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Phoenix's Grady: Gold May Be In 'Waiting Pattern' After Sharp Price Rise

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Gold traders may now have to wait to see if further bullish news emerges, says market veteran Kevin Grady. The president of Phoenix Futures and Options LLC describes himself as neutral in the short term after a big run-up in prices lately that was accompanied by an increase of some 55,000 contracts of open interest on Comex over the last 1 ½ weeks. “Gold has come pretty far, pretty fast,” Grady says. But now, he continues, traders are left watching to see if further news emerges on North Korean’s weapons program, plus traders may have to wait until October for further guidance on what the European Central Bank does with its quantitative-easing program. “Right now, it [gold] is in a waiting pattern.” As of 11:14 a.m. EDT, Comex December gold was 30 cents softer for the day at $1,350.10 an ounce after backing down from earlier peak of $1,362.40.

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

 

RJO’s Haberkorn: Gold May Due For Profit-Taking Pullback

Friday September 08, 2017 10:42

Gold may be due for a pullback next week if geopolitical tensions with North Korean do not escalate significantly, says Bob Haberkorn, senior commodities broker with RJO Futures. The metal early Friday hit its highest level in over a year. Haberkorn says this was helped in part by worries that North Korea might launch another missile in conjunction with a major holiday over the weekend. “After we get past this event, as long as it’s not a catastrophic event…and it does not further escalate the situation, I think you’ll see gold take a little bit of a pullback. It is overdone technically at current levels….Markets don’t go up forever. They have to have a pullback to adjust and [then] make an even higher high. The overall trend is up, but it’s due for a correction on profit-taking after we get through this weekend.”

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

 

TDS: Gold May Have Not Reach $1,400 Without Certainty On Fed Rate-Hike Delay

Friday September 08, 2017 10:42

Gold could have trouble rallying past $1,400 an ounce as long as the market anticipates more U.S. rate hikes next year, but silver has potential to outperform, says TD Securities. Thus, the bank favors a short gold/silver ratio trade that would be profitable if silver outperforms. Spot gold on Friday hit a one-year high of $1,357.50 an ounce. Some of this is due to diminished expectations for more Federal Reserve rate hikes this year. “So long as there is still a chance the U.S. central bank pulls the trigger on the higher Fed funds [rate], along with the risk of three more hikes next year, money managers will have difficulties to justify growing long positions past their current extreme levels, or to erode short exposure any more,” TDS says. “The rather extreme derivative positions likely means that any additional rallies caused by geopolitics or other temporary shocks are likely to be reversed in fairly short order. A sustained run into $1,400/oz is unlikely to happen until the market eliminates a few hikes from its projections, and this is likely next year's story considering inflation keeps on lagging and the economy and politicians disappoint.” By contrast, underperforming silver is still nowhere near its 2016 highs, TDS points out. There is plenty of room for speculators to become more bullish, while physical demand is likely to improve while mining output does not, the bank says.

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

 

FXTM’s Otunuga: Gold Hits One-Year High Due To North Korea, Weak Dollar

Friday September 08, 2017 08:52

Gold has risen to its strongest level in a year, boosted by geopolitical tensions and a weakening U.S. dollar, says Lukman Otunuga, research analyst at FXTM. Spot metal has been as high as $1,357.50 an ounce. “Jitters created from the tensions between North Korea and the United States have attributed to gold’s resurgence, while a weaker dollar amid fading rate-hike expectations continues to fuel the upside,” Otunuga says. “With uncertainty across the board and overall caution likely to stimulate the flight to safety, safe-haven assets such as gold remain heavily supported.” The analyst describes the technical-chart picture as “heavily bullish,” with consistently higher highs and higher lows on a daily chart and prices trading above the 20-day moving average. “The breakout above $1,350 may open a path higher towards $1,365,” the analyst says. “Daily bulls remain in firm control and are likely to secure more control, if gold concludes the week above $1,340.”

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

 

BBH: U.S. Dollar Weakens As Treasury Yields Decline

Friday September 08, 2017 08:22

The U.S. dollar has fallen along with Treasury yields, says Brown Brothers Harriman. Moves in the greenback are important to metals traders since base and precious metals alike often move inversely to the dollar. The euro has been as high as $1.20924 as of early Friday, the most muscular level since early 2015. “The U.S. dollar has been unable to find any traction as U.S. yields continue to move lower,” BBH says. “The U.S. 10-year year is slipping below 2.03% in European turnover, the lowest level in 10 months. The risk, as we have noted, is that without prospects of stronger growth and inflation impulses, the yield returns to where was before the U.S. election (~1.85%).” The two-year note yield, anchored more by Fed policy than the long end of the yield curve, is also soft, yielding 1.25%, the same as the upper end of the Fed funds target range, BBH adds.

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

 

Commerzbank: Debt Ceiling Likely To Resurface As Factor Affecting Gold

Friday September 08, 2017 08:22

The U.S. debt-ceiling issue has been deferred rather than solved permanently, thus may well resurface to influence gold prices again a few months down the road, says Commerzbank. President Donald Trump and U.S. lawmakers this week struck a deal to raise the federal debt limit to fund the government into December, thereby alleviating concerns about a government shutdown this month.  “Although this means that the U.S. government will have enough money to see it through the next three months, it does not actually solve the problem, meaning that it will soon find its way back onto the agenda,” Commerzbank says. “Gold should profit from the resulting uncertainty and find good support.”

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

 

Walsh’s Lusk: North Korea, ‘Disarray In D.C.’ To Keep Supporting Gold

Friday September 08, 2017 08:22

Bulls are likely to stick with gold even if the metals do appear “overbought” on the technical charts, says Sean Lusk, director of commercial hedging with Walsh Trading. “Continuing tensions on the Korean peninsula over North Korea’s nuclear tests continue to provide a backbone of support for safe-haven gold,” he says. “While both gold and silver are showing an overbought condition on the daily charts, there seems to be so much uncertainty in the markets right now for a major abandonment by the longs [bulls] right now. In fact, any liquidation would most likely occur closer to the Fed’s next meeting on the 19th and 20th of September. Currently the disarray in D.C., with the U.S. Congress facing a daunting schedule -- trying to tackle tax reform, the budget, funding for hurricane relief, and now DACA [Deferred Action for Childhood Arrivals] -- add to the risk off tone.”

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