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MKS: Macron Showing In French Election Cuts Gold's Risk Premium

Kitco News

A strong performance by Emmanuel Macron during the first round of the French presidential election Sunday wiped away much of gold's risk premium during early-Monday Asian trading, says MKS (Switzerland) S.A. “The yellow metal opened well offered to collapse nearly $15 within the first 15 minutes of trade, as we saw close to 25,000 lots pass through Comex in the first hour,” says Sam Laughlin, senior precious-metals trader with MKS. Still, since a number of geopolitical concerns persist, and the metal saw “solid bids” around $1,270, he says. As of 7:52 a.m. EDT, spot gold was down $14 to $1,270.05, bouncing from a low of $1,265.65. “As the dust settles following yesterday's election, short-term focus once again turns to North Korea, with an eye on Trump's 'massive tax cut' announcement and the implications of the potential U.S. government shutdown on Friday,” Laughlin says. He puts initial technical-chart support around the February high near $1,264, then $1,250 to $1,255, an area that contains the 200-day moving average that currently just above $1,253. “On the top side, the downtrend from the all-time high comes in toward $1,290,” Laughlin adds.

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

 

BBH: Capital Markets Show ‘Dramatic Response’ To French Election

Monday April 24, 2017 08:11

The outcome of the first round of voting in the French presidential election Sunday has spurred a “dramatic response” in capital markets, says Brown Brothers Harriman. ” European stocks are sharply higher, the S&P 500 futures are signaling a stronger opening in the U.S., and the euro has risen more than 1% against the U.S. dollar.  Centrist candidate Emmanuel Macron and Far Right populist Marine Le Pen advanced to the second round of voting in early May, but polls suggest Macron will win the second round by over twenty percentage points, BBH says. “Our thesis, that there is no populist-nationalist wave sweeping the world, is supported by the previous results in Austria, the Netherlands, and now France,” BBH says. “The AfD in Germany (is) wilting in the polls, and there too the center will hold. The populist-nationalist wave seems a result of the Anglo-American two-party system in which the center-right party adopted part of the populist-nationalist platform. While there was, of course, a certain amount of anxiety, especially given the electoral surprises over the past year, the investment community seemed not to be overly worried. Large speculators in the currency futures have been amassing what Bloomberg calculates as a record large long euro position. The premium that investors demand over Germany is elevated but has not accelerated as the election drew near.”    

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

 

SP Angel: Safe-Haven Assets Retreat After French Voting

Monday April 24, 2017 08:11

Commodities brokerage SP Angel reports that safe-haven assets have retreated on the back of the first round of presidential-election results in France as centrist Emmanuel Macron beat other contenders and emerged as the favorite. A snap poll from Ipsos says Macron is set to secure 62% support in the second round due May 7, versus 38% for Marine Le Pen. “The euro climbed two cents against the U.S. dollar while the spread between German and French 10-year bond yields narrowed to the lowest since late January,” SP Angel says. “U.S. Treasuries were down, with gold and (the Japanese) yen both down around 1% this morning.”

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