Market Nuggets
MKS's Nabavi: Gold Hits Multi-Month High On North Korean News
Gold got a safe-haven bid overnight before falling back on profit-taking, says Afshin Nabavi, head of trading at trading house MKS (Switzerland) SA. Spot metal peaked above $1,295 an ounce, its strongest level since Nov. 9. “The market opened rather bid in the Far East overnight on the back of the North Korean missile test which failed,” Nabavi says. However, when the market did not push convincingly above the roughly $1,295 area, he continues, profit-taking set in. “Liquidity is non-existent with the U.K. and most other European countries closed,” he continues. He puts support around $1,285. As of 7:52 a.m. EDT, spot gold was up $1.75 to $1,288.90 an ounce.
By Allen Sykora of Kitco News; asykora@kitco.com
TDS: Market To Become ‘Desensitized’ To Trump Efforts To Jawbone Dollar
Monday April 17, 2017 07:55
The foreign-exchange market is likely to become “increasingly desensitized” to the Trump administration's views on the U.S. dollar, says TD Securities, pointing out that the president made another effort to jawbone the U.S. dollar lower. “While jawboning is likely to be second order, the reshaping of monetary policy will be a key risk for the FX market later this year,” TDS says. “Indeed, Trump’s preference for low interest rates and his ability to redraw the Fed does have the potential to shift in the fundamentals against the USD. For now, though, the administration has to operate with the knowledge that their economic goals run counter to their preference for a weak dollar.” In particular, TDS cites planned policies to stimulate economic growth despite little “spare capacity.” TDS continues, “The prospects of strong real returns on U.S. capital investment will trigger inflows that would strengthen the USD. These fundamentals leave the administration with the prospects of direct intervention in the FX market or renegotiating trade policy to plug valuation gaps.” Metals traders tend to monitor developments in the foreign-exchange market since precious and base metals alike tend to move inversely to the U.S. dollar.
By Allen Sykora of Kitco News; asykora@kitco.com
Standard: ‘Flight To Safety Could Lift Gold Prices Further’
Monday April 17, 2017 07:55
Standard Chartered sees potential for further gains after the metal closed above its 200-day average last week. “Aided predominantly by rising geopolitical tensions, accompanied by USD (U.S. dollar) weakening and softer U.S. 10-year Treasuries, prices have found a firmer footing and gold volatility has risen,” Standard says in a research note ahead of the weekend. “We still see further upside price risk given that physical demand has shown signs of stabilizing and seasonal demand materializes in April, but also as political and geopolitical risks linger, despite (U.S. President Donald) Trump’s softer stance. Psychologically, $1,300/oz poses the next hurdle for gold, but investor positioning is far from overcrowded and a flight to safety could lift gold prices further.”
