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MKS: Gold In Consolidation Phase; ETF Holdings Stable

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Gold could be in for a period of sideways consolidation, and exchange-traded-fund holdings held up despite a recent price decline in the precious metal, says Alex Thorndike, senior precious-metals trader with MKS (Switzerland) S.A. While spot metal touched a fresh 2018 low of $1,282.20 on Monday, the market has mostly sideways since falling below $1,300 support on May 15. “For now we see stubborn resistance at $1,298-$1,300, with thick offers from producers, real money and leveraged sellers alike prevalent on runs higher,” Thorndike says. “To the downside, [support] sits at the previous low and 61.8% Fibonacci retracement levels between $1,282-86. We think the gold will be in for a period of consolidation in the short term and are monitoring moves in ETF holdings, which have surprisingly held rather steadily given the move through $1,300 support.” He points out that holdings in SPDR Gold Shares, the world’s largest gold ETF, have only shed around 4.13 tonnes, or 133,000 ounces, since the price collapse on May 15.

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

 

Commerzbank: Gold/Silver Ratio Narrows; Silver Holds Up As Gold Falls

Wednesday May 23, 2018 08:30

The gold/silver ratio has narrowed slightly, meaning a modest outperformance by silver, points out Commerzbank. The ratio measures how many ounces of silver it takes to buy an ounce of gold. “The gold/silver ratio has fallen to 78 because silver has resisted gold’s downward pull of late,” Commerzbank says. “Silver is clearly finding support from the high base-metals prices at present; at $16.50 per troy ounce, [silver] is trading in the middle of the corridor of $16-$17 in which it has found itself since early February and – unlike gold – well above its 2018 low.” 

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

 

Metals Focus: Italian Developments To Weigh On Gold In Short Term Only

Wednesday May 23, 2018 08:30

Metals Focus says Italy’s political situation may pressure gold but in the short term only, as safe-haven buying could ultimately develop. In Italy, the coalition formed between the Five Star Movement and The League resulted in some “radical proposals” that could “significantly impact” the country’s fiscal deficit, Metals Focus says. Further, analysts point out that the parties have been in favor of a referendum on the country’s participation in the euro. Italy’s bond yields have climbed and there is a risk of a further downgrade to Italy’s debt. “Overall therefore, it is not surprising to see that the euro has weakened noticeably following the election result, giving up the gains realized over the first four months, in the process adding to the near-term downward pressure on the gold price,” Metals Focus says. Still, the impact on gold has been limited so far, analysts say, with no tangible rise in gold bar and coin demand in Germany, Europe’s largest physical investment market, or gold exchange-traded products. “At present, there seems to be a wait-and-see approach, given that discussions about the choice of prime minister have only just started, suggesting that policy announcements may not be an immediate concern,” Metals Focus says. “However, safe-haven demand may then emerge, in response to a growing anti-EU [European Union] mandate or as fears develop concerning excessive fiscal slippage, and the potential for this to spread to other European countries. Although we are not prescribing another eurozone debt crisis (as occurred in 2010), populist movements similar to those in Italy could benefit should the crisis in Italy deepen.”

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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