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Phoenix's Grady: Gold Making Lower Highs, Hurt By Tightening Worries

Kitco News

The same factors that hurt stocks lately – worries about tighter monetary policy – also seem to be holding back gold, says Kevin Grady, president of Phoenix Futures and Options LLC. “The equity markets are looking a little soft,” he says, blaming this on expectations for more U.S. rate hikes plus comments from European Central Bank President Mario Draghi this week suggesting policymakers might cut back on their bond-buying program. “It’s bearish for stock markets, but it’s bearish for the gold market also,” Grady says. “So I’m a little cautious here. If you look at all of these rallies, they keep making lower highs.” For instance, he points out, Comex August gold stopped just shy of $1,300 an ounce on June 6, then another rally stalled around the $1,275 region, and then another stalled around $1,260. “It’s having a hard time on these rallies,” Grady adds.

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

 

INTL FCStone: Higher Yields ‘Making It Difficult’ For Gold To Rally

Friday June 30, 2017 10:06

Gold “continues to meander aimlessly” but is modestly lower so far Friday, says INTL FCStone. As of 9:53 a.m. EDT, the Comex August futures were down $3.60 to $1,242.30 an ounce. The metal has not been able to benefit lately from a softer U.S. dollar. “A weaker dollar should typically help gold, but we suspect that rising bond yields, especially in Europe, are acting as an offset and making it difficult for the precious metal to gain traction,” INTL FCStone says. “As examples, benchmark U.S. Treasury yields and German 10-year government bond yields each hit five-week and seven-week highs, respectively, this week.”

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

 

Price Futures Group’s Flynn: Inflation Outpacing Yields Would Help Gold

Friday June 30, 2017 08:42

Bond yields are rising but eventually may lag inflation, which would support gold, says Phil Flynn, senior market analyst with Price Futures Group. The metal came under pressure this week, with a number of market watchers citing rising bond yields amid hawkish comments from key central bankers. “But as we go forward, I think the market has adjusted to the fact that we’re going to have more hawkish sentiment from central bankers around the world,” Flynn says. “But at the same time, there is a growing concern that the long end of the yield curve is going to start falling behind the inflation curve. When that happens, it’s usually pretty good for gold.”

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

 

Commerzbank: Bond Yields Hurt Gold But ETF Buying Picks Up

Friday June 30, 2017 08:42

Gold has not been able to benefit from recent U.S. dollar and equity-market weakness, apparently pressured by rising bond yields instead, but exchange-traded-fund investors have used the price pullback in the metal as a buying opportunity, says Commerzbank. The dollar has dropped to its lowest level against the euro since May 2016, yet gold has fallen. With the currency moves, gold in euro terms has dropped to a six-month low of below €1,090 per troy ounce. Rising bond yields “almost certainly have weighed on prices,” Commerzbank says. Yields on 10-year U.S. Treasury notes climbed sharply Thursday for the third consecutive day, which increases the so-called “opportunity costs” of holding gold. “That said, the current price level is clearly also viewed as an attractive buying opportunity given that the gold ETFs tracked by Bloomberg recorded inflows of nearly four tonnes yesterday,” Commerzbank says. “ETFs have thus seen inflows of a good nine tonnes of gold in the past three days of trading.”

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

 

FXTM: Gold Hurt By Prospects For Tighter Monetary Policy

Friday June 30, 2017 08:42
 
Expectations for tighter monetary policy have emboldened gold-market bears, suggests FXTM research analyst Lukman Otunuga. Gold has been under pressure this week despite the dollar extending its losses and equities falling. “Generally speaking, a vulnerable U.S. dollar and depressed stock markets would have the ability to support the yellow metal; however, in this case, it seems that the prospect of tighter global monetary policy has inspired bears to make a move,” the analyst says. “With hawkish comments this week from central-bank heavyweights sparking speculation that the era of cheap money is coming to an end, gold may struggle to maintain its ground in the short term.” Still, Otunuga adds, “As the Brexit woes, political uncertainty in Washington and concerns over oil’s oversupply trigger risk aversion, safe-haven assets such as gold are likely to remain supported in the longer term.”

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