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BBH: U.S. Dollar Rebounds In Aftermath Of FOMC Minutes

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Gold has been under pressure since the start of Asia-Pacific trading as the U.S. dollar starts to recoup some of Wednesday’s losses, says MKS (Switzerland) S.A. “The USD strength persisted throughout the [Asia-Pacific] morning and all the precious complex continued to sell off unabated leading into the SGE [Shanghai Gold Exchange] open,” MKS says. “Right on the open, the gold shot down to $1,191.50 although some physical demand did present itself down there….There has been no sign of the USD retreating and the metals remain close to the lows of the day….” At 8 a.m. EDT, spot gold was down $5.70 to $1,189.65 an ounce. The spot U.S. dollar index was up 0.138 point to 95.284.

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

 

BBH: U.S. Dollar Rebounds In Aftermath Of FOMC Minutes

Thursday August 23, 2018 08:25

The U.S. dollar is rebounding against most major and emerging-market currencies in the wake of the Wednesday release of Federal Open Market Committee minutes, says Brown Brothers Harriman. “The minutes confirmed the high probability of a hike next month, and there was little to cast doubt on the likelihood of a December hike as well,” BBH says. “The minutes revealed a more confident Fed due to the strong labor market, robust growth and an inflation rate at the target.” BBH notes that Fed officials are concerned that tariffs and trade tensions risk slowing the economy and boosting prices.  “However, there appears to be little tangible impact yet, but the Fed is mindful,” BBH says. Meanwhile, the U.S. and China have gone forward with 25% tariffs on $16 billion of each other's goods even though trade talks are set to continue Thursday. “Part of the low probability of anything meaningful coming out of the negotiations is that [U.S. President Donald] Trump rejected the deal worked out by the Treasury Department earlier in the year, when China was prepared to step up its purchases of U.S. goods,” BBH says. “No one else's commitments seem to matter but the President's, which is why a resolution is only possible by a Trump-Xi meeting that could tentatively take place in November.” Just before 8 a.m. EDT, the September dollar index was up 0.149 point to 95.200. Metals traders tend to monitor dollar moves since base and precious metals alike often move inversely to the U.S. currency.

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

 

Commerzbank: Gold Prices Weak In Euro Terms

Thursday August 23, 2018 08:25

While gold is softer in U.S. dollar terms early in the Thursday New York trading session, the metal’s weakness against the euro is “particularly remarkable,” Commerzbank says. Gold has fallen below €1,030 per troy ounce, and “on a closing price basis, this would mark its lowest level since February 2016,” Commerzbank says. “This is hard to understand in view of negative real interest rates in the euro zone and emerging speculation that Bundesbank President [Jens] Weidmann probably will not succeed ECB [European Central Bank] President [Mario] Draghi. After all, if another monetary policy ‘dove,’ whose main concern is holding the monetary union together, ends up at the helm of the ECB rather than a ‘hawk’ who focuses first and foremost on monetary stability and thus keeps a close eye on inflation risks, the euro zone is likely to become more and more a transfer union, with the euro characterized by latent weakness. In this situation, the gold price in euros should rise sharply.” Around 8 a.m. EDT, gold was down 0.31% to €1,027.76 an ounce.

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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