Market Nuggets
Citi Upgrades 2017 Gold Outlook But Sees Longer-Term Pullback
Citi has upped its 2017 gold outlook but looks for a pullback in prices over the next year. The bank says it is “agnostic on gold in the short run” but upgraded its full-year outlook to $1,220 an ounce because of a low environment for interest rates in the second quarter, policy risks associated with U.S. President Donald Trump, and rising geopolitical tensions. Last month, Cit had listed a full-year outlook of $1,200. “Citi economists are currently projecting two additional rate hikes in 2017 along with balance-sheet reduction beginning in December,” Citi says. The bank says its base case currently puts a zero- to three-month price as high as $1,300 an ounce, but a six- to 12-month price at around $1,200.
By Allen Sykora of Kitco News; asykora@kitco.com
BMO: Gold Likely To Pull Back Ahead Of Upcoming Fed Meetings
Tuesday April 18, 2017 08:32
BMO Capital Markets maintains a 2017 average gold forecast below current prices, commenting that some pressure is likely to come from expected Federal Reserve rate hikes, even though the gold market has geopolitical tailwinds at the moment. Gold has rallied some $50 over the last 30 days, helped by safe-haven demand due to geopolitical risks such as rising U.S.-North Korea tensions. Also, after a visit with Russian officials last week, U.S. Secretary of State Rex Tillerson said there is “a low level of trust between our countries.” Further, there is “a new and largely unproven president in the White House,” all leaving investors seeking safety in precious metals, BMO says. “Despite recent price strength, however, we continue to maintain our gold price forecast for an average of $1,215/oz in 2017, and expect that investor attention will soon turn to the upcoming Fed meetings, where a rate hike is still on the table, in our view,” BMO says. “Indeed, despite the recent upswing in metal prices, we have seen a relatively muted response from the equities, with sector average multiples remaining largely flat, suggesting that investors are expecting some metal price weakness heading into Fed meetings in May and June.”
By Allen Sykora of Kitco News; asykora@kitco.com
TDS: ‘Gold Has A Very Tough Ceiling To Breach Near $1,290/Oz’
Tuesday April 18, 2017 08:32
Gold may edge above $1,300 an ounce but may have trouble racing ahead from here due to the “gravitational pull” of continued expectations for tighter U.S. monetary policy, says TD Securities. The metal rallied over the last week on geopolitical issues and comments from U.S. President Donald Trump saying the U.S. dollar is too strong. Further, there was some softening in U.S. economic data. Still, TDS says, “Given that the U.S. economy is posting only more moderate activity and not collapsing, the U.S. central bank should continue to proceed with its tightening program and will likely go out of its way to communicate this to the market. This implies that gold has a very tough ceiling to breach near $1,290/oz which will also serve as a magnet preventing the yellow metal to break out materially past the $1,300/oz mark on a sustained basis.” However, TDS adds, a temporary move to the $1,305 to $1,308 area is possible “should we see more U.S. economic weakness or the situation in Europe (e.g. French elections), North Korea or the Middle East go off the rails.”
By Allen Sykora of Kitco News; asykora@kitco.com
FXTM: Gold Bulls ‘Remain In Firm Control Above $1,260’
Tuesday April 18, 2017 08:32
Gold bulls still have the upper hand on the technical charts as long as prices remain above $1,260 an ounce, says FXTM research analyst Lukman Otunuga. “The geopolitical tensions across the globe and political risks may continue to support gold moving forward,” Otunuga says. “Although prices edged lower on Monday, the metal remains bullish on the daily charts with buyers potentially exploiting the technical correction. From a technical standpoint, bulls remain in firm control above $1,260, with $1,300 acting as the next major level of interest.” Spot gold was up 30 cents to $1,284.75 cents an ounce as of 8:14 a.m. EDT.
By Allen Sykora of Kitco News; asykora@kitco.com
MKS: Gold Remains Underpinned By North Korea, Political Issues
Tuesday April 18, 2017 08:32
Gold may have pulled back from the early-Monday highs but geopolitical and political issues continue to provide underlying support, says MKS (Switzerland) S.A. As of 8:14 a.m. EDT, spot gold was up 30 cents to $1,284.75 an ounce after hitting a five-month high of $1,295.45 an ounce Monday. “With investor's still considering the fluid situation between North Korea and the U.S., as well the upcoming French election, there is no doubt strong underlying interest (is) supporting the metal around current levels,” says Sam Laughlin, precious-metals trader with MKS. Initial support lies around $1,280 to $1,282, while below this $1,276 should restrict further declines, the trader says. Resistance was listed around $1,290, “while a break above this will once again open up $1,300,” he adds.
