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Correction: Gold To Perform Well In February Despite Current Selloff – INTL FCStone

Tuesday February 3, 2015

Editor's Note: This comment has been updated with the proper spelling of Edward Meir’s name.

Despite recent downside pressure in gold prices, Edward Meir of INTL FCStone says he expects the metal to do well this month. “Although struggling so far in February, we think gold will do better as well in February, since we do not think that the heightened volatility in equities is over just yet,” he says. Meir notes several factors contributed to gold’s strength in January, including the unprecedented move by the Swiss National Bank as well as uncertainty stemming from Europe, and although they have seemed to calmed down, he is positive on his outlook for gold. “[We] expect to see a $1225-$1310 trading range prevailing,” he says. “Longer-term, the most recent Reuters poll has gold averaging $1234 in 2015 and $1278 in 2016, levels that might prove too low if central banks start to second-guess themselves again,” he adds. Meir says that although silver prices can benefit from gold’s strength, he expects the yellow metal to outperform silver.

By Sarah Benali of Kitco News; sbenali@kitco.com


Greek Finance Minister's Comments Seen As "All-Clear"

Tuesday February 3, 2015 3:22 PM

In its Tuesday report, Mitsubishi says that recent comments made by Greek Finance Minister, Yanis Varoufakis, regarding the country needing a “bridge agreement” on its debt situation is interpreted to be, “the financial all-clear for which the markets were so desperately waiting.” “The euro bounced, world stock indices rallied, and the bids disappeared from the gold market,” explains John Howlett of Mitsubishi International Corporation. “The already overloaded on the long side gold market couldn’t handle all this temporary euphoria, but the white metals, copper, and oil all got a decent jolt,” he writes. Howlett explains that whether or not this happy deviation from the “lugubrious script” can be sustained will be better known when January’s Purchasing Managers Index (PMI) numbers from both China and Japan are released. “The spending habit of over a billion Chinese citizens trumps the possible fiscal responsibility of 11 million Greeks,” he says. “Technically for gold there is the confluence of the 200-day moving average (around 1252.50) and the round 1250 number that has to hold to keep the bulls from all-out panicking,” Howlett explains. Greece’s Finance Minister is set to meet European Central Bank President Mario Draghi on Wednesday.

By Daniela Cambone of Kitco News; dcambone@kitco.com


Gold Whipping Around -TD Securities' Scacalossi

Tuesday February 3, 2015 12:05 PM

Gold is whipping around “pretty violently, with the recent range of $1252-$1288 an ounce,” says Steve Scacalossi of Global Metals, TD Securities, in his Tuesday report. “I’ve been looking for a pull-back given the long positioning in the market, but it has proven to be a dangerous game holding onto that position, as $10 swings happen on little volume,” he explains. “Today’s gold fix started at $1264.75 and set lower at $1264.25 on final volume of 12k selling and 30k buying interest,” he says. The Tuesday report notes that silver is the more stable of the two as it continues to build a base above $17.00.  “To say I am perplexed, would be understating my conviction for the direction of the market at this point in time,” he explains. With more U.S. data on the way this week – ADP employment, ISM Non-Manufacturing, and ultimately Friday Payrolls, Scacalossi expects more of the same choppy trading environment till the end of the week.

By Daniela Cambone of Kitco News; dcambone@kitco.com


February Positive Month For Precious Metals – Barclays

Tuesday February 3, 2015 11:16 AM

Based on historical data, Barclays expects Februrary to be positive for the metals. “February is a positive month for both precious and base metals and also crude oil,” says Lynnden Branigan, vice president of technical research for the bank. In an email to Kitco News, Branigan explains that although the research is based on historical returns and he does not rank February against other months, “our basket of commodities… all have positive median and mean returns and all show a positive % chance of advance.”

By Sarah Benali of Kitco News; sbenali@kitco.com


CME Metals Volume Up 24% In January

Tuesday February 3, 2015 10:22 AM

CME Group announced on Tuesday a 21% increase in average daily contracts in January, with metals daily contracts increasing by almost a quarter. “CME Group metals volume averaged 410,000 contracts per day, up 24 percent compared with the prior January,” CME says. The company press release says average daily volume for January 2014 stood at around 331,000 contracts. “January 2015 volume averaged 15.6 million contracts per day, up 21 percent from January 2014.  Total volume for January 2015 was more than 312 million contracts, of which 87 percent was traded electronically,” CME adds.

By Sarah Benali of Kitco News; sbenali@kitco.com


Obama's New Overseas Tax May Hurt Gold – HSBC

Tuesday February 3, 2015 7:35 AM

According to media reports, President Barack Obama intends to propose a new, one-time tax on U.S. corporate profits held overseas and HSBC says this may hurt gold. “The proposal by the White House to levy a one-off tax on US companies’ overseas cash holdings is theoretically negative for gold,” HSBC analysts say in a report Monday. “According to media reports…President Barack Obama announced plans to propose raising USD238bn in taxes from overseas cash held by US companies. This would translate to a 14% ‘transition’ tax on the estimated USD2tn in earnings by US companies held overseas, according to the White House,” the bank adds.  Quoting HSBC’s G10 FX strategist Robert Lynch, the analyst says that this tax could generate a “sizeable wave of USD buying as corporations repatriate funds held abroad to the U.S., as occurred in 2005.” They add that a stronger U.S. dollar typically weighs down on the gold price. “However, the talks appear to be in their preliminary stages given the divide between the White House and the Republican-controlled Congress. We will continue to monitor these events for potential developments,” HSBC says.

By Sarah Benali of Kitco News; sbenali@kitco.com



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