkishly construed comments from Federal Reserve Chair Janet Yellen after a quarter-point U.S. rate hike, Lusk says. The comments led to U.S. dollar strength. Still, as last week ended, August gold futures held key moving-average support, with the 100-day at $1,250.60 an ounce and the 200-day at $1,250.30, Lusk says. “These levels need to hold or August futures would most likely test the early May 2017 lows down [around] $1,221,” Lusk says. As of 9:45 a.m. EDT, August gold was down $6.10 to $1,250.40 but has been as soft as $1,249.10.

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

 

Mitsubishi: ‘Macroeconomic Conditions Will Remain Quite Favorable To Gold’

Monday June 19, 2017 08:49

Mitsubishi says the short- to medium-term macroeconomic outlook remains supportive for gold prices, suggesting the metal “has perhaps taken more of a battering than may be justified” since last week’s U.S. interest-rate hike was already anticipated and the rate-hike path remains largely unchanged. “The emphasis by the Federal Reserve on shrinking the balance sheet does have the potential to make the macro environment less favorable to gold if it means that, with less demand from Fed reinvestment, the yield on U.S. Treasury debt rises,” Mitsubishi says. “If inflation also remains stubbornly low, this would mean that real interest rates rise, thus increasing the cost of carry for non-yielding precious metals.” A major unknown for Fed watchers remains the three current unfilled vacancies on the Federal Reserve board, plus a possible new chair and two new vice chairs who are due to be in place by the end of next year, Mitsubishi says. “Overall, despite the Fed ratcheting up the hawkish tone…we believe that macroeconomic conditions will remain quite favorable to gold over the short to medium term.” The firm adds that geopolitical factors continue to favor gold as a risk hedge. In particular, analysts say Britain’s recent inconclusive election introduces new uncertainty, particularly for negotiating an exit from the European Union.

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

 

Commerzbank: Gold ETFs Still Have Net Inflow During June

Monday June 19, 2017 08:49

Global gold exchange-traded funds still have a net inflow for the month so far, although the amount was trimmed toward the end of last week as prices fell, says Commerzbank. The ETFs trade like a stock but track the price of the commodity, with metal put into storage to back the shares. “After the gold ETFs tracked by Bloomberg recorded their biggest daily outflow so far this year on Thursday (13 tonnes), holdings were cut by another tonne on Friday,” Commerzbank says.”This has reduced inflows into the gold ETFs since the beginning of the month to 11 tonnes.”

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

 

FXTM: Short-Term Gold Bears ‘Remain In Control Below $1,260’

Monday June 19, 2017 08:15

Gold remains below the $1,260-an-ounce level, which in turn leaves the bears in control of the market for at least the short term, says FXTM research analyst Lukman Otunuga. "Gold bulls were missing in action last week, with bears making a guest appearance on Monday as the dollar stabilized," the analyst says. "The Fed hawks still have a grip on the zero-yielding metal, with the prospect of higher U.S. interest rates this year enforcing downside pressures. If the dollar continues to stabilize and Federal Reserve officials adopt a hawkish stance this week, gold could be in store for further punishment. While the uncertainty surrounding Brexit negotiations and ongoing U.S. political instability is likely to support safe-haven assets such as gold in the medium term, short-term bears remain in control below $1,260."As of 8:05 a.m. EDT, spot gold was down $1.90 for the day to $1,251.20 an ounce and bottomed at $1,249.40, its weakest level since May 24.

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

 

Mitsubishi: Profit-Taking Cools Previously Hot Palladium Market

Monday June 19, 2017 08:15

Palladium hit a 16-year high on June 9 amid market tightness, although prices have eased since on profit-taking, says Mitsubishi. The metal rose early in the month on buying by investors and industrial users alike, pushing the forward market into backwardation. This is where nearby prices are higher than the deferred, which is the opposite of the norm, indicating buyers are willing to pay a higher price to get ahold of the commodity right away. “While the market has eased somewhat due to investor profit taking, metal for immediate delivery continues to trade at a premium to forwards,” Mitsubishi says. “A notable feature about the recent market tightness is that it has predominantly affected ingot, which has traded at a premium to sponge in a reversal of the normal situation – this indicates that it is investment, rather than industrial demand, that is the main driver.” The firm says tightness in the palladium market has been building for months. “This is ultimately the result of fundamental supply-demand factors; after five years of deficits and the drawdown of above-ground stocks to bridge these shortfalls, as well as projections of sustained deficits for the next several years, there have been relatively few willing sellers of palladium ingot.” However, sentiment “now seems to be turning as investors look to book profit, and as some industrial users choose to purchase rather than borrow palladium – thus easing conditions in the forward market while supporting the spot price.” As of 8:01 a.m. EDT, spot palladium was up $4.90 for the day at $869.40 an ounce, although down from early-month highs above $900 an ounce.

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.

Precious Metal Charts

Follow Kitco News