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HSBC: IMF Caution On Economy Supportive For Gold

Kitco News

International Monetary Fund caution about the global economy is potentially gold bullish, says HSBC. Analysts cite an IMF report stating that while global financial stability has improved, there are risks ahead for the global economy. Analysts also cite the IMF view that easy monetary and financial conditions against a backdrop of sluggish inflation is elevating medium-term risks, with risks rotating from banks to financial markets. The IMF essentially cautioned that policymakers need to ensure that growing financial vulnerabilities are contained while monetary policy remains supportive of the recovery. “If this is not done smoothly, rising debt loads and overstretched asset valuations could undermine market confidence,” HSBC says. “If risks are rising in global financial markets, as the IMF warns, and they are not successfully contained, volatility in the financial markets may trigger safe-haven buying in gold. While a liquidity crisis or sudden bursting of an asset bubble is obviously gold bullish, even the fear of one developing may stimulate greater gold purchases than would otherwise be the case.”

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

 

RBC’s Gero: Gold Break Of $1,300 Would Encourage More Buying

Thursday October 12, 2017 10:45

Gold is again within striking distance of $1,300 an ounce, and a break above this could encourage more asset allocators to step in as buyers, says George Gero, managing director with RBC Wealth Management. He links the metal’s strength to Federal Open Market Committee minutes, released Wednesday afternoon, that were not as hawkish as markets anticipated ahead of time. Meanwhile, worries about North Korea, Venezuela, Turkey and U.S. politics continue. “Look for $1,300 area by year end as more worries and basics play out,” Gero says. As of 10:28 a.m. EDT, Comex December gold was $5.20 higher to $1,294.10 an ounce.

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

 

Commerzbank: Doubts About Fed Tightening Supportive For Gold

Thursday October 12, 2017 10:45

Some doubts about how aggressively the Federal Reserve will tighten monetary policy have crept into the market, which is supportive for gold, says Commerzbank. Analysts point out that the Wednesday release of minutes from the last meeting of the Federal Open Market Committee show that while “many” Fed members still expect a rate hike this year, “several” are concerned that the currently low inflation rate in the U.S. may turn out to be not temporary after all, and are therefore arguing for a slower approach. “In other words, doubts are clearly emerging in the market as to whether the Fed will really raise interest rates three times next year, as it was indicating just a few weeks ago,” Commerzbank says. “If interest rates are raised less sharply, gold would become more attractive as an alternative investment.”

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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