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BBH: Stocks, Commodities Weak As Trade War Escalates

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A muscular U.S. dollar is pressuring gold prices, says BMO Capital Markets and MKS (Switzerland) S.A. As of 8:35 a.m. EDT, the September dollar index was 0.131 point higher to 94.020. Meanwhile, Comex August gold was down $4.80 to $1,250.60 an ounce. “Gold prices have also suffered from the stronger dollar, dropping back to ~1,250/oz while silver dipped back below $16/oz,” BMO says. Alex Thorndike, senior precious-metals dealer with MKS, says Chinese market participants were gold sellers early in their trading day before the yellow metal showed signs of stabilizing. However, he adds, “the dollar continued its steady upward momentum throughout the [Asia-Pacific] afternoon, which kept gold from bouncing back, remaining in a tight $1,250-53 range.”

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

 

BBH: Stocks, Commodities Weak As Trade War Escalates

Wednesday July 11, 2018 08:54

Equities and commodities have a weaker tone after U.S. President Donald Trump escalated a trade war with China. The U.S. threatened to slap another 10% tariff on $200 billion of Chinese imports in response to China’s retaliation over previous U.S. tariffs. This time the U.S. list includes numerous consumer goods. “China immediately objected and vowed to retaliate, but the tit-for-tat strategy is limited by the more modest U.S. import penetration,” BBH says. “Still, there are various asymmetrical ways China can respond, and it may be best for it to just do it without making major announcements, such as squeezing U.S. businesses operating in China, which incidentally sell more than $300 billion of goods there in addition to exports.  When considering the commercial relationship between the U.S. and China, these domestically produced and sold goods are an important part even if the direct benefit to U.S. employees is not straightforward.” BBH says the trade confrontation is “sucking the oxygen away” from other issues and is the main focus of markets. “The broad response was to take equities and commodities lower and the dollar and bonds higher,” BBH says. 

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

 

SP Angel: South African Gold Industry In Decline As Wage Talks Begin

Wednesday July 11, 2018 08:54

Wage talks in the South African gold-mining sector are occurring against a backdrop in which the country’s industry is already a fraction of what it once was, says commodities brokerage SP Angel. Analysts cite data from the Minerals Council SA saying three-quarters of South Africa’s gold mines are unprofitable or barely making money as the sector enters wage talks. South Africa was once the world’s top gold producer but is now a “shadow of itself, barely clinging onto eighth place ahead of Mexico. Its mines are old, deep, with falling grades and productivity, and rising costs,” SP Angel says. Employment has fallen from more than 392,000 people in 1994 to 111,800. A number of companies enter wage talks on Wednesday, seeking a two-year wage deal. “The opening demands from the two biggest unions, the National Union of Mineworkers, with 51% representation of the 79,517 employees at the four companies, and the Association of Mineworkers and Construction Union, with 34%, did not reflect an awareness of the difficulties,” SP Angel says.

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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