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FXTM's Otunuga: Soft Dollar Propels Gold To Four-Week High

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Spot gold moved to a four-week high at $1,258 an ounce Monday on the back of U.S. dollar weakness, says FXTM research analyst Lukman Otunuga. “With investors adopting a cautious approach ahead of an explosively data-packed and event-filled week, safe-haven assets such as gold could come back into fashion,” Otunuga says. “Although the rising prospects of tighter global monetary policy still have a grip on the zero-yielding metal in the longer term, short-term bulls are currently in control.” Technically, the $1,260 level will be a key one for gold, as a break above this “should open a path higher towards $1,268,” the analyst adds.

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

 

Walsh’s Lusk: Economic Data Could Mean Volatility For Gold

Monday July 24, 2017 08:11

A U.S. Federal Open Market Committee meeting this week may not have much impact on gold and other markets, but there could be some volatility as a result of economic data, says Sean Lusk, director of commercial hedging with Walsh Trading. He notes gold just posted its biggest weekly gain in two months, helped by a stronger euro due to moves in bond yields and ongoing turmoil surrounding U.S. President Donald Trump. Traders will remain focused this week on political drama, “which is nothing new,” he says. “The major event, however, will be the Federal Reserve’s monetary policy meeting that is expected to be a relatively minor event due the fact there is zero expectation in the market for a change in rates,” Lusk says. “As revealed in the May’s monetary policy meeting minutes, the central bank would look to reduce investments in Treasuries by $6 billion a month, increasing that level by $6 billion every three months until it reaches $30 billion. At the same time, it would reduce its holdings in mortgage-backed securities by $4 billion a month, raising the limit by $4 billion every three months until the amount reaches $20 billion.” Meanwhile, Lusk says, “a full docket of economic data will help to create some volatility in markets.” Key reports include housing sales – with existing-home sales data Monday and new home sales on Wednesday – plus consumer confidence on Tuesday and durable goods on Thursday. The second reading of second-quarter gross domestic product is due out on Friday. Technically, Lusk adds, gold settled above a number of major moving averages last week, including the 50-, 100- and 200-day averages.

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

 

Commerzbank: Chinese Silver Imports Strong During First Half

Monday July 24, 2017 08:11

China’s silver imports have been robust so far in 2017, points out Commerzbank. Analysts cite data from customs authorities showing that China imported around 330 tonnes of silver in June, which is up 34% from last June. “The figures show that 1,984 tonnes of silver were imported in the first half year – 37% more than in the same period last year and the highest first-half-year silver imports in seven years,” Commerzbank says.

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

 

BBH: ‘The Market Understands Full Well Where The Fed Is

Monday July 24, 2017 08:11

This week’s meeting of the U.S. Federal Open Market Committee is “not live,” with no expectations for a change of any kind in monetary policy, says Brown Brothers Harriman. “For reasons beyond our ken, the Federal Reserve insists on making changes only at the half of the FOMC meetings which are followed by a press conference,” BBH says. Analysts later add, “the market understands full well where the Fed is. It is getting close to allowing its balance sheet to begin shrinking. After raising rates in March and June, officials are not ready to go again, at least not in July nor September. December is a closer call.” For now, softer price pressures, rather than weaker growth, have become a focal point in Q2, BBH says. “It will take a few months of data to assuage these concerns.”

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