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BMO: FOMC Minutes 'May Offer Gold Some Support'

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BMO Capital Markets describes Wednesday’s release of minutes from the last Federal Open Market Committee meeting as constructive for gold since they did not hint at an increased pace of monetary tightening. “The FOMC minutes published yesterday read fairly dovishly…with the key points being that the Fed was monitoring curve shape and that a ‘modest’ inflation overshoot could be permitted for the time being,” BMO says. “We still expect the next rate hike during the next meeting on June 12-13, but there was nothing else in the minutes to suggest any acceleration in the pace of tightening. This may offer gold some support [after] recent price weakness.” As of 9:04 a.m. EDT, Comex June gold was $8.30 higher to $1,297.80 an ounce.

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

 

Mitsubishi: More Fed Rate Hikes ‘Already Priced Into Gold’

Thursday May 24, 2018 09:20

Mitsubishi says more Federal Reserve rate hikes are likely already factored into gold prices and the market potentially could get a lift on any downdraft in equities. “The recent move below $1,300 represents the most significant test of gold’s strong 2018 performance – gold’s year-to-date average price is $1,326, the highest since 2013,” analysts say. “Whether gold turns higher and establishes a solid base of support above $1,300 once again will depend on the strength of the dollar and whether inflation keeps track of the rally in 10-year yields, maintaining a favorable real rate environment for gold. While there may be some short-term headwinds for gold from next month’s likely Fed rate hike, particularly if the revised economic projections present a more hawkish scenario, however we believe two or three more rate hikes this year are already priced into gold.” Meanwhile, Mitsubishi says, there is potential for gold to get a tailwind from risk aversion from the U.S. stock market. Analysts commented that the “sugar rush” of corporate tax cuts is already factored into share prices, and record earnings have failed to drive the S&P to fresh highs for the year.

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

 

Standard Chartered: Supply Deficit For Palladium; Surplus For Platinum

Thursday May 24, 2018 09:20

Standard Chartered has revised its supply balances for platinum and palladium but continues to look for palladium to be in deficit and have the upper hand price-wise. Analysts say they doubt there will be meaningful substitution away from palladium toward platinum, even though palladium is now the metal holding the price premium. “We continue to expect palladium to deliver a market deficit this year, but we revise our estimate down to 530,000 ounces from 762,000 previously,” the bank says. “In contrast, we expect the platinum market to remain in surplus and revise our estimate from 180,000 to 231,000 [ounces]. Our price forecast remains unchanged; we expect platinum to average $993/oz in 2018 and palladium to average $1,038/oz. Barring short-term weakness, we expect palladium prices to remain elevated and continue to expect platinum prices to find support on dips towards $900/oz.”

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

 

FXTM: Softer U.S. Dollar Lends Support To Gold

Thursday May 24, 2018 09:20

Gold has been underpinned by a softer U.S. dollar, says Lukman Otunuga, research analyst at FXTM. While the yellow metal could extend gains due to uncertainty over U.S.-China trade talks, gains are also likely to be capped by Federal Reserve rate-hike expectations, the analyst says. “With dollar strength still a dominant market theme and expectations heightened over a Fed rate hike in June, the zero-yielding metal remains vulnerable to downside losses,” Otunuga continues. “Taking a look at the technical picture, gold remains under pressure on the daily and weekly charts. Previous support around $1,300 could transform into a dynamic resistance that encourages a decline towards $1,280.” 

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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