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Standard Chartered Sees Post-FOMC Bounce For Gold

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Standard Chartered expects a bounce in gold prices once this month’s meeting of the U.S. Federal Open Market Committee is history. Trade tensions, the performance of China’s currency and emerging-market currency weakness are continuing to set the tone for gold prices, Standard says. “However, we still expect gold prices to gain upward momentum after the September FOMC meeting,” analysts say. “Even though a 25bps [25-basis-points] rate hike is widely anticipated, gold prices have tended to come under pressure ahead of such meetings, but bounce back afterwards. As USD [U.S. dollar] strength stabilizes, a critical drag on prices should ease, allowing the physical market to set a stable cushion for prices amid the seasonally strong consumption period.” Further, Standard says, there is potential for short covering -- in which traders buy to offset bearish positions – given “extreme positioning.”

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

 

INTL FCStone: Gold May Continue To Flounder During September

Gold is likely to “struggle” this month, absent a sharp correction in the stock market or steep decline in the U.S. dollar, says INTL FCStone in its monthly commodity outlook. Gold lost some 2% in August, although the metal pared its losses when the dollar eased and gold was “severely oversold,” INTL FCStone says. Weakness in emerging-market currencies has hurt demand in the physical market, while Indian demand could be hurt by flooding that cuts into farm incomes in key buying regions. “We think September likely will be another messy month for gold as in addition to the unresolved trade issues that threaten to push the dollar higher, the market will have to contend with yet another Fed rate increase,” INTL FCStone says.

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

 

Standard Chartered: 15% Of Gold Output Loss-Making Below $1,200

Should gold prices fall and remain below $1,200 an ounce, this would hurt producers and eventually help prices, says Standard Chartered. Lower output in any commodity eventually means the market tightens and prices improve as a result. Spot gold was at $1,203.65 an ounce as of 11:05 a.m. EDT but has been below $1,200 frequently over the last month. “Below 1,200/oz, around 15% of gold production is loss-making,” Standard says. “This suggests that sustained trading below 1,200/oz will result in rising cost pressures at the top end of the curve and should offer some support.”

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

 

RBC’s Gero: Bargain Hunting, Short Covering Lift Gold

Bargain hunting is supporting gold prices, especially with a softer U.S. dollar, says George Gero, managing director with RBC Wealth Management. Further, some short covering is occurring, he adds. This is when traders with short, or bearish, positions buy in order to square up. As of 11:05 a.m. EDT, Comex December gold was $6.80 higher to $1,208.10 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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