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SP Angel: Fed Rate-Hike Expectations Still Pressuring Gold

Kitco News

Gold remains under pressure after comments about the economy this week from Federal Reserve Chairman Jerome Powell sustained expectations for another U.S. interest-rate increase in September, says commodities brokerage SP Angel. As of 8 a.m. EDT, Comex August gold was $12.30 lower to $1,215.60 an ounce and bottomed at $1,214.40, its weakest level in more than a year. SP Angel cites comments from Powell suggesting that the U.S. economy may not yet have reached full employment, while noting that risks to central bank’s inflation forecast are “roughly balanced.” SP Angel concludes: “Gold has tumbled more than 10% from a 17-month high reached in January as resilient economic growth boosts speculation that the Fed will continue raising interest rates.”

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

 

Commerzbank: Dow-Gold Ratio Hits 11-Year High

Thursday July 19, 2018 08:17

The ratio of the Dow Jones Industrial Average to gold has hit its highest level in more than a decade, which “reflects how cheap gold is at present,” says Commerzbank. “The last time it was this high was 11 years ago, when gold cost just shy of $680 and the Dow Jones was trading at 14,000 points,” the bank says. “Subsequent months saw gold make considerable gains, partly because there was a correction on the stock markets. It remains to be seen whether something similar will happen this time.”

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

 

Metals Focus: Gold Recovery May Help Platinum Recoup Lost Ground

Thursday July 19, 2018 08:17

Platinum’s hope for a recovery may hinge on gold, since platinum’s supply/demand fundamentals are not favorable at the moment, says Metals Focus. “The increasingly negative tone towards platinum reflects several issues,” the consultancy says in a report this week. Supply from key producer South Africa is not expected to fall meaningfully despite profit-margin pressures, as costs such as electricity rise, the consultancy says. For one thing, the industry would have to contend with pressure from the government in a nation with an unemployment rate of around 27%. Meanwhile, demand has been hurt by the “ongoing and steep market share losses” for the light-duty diesel-car market in Europe, which requires platinum for catalytic converters. “The combination of lackluster demand along with sticky global supply means that platinum must contend with market surpluses,” Metals Focus says. As a result, the ability of platinum prices to strengthen “will remain largely contingent on the trend in gold,” the consultancy says. And, analysts say, gold may rise later in the year as U.S. economic growth slows and markets start to factor in monetary tightening by the European Central Bank. “As a result, some rotation in favor of gold should gradually emerge, driving prices higher late in 2018, with a peak in the upper $1,300s possible in our view,” Metals Focus says. “This move should also benefit platinum. As a result, the platinum price may well end the year closer to $1,000 than $800.”

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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