Make Kitco Your Homepage

Goldman Sachs: Trade-War Retaliation Could Boost Gold Demand

Kitco News

One of the potential outcomes of a trade war is that other nations start dumping U.S. Treasury securities, which could boost gold demand, says Goldman Sachs. Analysts put out a detailed research report outlining how U.S. President Donald Trump’s proposed tariffs on aluminum and steel could impact those metals as well as the industries that rely on them, both producers and consumers. Yet another impact could be capital flows, particularly from U.S. trade partners that are net savers, Goldman says. “Because these trade partners are large holders of U.S. Treasuries, it is often cited that they may retaliate by dumping U.S. securities at time when the U.S. Treasury needs to access global capital markets,” Goldman says. “If materialized, a reduction in U.S. Treasury holdings may boost the demand for gold, supporting our bullish view on gold prices.”

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

 

TDS on Trade War: Gold May Be ‘Winner In Relative, If Not In Absolute Terms’

Tuesday March 06, 2018 08:50

Gold would be the “winner” at least in “relative” terms compared to other commodities if the U.S. triggers a global trade war, says TD Securities. The metal initially fell last week on hawkishly construed congressional testimony from new Federal Reserve Chair Jerome Powell, before recovering amid growing trade tensions after U.S. President Donald Trump proposed tariffs on aluminum and steel. After falling to nearly $1,300 an ounce, gold found “some respite as investors rushed for safety,” TDS says. The Trump tariffs could prompt retaliation by other nations, as well as an “unwinding of existing geostrategic relationships, with the center shifting toward China,” TDS says. “These policies look to be negative for  aluminum, steel, base metals, crude oil, and PGMs [platinum group metals] due to the negative impact on demand. Gold would likely be the winner in relative, if not in absolute terms.”

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

 

RBC’s Gero: Gold Futures Lifted By Short Covering

Tuesday March 06, 2018 08:50

Gold is rallying on short covering, with the U.S. dollar softer, says George Gero, managing director with RBC Wealth Management. Gold is stronger even though U.S. 10-year Treasury yields remain near 2.9% and stock-index futures are pointing to a higher open on Wall Street. Short covering is when traders buy to offset bearish positions in which they previously sold the metal. “Gold is technically improving thanks to the weaker dollar and ag products, and metals may become of greater interest going forward to asset allocators,” Gero says. He adds that he is “still looking at $1,400 by year-end, maybe sooner.” Around 8:30 a.m. EST, Comex April gold was $10.80 higher at $1,330.70 an ounce, while the euro was up to $1.24025 from $1.23350 late Monday.

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

 

Commerzbank: Italian Politics, Trade Issues To Support Gold

Tuesday March 06, 2018 08:50

Gold prices may remain underpinned by worries about global trade and Italian politics, says Commerzbank. The Trump administration has proposed tariffs on aluminum and steel, prompting worries about retaliation and reduced global trade that leads to a softer economy. Meanwhile, weekend elections left Italy with no party holding a majority and anti-establishment candidates making a strong showing, leading to the resignation of the leader of the previous ruling party. “The issue of import tariffs is likely to preoccupy the market for some time yet and to unsettle market participants, meaning that gold should remain in good demand in the medium term,” Commerzbank says. “The ongoing political uncertainty in Europe in the wake of the elections in Italy also points to solid gold demand, in our opinion.”

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.

Precious Metal Charts

Follow Kitco News