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INTL FCStone Sees Gold Prices Faring Better In July

Kitco News

INTL FCStone looks for gold prices to perform better in July than they did during a “miserable” month for the metal in June. Analysts expressed surprise that gold fell last month, considering the dollar index “flatlined,” Treasury yields fell, inflation picked up in the U.S. and Europe and equity markets were wobbly. They chalked up gold’s declines to the general rout in commodities. In a monthly commodities outlook, INTL FCStone says “we are loathe to pick market bottoms, particularly when prices are falling, but have to suspect that gold will do somewhat better in July and doubt that the same set of aforementioned variable factors (should they persist) will contribute to another leg lower. In fact, so far in July, gold’s tone has improved somewhat and we see that continuing as we head deeper into the month; we see prices trading between $1,225-$1,295 in July.” Analysts list a potential July range of $15.60 to $16.60 for silver prices.

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

 

TD Securities Looks For U.S. Dollar To Fizzle

Monday July 09, 2018 09:50

TD Securities looks for the U.S. dollar to continue to lose steam. “This view rests on a few key drivers but mostly boils down to a mix of growth, valuation and positioning,” TDS says. The bank calls U.S. President Donald Trump a “wild card but in most cases should weaken rather than support the dollar.” TDS says the U.S. economic-growth story is “showing increasing signs of fatigue” while growth picks up in the rest of the world (ROW). “Our tracking of relative data surprise momentum shows the USD remains seemingly frothy versus the pickup in the ROW,” TDS says. Inflation should start to tick higher outside the U.S. as well as in it, TDS says. “Trade wars will exasperate these trends as supply chains lose efficiency,” TDS continues. “The result is the gradual withdrawal of stimulus, firming liquidity and tighter credit conditions. This backdrop continues to bode well for the international creditors like EUR and JPY (even CHF) against the debtors like the dollar bloc. It also signals a top in the DXY [dollar index] as growth looks less exceptional yet positioning and valuation appear stretched.” Metals traders tend to closely monitor moves in the U.S. dollar since base and precious metals alike often move inversely to the U.S. currency.

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

 

SP Angel: Soft Prices Likely Mean Cutbacks In Platinum Supply

Monday July 09, 2018 09:50

Weak platinum prices, which slumped to a nine-year low last week, may prompt mine-supply cutbacks, says commodities broker SP Angel. Analysts note that the world’s second-largest producer, Impala Platinum Holdings Ltd., cut 2,500 jobs in the first half of 2018, with further losses possible. Only three of 10 shafts at Rustenburg mining complex were profitable as of March, SP Angel says. “Implats isn’t facing the issue alone, with more than half of the industry’s production estimated to be unprofitable,” SP Angel says. “Rival Lonmin Plc is cutting 12,600 jobs over three years and its future hinges on the speedy approval of a merger deal with Sibanye Gold Ltd.” Analysts note that platinum prices have dropped by more than half since the 2011 peak, as demand for the metal used to curb pollution from diesel cars weakens, partly because of slower sales of the vehicles in Europe. “The selloff in the metal has gained pace this year amid concerns that industrial demand could be curbed as trade tensions escalate,” SP Angel says. Analysts later add: “As the demand outlook remains limited, falling prices are squeezing high-cost miners, and some supply will need to be removed.”

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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