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Van Eck's Foster: 'We Continue To Believe In A Positive Environment For Gold'

Gold should form a base in 2017 for a longer-term bull market, says Joe Foster, portfolio manager and gold strategist with Van Eck. “Although the gold market consolidated on U.S. dollar strength, we continue to believe in a positive environment for gold in the longer term,” Foster says. He cites financial risk due to increasing political populism around the globe, particularly in Europe, as well as the potential for increased investment interest in the Islamic finance industry after the recent release of a new Shari’ah gold-investment standard. “The new standard could help increase the demand for gold bars, coins, ETPs (exchange-traded products), and stocks within a significant segment of the global population that already has an affinity for gold,” Foster says. Meanwhile, he looks for global financial risks to surface in 2017, reversing positive sentiment for the stock market and U.S. dollar, with gold benefitting. “Such risks include (U.S. President-elect Donald) Trump’s policies, particularly changes to trade treaties, immigration policies and national debt, as well as disarray in Europe and strife in the Middle East.”

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

 

INTL FCStone: Softer Dollar, Trump Comments Underpin Gold

Tuesday January 17, 2016 10:47

Gold is sharply higher on the back of a weaker U.S. dollar, says INTL FCStone. “The precious metal may also be getting a bid as more of (U.S. President-elect) Donald Trump's unsettling policy pronouncements pile up,” INTL FCStone says. “Only a day after Trump irked the Chinese by again casting doubt on the sanctity of the one-China policy, he caused additional unease among NATO allies by calling the alliance obsolete, although he still thought it was important. He also minimized the U.S. relationship with Germany, implying that he would initially treat the German chancellor and the Russian president with pretty much the same level of trust and also speculated that even more countries would leave the EU this year, calling it a good thing. It remains to be seen how much of this policy improvisation will be translated into action once Trump takes office, but his unorthodox view of the world is certainly going to contribute to much more volatility in the markets next year….” Around 10:40 a.m. EST, the euro was up to $1.06958 from $1.06388 late Friday ahead of a three-day U.S. holiday weekend. Comex February gold was up $17, or 1.4%, to $1,213.20 an ounce.

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

 

Citi Expects Upbeat Earnings Reports From Mining Sector

Tuesday January 17, 2016 10:47

The season is approaching when mining companies release their quarterly and 2016 full-year earnings reports, and this is typically a time when mining stocks do well, reports Citi Research. “After enjoying a strong price performance in 2016, it's report-card time for mining companies,” Citi says. “We believe the reporting season would inject further positivity into the market through positive management commentary, improved balance sheets, strong cash generation, and continued delivery on cost control programs. Miners have historically performed well around FY (fiscal year) reporting, with only four years of negative February returns in two decades.” Aside from macroeconomic issues, Citi looks for these themes to be at the forefront during earnings season: an uptick in projects and exploration activities though companies are likely to be relatively cautious on capital allocation; catch-up in sustaining capital expenditures, which could have been compromised during the five-year downturn; potential cost inflation, especially due to oil and also labor negotiations, particularly in Chile; retention rate of cost savings program; potential for excess capital return with improved balance sheets and appetite for mergers and acquisitions; and revised strategies, especially around divestment targets.

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

 

Gold Gets Noticed, More Price Gains Post Options Expiration - RBC's Gero

Tuesday January 17, 2016 09:14

With gold prices seeing continued momentum this year, more asset allocators seem to be taking notice in the yellow metal, notes RBC Wealth Management managing director George Gero. According to the veteran precious-metals analyst, investors are starting to flock more to gold on Brexit worries and concerns over elections in Europe – in France and Germany. Currency concerns over the Turkish lira, the Venezuelan bolivar and the Indian rupee are also making gold a more attractive asset, he adds. "Look for continued volatility and later higher prices after option expiration," Gero says. Gold futures continue to trade above $1,200 an ounce, surging to a two-month high Tuesday. February Comex gold last traded at $1,214.90 an ounce, up 1.56% on the day.

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

 

 

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