Market Nuggets
Adrian Day: Gold 'Remarkably' Strong In 2017 Despite Fed Tightening
The fundamental backdrop remains “positive” for gold, with the metal performing “remarkably” well so far in 2017 considering the Federal Reserve has been tightening monetary policy and the stock market has fared well, says Adrian Day, chairman and chief executive officer of Adrian Day Asset Management. “We have seen a series of higher highs and higher lows, a positive pattern, though the last few weeks, where a bounce has reversed, gives some pause; the next few weeks should provide a clearer technical picture,” he says in his quarterly portfolio update. “Fundamentally, however, we remain positive: the dollar has topped, and though a near-term rally may be in the offing, it is likely to be weaker going forward; though rates around the world are likely to move higher, the pace is cautious; and inflation in both the U.S. and Europe is slowly moving up. Political uncertainty in the U.S., geopolitical tensions (in Korean and Syria), and a contentious period in Europe all lend support to gold.”
By Allen Sykora of Kitco News; asykora@kitco.com
Mitsubishi: Investors May Pursue Risk Hedging Into Gold During 2H
Tuesday July 04, 2017 08:56
Gold has had a tendency to fare more poorly in the second half of the year than the first in recent years, although that could change this year if investors hedge into the yellow metal due to high stock-market valuations, says Mitsubishi. Analysts point out that gold appreciated by 7.9% in the first half of 2017. The metal rose by 23.9% in the first six months of 2016, eased by 1.2% in the same period of 2015 but climbed 9.4% in the first half of 2014. “It is perhaps worth noting that gold’s performance in the second half of recent years has been somewhat worse than the first,” Mitsubishi says. “However, the strong performance of equity markets in the first half of this year, when the main U.S. indices have hit new record high levels, suggests that risk hedging in gold and precious metals could become more prevalent in the second half of this year, especially if corporate earnings fail to live up to elevated expectations amid rising interest rates and a lack of significant progress on U.S. tax reform and fiscal stimulus.”
By Allen Sykora of Kitco News; asykora@kitco.com
TD Securities: U.S. Data To Be Key For Gold Prices This Week
Tuesday July 04, 2017 08:56
U.S. economic data this week will likely to determine the direction for gold, particularly after a number of Fed speakers made comments last week that were construed hawkishly, says TD Securities. In particular, analysts cited the coming release of Federal Open Market Committee minutes on Wednesday and the monthly jobs report Friday. “With the Fed signaling a more hawkish tone and plans to begin offloading the balance sheet, the U.S. data will need to perform in order to justify these plans,” TDS says. “The jobs report will indeed be important in shaping the market’s expectations of the Fed’s ability to follow through on these goals. Should the data disappoint, gold would surely recover from the lows seen the past few days as the market begins to doubt how hawkish the Fed can really get. On the other hand if the data is strong, prices would remain under pressure at the lower bound.”
