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TDS Looks For Dollar Strength To Fade, Supporting Gold

Kitco News

TD Securities says it looks for a weakening U.S. dollar and a reversal in positioning to buoy gold. Analysts say they anticipate that the dollar’s recent upward momentum will fade, particularly after U.S. President Donald Trump accused America's trading partners of currency manipulation and broke with tradition to criticize Federal Reserve monetary policy. “The severe flattening of the U.S. yield curve and the lack of positive carry across the Treasury curve when hedging costs are factored in will be major headwinds that start to work against the greenback into 2018,” TDS says. With the European Central Bank planning to unwind quantitative easing, TDS sees the euro trending toward the low $1.20 area later this year. “Positioning USD optimism, trade and EM [emerging-market] angst have prompted investors to shun gold, dragging net positioning near the lower bound as money managers hold excessive shorts and are significantly underweight,” TDS says. “In fact, further analysis suggests gold traders hold significant amount of dry powder to increase their bullish bets, but are constrained on the short side.”

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

 

Price Group’s Flynn: Gold Market ‘Getting Oversold’

Friday July 20, 2018 08:31

The gold market may be "getting oversold” and ready to stage a rebound, says Phil Flynn, senior market analyst with at Price Futures Group.Comex August gold on Thursday hit its lowest level in more than a year. As of 8:18 a.m. EDT, the contract was up 30 cents to $1,224.40 an ounce. “It’s due for a bounce,” Flynn says. “I think most people believe the market is getting oversold.” A possible catalyst for a bounce is U.S. President Donald Trump’s comments criticizing Federal Reserve rate hikes, Flynn notes. On the one hand, the president does not set interest rates. But on the other hand, “sometimes you need a change in psychology to get people to take profits,” he continues. In this case, he suggested traders with bearish positions could buy to offset them and capture profits.

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

 

FXTM: Gold ‘Vulnerable’ Due to U.S. Dollar Strength

Friday July 20, 2018 08:20

Gold remains “vulnerable” due to recent strength in the U.S. dollar, says Lukman Otunuga, research analyst at FXTM. As of 8:02 a.m. EDT, spot gold was $1.90 higher to $1,224.50 an ounce a day after hitting its lowest level in more than a year. “The aggressive depreciation witnessed in recent days continues to highlight how the precious metal remains heavily influenced by the dollar’s performance and U.S rate-hike speculation,” Otunuga says. “With [Federal Reserve Chair] Jerome Powell reinforcing market expectations over the Fed gradually raising rates, gold is likely to remain vulnerable despite trade tensions weighing on sentiment.” The technical-chart outlook remains bearish, the analyst says. “Sustained weakness below $1,236 could encourage a decline toward $1,209 and $1,200, respectively.”

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

 

Commerzbank: Potential Strike Looming In South Africa’s Gold Sector

Friday July 20, 2018 08:20

A strike is looming in the South African gold-mining sector, reports Commerzbank. Analysts note that the nation was once the world’s largest gold producer although it was only ranked seventh last year. They point out that the National Union of Mineworkers has rejected a pay offer from the mining association, calling it an “insult,” and is demanding wage increases of 15% to 18.5% for a two-year deal. The Association of Mineworkers and Construction union “also regards the offer as unacceptable,” Commerzbank adds. 

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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