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CrossBorder: Chance Of Big Move In Gold Prices 'Disappointingly Low'

Kitco News

Gold prices could climb “modestly” but the prospects of a sharp up or down move – based on liquidity and capital flows – are “disappointingly low,” says CrossBorder Capital. Analysts note that more central-bank liquidity tends to devalue paper money and boost gold, and vice-versa. “Therefore, latest plans to withdraw quantitative easing are unlikely to be positive for bullion,” CrossBorder says. The firm also studies world private-sector liquidity minutes central-bank liquidity, which gives the “net demand” for paper money. “Latest data suggest that gold could appreciate modestly from here, but the odds of a sharp upward (or downward) move based on these liquidity and capital flows currently appear to be disappointingly low,” CrossBorder says. The firm also suggests that world capital flows are shifting from U.S. dollars into euros and other European currencies. “The weight of money flow seems to confirm our view that the U.S. dollar is losing support as capital shifts towards the euro,” CrossBorder says.

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

 

FXTM's Otunuga: Gold Bears 'Remain In Control Below $1,300'

Wednesday September 27, 2017 9:50

Gold has continued its downward spiral after a hawkishly construed speech by Federal Reserve Chair Janet Yellen on Tuesday, and bears now appear in control of the market, says Lukman Otunuga, research analyst at FXTM. "With expectations mounting over the Federal Reserve raising U.S. interest rates in December, gold, which is zero-yielding, is likely to come under renewed selling pressure," the analyst says. "Bears remain in control below $1,300, with further downside expected as the dollar continues to appreciate. From a technical standpoint, the yellow metal is coming under increasing selling pressure on the daily and weekly charts. Previous support at $1,300 may transform into a dynamic resistance level, and may encourage a decline towards $1,280." As of 9:45 a.m. EDT, spot gold was $8.40 lower to $1,285 an ounce.

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

 

INTL FCStone: Precious Metals Pressured By Dollar, No Fresh North Korea News

Wednesday September 27, 2017 9:50

A more muscular U.S. dollar and lack of fresh geopolitical worries have pushed precious metals lower, says Edward Meir, commodities consultant with INTL FCStone. As of 9:45 a.m. EDT, Comex December gold was down by $14.30 to $1,287.40 an ounce, while December silver lost 7.3 cents to $16.81. The euro was down to $1.17239 after having been above $1.20 last week. "In light of the stronger dollar, talk of higher [U.S. interest] rates and a relatively quiet news day on the North Korean front, it comes as no surprise that gold is under pressure," Meir says.

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

 

Commerzbank: Hong Kong Data Confirm China’s Softening Gold Demand

Wednesday September 27, 2017 8:50

Data from Hong Kong’s Census and Statistics Department confirm current weaker gold demand in China, says Commerzbank. The figures show that China imported only 32.6 tonnes of gold on a net basis from Hong Kong in August, the lowest amount since January, Commerzbank says. “At 485 tonnes, net imports in the first eight months of the year were 70 tonnes down on the same period last year,” analysts say. “Direct gold imports from Switzerland were already weak in August.”

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

 

BBH: Investors Getting Message On Potential Fed Rate Hike

Wednesday September 27, 2017 8:50

Investors are starting to get the message that the Federal Reserve is still thinking of hiking interest rates in December, says Brown Brother Harriman.  Analysts point out that the Bloomberg calculation of the odds of a rate hike before the end of the year has risen to 70% from 53% before last week's meeting of the Federal Open Market Committee and 33.5% at the end of last month. The CME Federal funds tool puts the odds at 81%, up from 37% a month ago, BBH points out. Fed Chair Janet Yellen gave a speech that was hawkishly construed Tuesday afternoon, although BBH points out that she did not break new ground. “She reaffirmed the impression at her recent press conference that the uncertainties about inflation do not stand in the way of another hike this year,” BBH says. “Remember that the dot-plots showed that 11 of the 16 Fed officials thought a December hike would be appropriate, up from eight in June.” The Fed chief acknowledged some uncertainty about inflation, but BBH says she was simply sharing an intellectual honesty that is often most noticed in its absence.”

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

 

Metals Focus: Nature Of China’s Gold-Jewelry Market Changing

Wednesday September 27, 2017 8:50

The consultancy Metals Focus says the nature of China’s gold-jewelry market is changing. During the first half of this year, China’s gold-jewelry consumption fell an estimated 3.6% year-on-year following a 16% decline in 2016, analysts say. “There are several reasons for this performance, but one that stands out have been the structural changes in the Mainland jewelry sector, where traditional three 9s chuk kam jewelry, which dominates the retail landscape, has lost market share to products that carry a far higher design component,” Metals Focus says. “By definition, therefore, this jewelry attracts a much higher labor charge; it will often also be lighter compared with chuk kam.” Analysts cited observations after recently visiting both the Hong Kong Jewelry Fair and the Shenzhen Jewelry Fair. At the Hong Kong event, they report observing “considerable interest” in pearls and colored stones. At Shenzhen, “there appeared less focus on three 9s or four 9s 24-carat gold,” Metals Focus says. However, despite less overall focus on 24-carat pieces, one new combination gaining traction has been 24-carat combined with pearls, which attracts a higher margin, Metals Focus says. “A second trend reflected market share gains by gem-set and 18-carat products,” the consultancy says. “Given the generally weak demand for 24-carat, manufacturers are continuing to developing new merchandise with a more significant design component.” Analysts also report rapid growth in “E-tailing” in the sector. “Overall, there was a sense of a more diversified jewelry fair in Shenzhen, both in terms of exhibitors and visitors,” Metals Focus concludes. “This suggests that the Chinese jewelry industry is developing in several different ways as the industry addresses new consumer trends.”

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