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INTL FCStone: Gold-Price Movement Could Pick Up Once FOMC Meeting Is History

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Price movement in gold could pick up once this week’s two-day meeting of the U.S. Federal Open Market Committee is over, says INTL FCStone. Policymakers are expected to hike interest rates again on Wednesday, but investors will be watching Fed commentary for clues on how aggressive tightening will be in the future. Gold has been range-bound lately. “One market that has yet to move for some time now is gold; prices remained stuck around the $1,300 mark, although both palladium and silver are doing better, now hovering close to a two-month highs,” INTL FCStone says. “Similar to gold, platinum remains adrift as well, but the whole complex could see more direction once the Fed meeting is out of the way.”

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

 

FXTM: Positive U.S.-North Korean Summit Would Mean ‘Negative Momentum For Gold’

Monday June 11, 2018 08:27

Enthusiasm for gold as a safe haven could be dampened if this week’s summit between the leaders of the U.S. and North Korea is a success, says Jameel Ahmad, FXTM’s global head of currency strategy and market research. “Such a historic meeting between a very unpredictable United States president and the leader of a nation with nuclear capabilities that has been in complete isolation for decades represents an event that investors will not be able to ignore,” Ahmad says “Assuming that the meeting goes as planned, there are a number of potential winners and losers from alternative scenarios of the summit ending positively or negatively.” In the markets, potential winners from a positive summit would include the Korean won, global equities, Asian emerging-market currencies and any currencies pegged to the U.S. dollar, plus high-yielding emerging-market currencies, the analyst says. The analyst lists gold and the Japanese yen as potential losers if the summit is positive. “The yellow metal has struggled greatly over the second quarter of 2018 from the unexpected resurgence in the USD [U.S. dollar],” Ahmad says. “Buying sentiment for gold is highly reliant on market uncertainty and the potential rally in the stock markets, in addition to lower attraction towards safe-haven assets, would be seen as negative momentum for gold.”

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

 

MKS:  Precious Metals Could Be In For Volatile Week

Monday June 11, 2018 08:27

Gold and other precious metals could be in for a volatile week with a number of potential market-moving events on the horizon, says Samuel Laughlin of precious-metals trading and sales with MKS (Switzerland) S.A. Gold tried to push higher overnight before backing off, and the Comex August futures were $1.40 lower to $1,301.30 an ounce as of 8:09 a.m. EDT. “Expect the precious complex to see volatile trade this week with a number of events on the calendar,” Laughlin says, listing ongoing headlines following the Group of Seven summit, the approaching meeting between U.S. President Donald Trump and North Korean leader Kim Jong-un, a Federal Open Market Committee meeting and a European Central Bank meeting, in which traders will focus on any comments regarding the future of quantitative easing.

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

 

Commerzbank: Chinese Car Sales Bode Well For Palladium

Monday June 11, 2018 08:27

The most recent Chinese car-sales data are supportive for palladium, says Commerzbank. Chinese cars tend to have gasoline-powered engines, which rely upon palladium for catalytic converters. Analysts cite data from the China Association of Automobile Manufacturers showing that 1.89 million cars were sold in China during May, up 7.9% year-on-year. Some 5% more cars were sold in the first five months of 2018 than in the same period last year, putting the Chinese auto market on track to achieve a new record year, Commerzbank says. “The good figures helped ensure that palladium remains firmly above the $1,000-per-troy-ounce mark,” the bank says. As of 8:11 a.m. EDT, spot palladium was up $2 to $1,006 an ounce.

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

 

BBH: Failure Of Fed To Signal More Aggressive Action Would Not Be ‘Dovish Hike’

Monday June 11, 2018 08:27

Should the Federal Reserve not signal more aggressive monetary tightening, this should not be seen as a “dovish hike” in interest rates, says Brown Brothers Harriman. Policymakers hold a two-day meeting that winds up on Wednesday and are expected to increase the Federal funds target rate another 25 basis points, which would be the seventh hike in the cycle that began in December 2015. “The key to the market’s response will not lie so much with what the Fed does, which is just about taken for granted now, but what it says,” BBH says. “The FOMC statement may reflect officials’ growing confidence that [the Fed] has achieved its mandate of full employment and price stability (as it defines it). There is some thought that the Fed may alter its characterization of monetary policy as accommodative. The Fed may acknowledge that monetary setting may move need to move beyond neutral to slightly restrictive.” However, BBH says, there is “no compelling need” for policymakers to shift forward guidance toward four potential rate hikes for this year. “To signal a more aggressive trajectory now would risk an inversion of the yield curve,” BBH says. “There seems to be a split on the Fed on the issue.” BBH later adds: “We do not think that the failure of the Fed to signal a more aggressive path should be read as a dovish hike. The Fed is still most likely to signal continued hikes next year. The combination of rate hikes, the reduction of the Fed's balance sheet and the large fiscal stimulus makes for a very aggressive policy mix.”

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

 

BBH: Trade Tensions Likely To Escalate Further

Monday June 11, 2018 08:27

Brown Brothers Harriman looks for an escalation of global trade tensions after a Group of Seven summit made no progress on the issue and U.S. President Donald Trump criticized the leader of host country Canada and hinted at more tariffs. “Trade tensions are likely to escalate further, if the U.S., as scheduled, provides a list of $50 billion of Chinese goods that will face another 25% tariff for intellectual property violations,” BBH says. “If the U.S. does so, China has threatened to retract some of the concessions it has made.” BBH adds that Trump positioned himself as an outsider at the summit. “His policies, particularly the claim that steel and aluminum imports (and possible auto imports down the road) from countries that have long been military allies are threats to U.S. national security, have isolated the U.S.,” BBH says. “The U.S. president did not even deign the summit of sufficient importance to stay for the entire meeting.  Although presidential advisor [Larry] Kudlow claims this is simply a family squabble, the dysfunctionality is palpable and likely to prove more profound than the spat like [George] W. Bush’s steel tariffs.”

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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