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BBH: Investment Climate Faces Several Challenges

Kitco News

The investment climate faces a challenging environment due to U.S. monetary/fiscal policies, trade tensions and immigration issues, says Brown Brothers Harriman. “All three of the major central banks met last week and confirmed that monetary policy would continue to diverge for at least another year,” BBH says. “The clarity of the trajectory of monetary policy reduces the impact of high-frequency economic data.  There are three major disruptive forces [that] make for a challenging investment climate just the same: the U.S. policy mix, trade tensions, and immigration.” Analysts note that the mix of tighter monetary policy and looser fiscal policy in the U.S. is “in extremis.” While the Federal Reserve says monetary policy is accommodative, the central bank has clearly signaled an intention to restrict policy. Meanwhile, “the fiscal stimulus that is being provided in the form of tax cuts and spending cuts are larger than in 2008-2009,” BBH points out. On another issue, the “aggressive U.S. trade stance makes investors uneasy,” BBH says. The U.S. has gone ahead with plans to implement tariffs starting July 6 and China has responded with similar amounts and time. “The U.S. is in no mood for a compromise,” BBH says. “Indeed, the confrontation with China is one area [that] draws support for the administration's critics.” Meanwhile, as the U.S. is embroiled in its divisive immigration crisis and turning asylum seekers away, Europe's refugee crisis threatens to topple two governments, the bank points out.

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

 

MKS: Gold Muted In Asian Trade; Support Lies Around $1,275

Monday June 18, 2018 08:12

Gold was muted in overnight Asia-Pacific trading after Friday’s heavy sell-off, says Samuel Laughlin of precious-metals sales with MKS (Switzerland) S.A. “The yellow metal opened underneath Friday's close, however, was generally well supported in early flows to push back above $1,280,” he says. “A modest bid to the greenback in the afternoon created some headwinds to drag bullion back underneath the figure; however, the metal held a narrow range into the European open and didn't extend much lower.” Movement in the U.S. dollar is likely to be the main drive of driver of price action in the short term, Laughlin says. He lists support around $1,275 and resistance at the recently broken May low of $1,282, with an extension to $1,285. “Downside risks continue to build as ETF positioning remains buoyant and should outflows drive a break of $1,275 we could see an extension as far as $1,250 - $1,236 (December 2017 low),” Laughlin adds. As of 8 a.m. EDT, spot gold was nearly steady – down 40 cents to $1,278.50 an ounce.

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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