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Mitsubishi: 'Gold Will Remain As One Of The Few True Stores Of Value'

Gold may eventually get the upper hand on other safe havens, says Mitsubishi. The yellow metal has risen since Thursday's U.K. vote to leave the European Union, as have the U.S. dollar, Japanese yen and bonds, with yields on the latter falling as a result. U.S. 10-year yields are below 1.5% and euro-zone government debt has moved into negative territory for the first time ever. "This speaks to an ongoing role for gold, if not as a safe haven then at least as a store of value when other supposed safe havens are giving negative yield," Mitsubishi says. "An additional factor is that gold is an asset free from intervention/manipulation, so while the yen may eventually lose value if the (Bank of Japan) extends quantitative easing and/or negative interest rates…, gold will remain as one of the few true stores of value. With investors now paying to hold euro-zone debt with any maturity of less than 10 years, we believe gold will become increasingly attractive as an asset that has no yield. In addition, the real rate environment ought to stay favorable to gold with the Fed unlikely to raise rates again for several months as it digests the consequences of Brexit and its own upcoming presidential election." The lack of inflation should also keep the Fed from raising rates, Mitsubishi adds.

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

 

BMO: Brexit Uncertainty To Hurt Global Economic Growth But Help Gold

Tuesday June 28, 2016 10:27

BMO Capital Markets remains bullish on gold although analysts also caution about potential for a pullback in prices. "Admittedly, our shift to a constructive outlook for precious metals in early May did not assume a surprise Brexit outcome, but we did assume at the time that the market was not pricing in any uncertainty around the Brexit vote," BMO says. "We maintain our underlying thesis of uncertain global growth driving safe-haven demand for gold, even though there may be a slight pullback over coming weeks, as net longs have increased." The ongoing uncertainty after the Brexit vote is positive for gold and silver, BMO says. "The Brexit vote may be over, but we now face two years of negotiations plus the prospect of other European countries calling referendums of their own," BMO says. "Our economics team expects this uncertainty to have a slight negative impact on the global growth outlook." BMO forecasts gold at $1,350 an ounce in the third quarter and $1,375 in the fourth. Silver is seen at $19 and $20.50 in the next two quarters.

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

 

Commerzbank: ETF Gold Holdings Rise Sharply Again In Wake Of Brexit Vote

Tuesday June 28, 2016 09:51

Global exchange-traded-fund holdings of gold rose sharply Monday for the second straight trading day since the Thursday U.K. referendum to leave the European Union, points out Commerzbank. The ETFs trade like s stock but track the price of the commodity, with gold put into storage to back the shares. "ETF investors…appear to be assuming that the Brexit issue will continue to preoccupy markets for some time yet. Yesterday, gold ETFs saw inflows of 12.6 tonnes, their second major daily inflow in a row," Commerzbank says. "Holdings have been increased by 30 tonnes within the space of two days."

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

 

Traders: Gold Eases As Riskier Assets Finally Bounce After Brexit Vote

Tuesday June 28, 2016 09:50

Gold futures have eased as so-called risk assets, such stocks and industrial commodities, finally bounce in the aftermath of Thursday's U.K. Brexit referendum. "Euro bourses and base commodities are all trading higher with the exception of the Shiny One, which is losing some safe-haven momentum as riskier assets are added back to portfolios," says Janet Mirasola, managing director of the Metals Group with Wells Fargo Securities. U.S. stocks are also recovering, points out George Gero, managing director with RBC Wealth Management. Still, Gero adds, "some more asset allocators may enter gold if we close over $1,360.Problems are not solved in overnight…and buyers continue haven seeking." As of 9:17 a.m. EDT, Comex August gold was down $6.70 to $1,318 an ounce. The S&P 500, oil and copper futures were all higher.  

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

 

MKS: 'We Maintain A Conviction To Hold Gold'

Tuesday June 28, 2016 09:50

MKS (Switzerland) S.A. remains upbeat about gold even though the firm also sees potential for a corrective pullback. "We maintain a conviction to hold gold at this juncture, with a number of factors pointing to short- to medium-term support for the metal," says Alex Thorndike, senior precious-metals trader. "These include: 1) Uncertainty surrounding the outcomes of Brexit, both in an economic and political sense; 2) The likelihood that Brexit may stay the Fed's hand in raising (U.S.) rates, with a single rate rise this year now appearing more likely than two; (3) Continued USD (U.S. dollar) strength in the coming months and equity weakness; and (4) The willingness of worldwide central banks to provide domestic monetary support if required. With these positives in mind, we do not however rule out a pullback towards $1,295-$1,310."

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

 

TD Securities Sees 'Further Material Gains' In Gold, Silver

Tuesday June 28, 2016 09:50

TD Securities looks for more strength in gold and silver in the aftermath of last week's U.K. Brexit vote to leave the European Union, suggesting investor flows should put gold on a trajectory toward $1,400 an ounce in the coming months. "The Brexit surprise looks set to have divergent impacts on the commodity markets, with gold/silver likely posting further material gains, while industrial metals and energy will be under selling pressure," TDS says. "The gold complex is very likely to see significant capital inflows as the European Union existential crisis redirects funds into safe havens. It will also benefit from the expected reduction in carry costs, as central banks add liquidity and ponder rate cuts globally. We would also look to upgrade our view on gold/silver prices as the Fed too is now virtually assured to be on hold for quite some time."

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

 

 

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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