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INTL FCStone: 'Stale Longs' Exiting From Gold Positions

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Bulls are exiting from “stale” positions in gold futures, says INTL FCStone. The market is sliding and has lost the upward momentum from earlier in the year. INTL FCStone analysts say “we are quite surprised to see a big selloff hitting gold,” with prices falling to a six-month low. “The fact that the precious metal has not been moving higher despite falling global equities and a rather restrained dollar has prompted stale longs to exit their positions,” INTL FCStone says. “In fact …overall fund length in gold hit a 2 ½-year low this past week, according to the latest CFTC [Commodity Futures Trading Commission] report.”

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

 

TDS: Better Days May Be Ahead For Gold Amid ‘Trade Angst’

Tuesday June 26, 2018 08:36

Gold has not fared well lately despite rising global trade tensions that have knocked down equities, but the yellow metal “may do better on growing trade angst,” says TD Securities. Gold has been hurt by expectations for more Federal Reserve hikes, says Bart Melek, head of commodity strategy with TDS. Further, the U.S. dollar rose – which hurts gold – after dovish signals on European monetary policy, Melek points out. “However, given the recent equity-market correction and talk of a trade-driven slowdown in the global economy, it is likely that the market will start to get a lot less enthusiastic about aggressive Fed tightening and the USD [U.S. dollar],” Melek says. “In addition, the yield curve and rates across the curve are falling, which decreases both carry and opportunity cost, while risk of sentiment should see investors start returning to the paper gold market.” Further, bullish positioning by speculators fell sharply in the most recent report from the Commodity Futures Trading Commission. “With low long positioning and risk reversals starting to move convincingly towards puts, even a modest risk that a trade war may materialize, a weaker USD or Fed statements walking back from aggressive hike rhetoric have the potential to very quickly spike gold into the $1,300s,” Melek concludes.

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

 

Analysts: ETF Gold Holdings Continue To Decline

Tuesday June 26, 2018 08:36

Gold holdings of global exchange-traded funds continue to decline, analysts report. Reuters reported that holdings by 12 gold-backed ETFs tracked by the news organization were down 3% from 57.8 million ounces last month to 56.2 million as of Friday, with holdings on pace for the weakest month since July 2017. Analysts reported further declines in ETF data released Monday. “Besides the withdrawal of speculative financial investors, ETF investors are also continuing to jettison gold,” says a research note from Commerzbank. “Gold ETFs saw outflows of 4.3 tonnes again yesterday.” Adds MKS (Switzerland) S.A.: “The precious complex is struggling against ETF outflows (holdings down 1.5 million ounces in June), while failing to find support from ongoing 'trade war' headlines as President Trump turns focus from China to Europe.”

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

 

Commerzbank: ‘Reduced Risk Willingness’ May Eventually Support Gold

Tuesday June 26, 2018 08:36

Gold may eventually profit from “nervousness” in the financial markets, Commerzbank says. “Despite the numerous risks, gold is still not in demand as a safe haven,” Commerzbank says. “That said, the nervousness among market participants is growing. The VIX index, which shows the fluctuations in the S&P 500 stock index in the U.S., rose sharply for a time yesterday, while our in-house risk index – the ARPI – also indicates a somewhat reduced risk willingness among market participants. This is not reflected in the gold price as yet, however, though it could signal an upcoming shift in mindset among market participants. If so, gold should finally profit.”

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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