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MKS: Soft Dollar Supports Gold; Holiday Period To Curb Physical Demand

Kitco News

U.S. dollar weakness has supported gold so far Tuesday, although the absence of traders from certain Asian gold-buying nations during the upcoming Chinese New Year holiday period could take away physical buying for a spell, says Sam Laughlin, senior trader with MKS (Switzerland) S.A. Gold rose in Asia-Pacific trade, underpinned as the U.S. dollar fell against the Japanese yen, he explains. Bullion moved through broad resistance around $1,325 to $1,326, triggering a brief but sharp stop-loss run higher, before profit-taking set in, Laughlin says. “Recent price action is indicative of short-term positioning, with expectations of strength toward $1,335-$1,340 as shorts are further tested,” he says. “The caveat to a short-term push higher, however, is the upcoming Chinese New Year holiday, which will remove physical demand from the market.”

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

 

Commerzbank: Silver Faring Better Than Gold In Recent Trade

Tuesday February 13, 2018 08:17

Silver has outgained gold so far this week, pushing the gold/silver ratio back just below 80 early Tuesday, although the ratio remains historically high, says Commerzbank. The ratio measures how many silver ounces can be bought with an ounce of gold, with a smaller number meaning silver outperformance and vice-versa. The metals have been underpinned by a weaker U.S. dollar. “Silver has made disproportionate gains in gold’s slipstream…driving the gold/silver ratio back below 80,” Commerzbank says. “This still leaves it well above the historical average, however, which since 2003 has been just shy of 63. Silver is presumably also profiting from the firm base metals prices this morning. Furthermore, short positions are likely to have been covered after speculative net-long positions were almost entirely eliminated during the last CFTC [Commodity Futures Trading Commission] reporting week.  Shortly after 8 a.m. EST, spot silver was up 0.4% to $16.584 and gold was up 0.3% to $1,326.50.

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

 

FXTM: Potential For Higher U.S. Rates Could Limit Gold Gains

Tuesday February 13, 2018 08:17

Prospects for higher U.S. interest rates could limit gold’s upside, says Lukman Otunuga, research analyst at FXTM. Higher rates tend to boost the dollar, which hurts gold, and also increase the so-called “opportunity cost” of holding a non-yielding assets such as precious metals instead of assets that pay interest. Gold rose Monday on a softening U.S. dollar and is up again so far Tuesday. “While dollar weakness could in the short term offer the yellow metal further support, gains are likely to be limited by rising expectations of higher U.S. interest rates,” Otunuga says. “Focusing purely on the technical picture, the yellow metal remains under pressure on the daily charts. A failure for prices to keep above the $1,324.15 level could inspire a decline towards $1,300. Alternatively, if bulls are able to hold their ground above $1,324.15, prices could venture towards $1,340.” Shortly before 8 a.m. EST, spot gold was $5.25 higher at $1,327.85.

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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