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MKS: Gold Taking Direction From Strengthening U.S. Dollar

Kitco News

Gold has suffered lately due to its traditional inverse relationship with a strengthening U.S. dollar, thus has not been able to garner a safe-haven bid despite escalating trade tensions between the U.S. and China, says Alex Thorndike, senior precious-metals dealer with MKS (Switzerland) S.A. Gold hit a 2018 low on Tuesday as the dollar continued to flex its muscles. “The market attention certainly seems to be on the U.S and China at present and what comes out of these tariff-for-tariff blows,” Thorndike says. “One would think gold should perhaps be higher given the uncertainty; instead, it is trading like any other commodity at the moment and at the mercy of swings in the USD.” As of 7:31 a.m. EDT, Comex August gold was $3.10 lower to $1,275.50 an ounce. The spot dollar index was up 0.03 point to 95.115.

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

 

CIBC Sees U.S. Dollar Gains Eventually Fading

Wednesday June 20, 2018 07:58

U.S. dollar strength may last longer than CIBC analysts once thought, but they still look for the U.S. currency to weaken down the road. The U.S. economy continues to heat up, with the bank now calling for 4% economic growth in the second quarter and four Federal Reserve rate hikes in 2018. ”The surprise outperformance of the U.S. economy so far in Q2 and a more dovish-than-expected ECB [European Central Bank] have seen investors bid up the USD,” CIBC says. “As a result, we’ve pushed back our forecasted depreciation of the greenback. That said, we still see structural factors as suggesting that a weaker USD is in store. Indeed, the effects of fiscal stimulus should taper off into the end of 2019 and markets will need to come to terms with an economy that has reached full employment and is grappling with a wide current-account deficit. With markets now overly pessimistic in terms of ECB policy and expected Fed hikes largely priced in, the medium-term course still seems to be set for depreciation against most other majors.”

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

 

FXTM: ‘Zero-Yielding Gold May Find Itself In Trouble’

Wednesday June 20, 2018 07:58

Gold could face further weakness based on formations on the technical charts, says Lukman Otunuga, research analyst at FXTM. The metal has been unable to garner support from global trade tensions, falling instead as the dollar rises and financial markets anticipate more U.S. rate hikes. “With the Federal Reserve expected to raise rates at least two more times in 2018, zero-yielding gold may find itself in trouble,” Otunuga says. “Taking a peek at the technicals, gold could be gearing for a heavy selloff on the daily and weekly charts. The $1,280 level has the ability to transform into a firm resistance that invites a steep decline towards $1,264. In an alternative perspective, a rebound and daily close back above $1,280 may reopen a path towards $1289 and $1,300, respectively.” As of 7:31 a.m. EDT, spot gold was $1.60 lower to $1,272.80 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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