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INTL FCStone: Gold May Test June Highs During August

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INTL FCStone sees potential for gold to retest its June high during August. “Last month, we said we saw gold being well supported in the $1,180–$1,200/ounce area and indeed we got a good bounce off the $1,204 intraday low after the precious metal tacked on an additional $65/ounce from there going into month end,” the firm says in its monthly commodities outlook. “We think that there is more upside on gold and see a possible test of the June high of $1,298/ounce materializing during August. A combination of a weaker dollar and falling U.S. bond yields should propel the precious metal higher, with North Korea being a wild card.” Silver likely move in tandem with gold and could get to a high of $17.40 if gold tests its June high, INTL FCStone continues. “Stronger European auto demand is doing little to help platinum, as the sector seems well supplied and has not pushed up along with a firmer gold and silver complex in July,” the firm says. Further, platinum is struggling with longer-term structural demand issues, the firm says. “Palladium continues to defy the bears despite slowing car sales in the U.S.,” FCStone says. “In China, we had a pick-up in June car sales and this should be supportive to palladium somewhat, offsetting the relative weakness we see in the U.S. Still, given palladium’s relatively high price, we remain cautious on the sector.”

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

 

BBH: ‘Tide Against The Dollar Is Both Political And Economic’

Monday July 31, 2017 08:43

The tide of sentiment has turned against the dollar, says Brown Brothers Harriman. The broad trade-weighted dollar index rose in seven of the last eight months of 2016. However, this measure of the dollar is set to record its seventh consecutive monthly decline this year, among the longest such runs in the modern era, BBH points out. “The tide against the dollar is both political and economic,” BBH says. “At the start of this year, many feared the populist-nationalist wave, which was seen as on its way to Europe after sweeping the U.K. out of the EU [European Union] and Trump into the White House. As we anticipated, Europe has turned back the populist threat at every opportunity. The political anxiety has been deflected back to the U.S., where distractions, inexperience, and/or incompetence have frustrated the legislative process despite one party enjoying a majority in both houses of the legislative branch and control of the executive branch.  Also, with a U.K. snap election called after repeated denials and an unexpected outcome, U.K. politics is anything but settled as the Brexit countdown continues.” Movement in the dollar has ramifications for metals, as they often trade inversely to the U.S. currency.

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

 

INTL FCStone: Electric Autos Pose Future Demand Risk For Platinum

Monday July 31, 2017 08:43

Long-term platinum demand will take a big hit if forecasts for a dramatic increase in battery-powered automotive technology prove true, says INTL FCStone. Platinum’s largest industrial demand is use of the metal in auto catalysts – in particular, for diesel-powered vehicles. Analysts cite a Reuters report quoting the chair of the International Precious Metals Institute, Bodo Albrecht, as saying that electric cars could prove as devastating for platinum demand as digital photography was for silver. “Albrecht says that the replacement of platinum group metals by battery electric technologies could result in a whopping 40% decline in platinum demand by 2023-2040,” INTL FCStone says. “Indeed, we are already seeing some rumblings in this direction; in addition to the ongoing backlash against diesel caused by the VW [Volkswagen] scandal, Volvo became the first company to say this month that all its cars will be going fully or partly electric as of 2019. Just a day before, France said it would ban gasoline engines in new cars altogether starting in 2040 and the U.K. also fell in line with the French a few days later. If Albrecht’s analysis is correct, much of platinum’s fortunes will ride in large part on the auto industry’s ability to keep the largest component of its demand mosaic intact and re-establish the diesel engine ‘as an environmentally acceptable propulsion unit,’ at least for the carmakers and countries that still want it.”

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