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INTL FCStone: Dollar, Receding North Korea Worries Likely To Pressure Gold

Kitco News

Gold could come under more pressure this month as the U.S. dollar remains stronger and market worries about North Korea’s military program recede, says INTL FCStone. A reversal higher in the dollar pressured gold for most of September after the Comex December futures hit a one-year high back on Sept. 8. “We think the combination of recent events (i.e. receding North Korean tensions and a somewhat stronger dollar) will likely continue to pressure gold going into October,” INTL FCStone says in its monthly commodities outlook. “We see the precious metal trading between $1,245-$1,310 during the month, while silver is expected to range between $16.10-$17.30. Platinum is seen at $870-$955, while palladium’s inability to test its all-time high early in September has left something of a double-top on the long-term charts and makes the technical case for an additional pullback ($875-$970 is our forecast range for this month).” Platinum and palladium face longer-term demand issues, as more countries contemplate banning gasoline engines altogether, INTL FCStone points out. “China was the latest to do so last month, although we do not know what timeframe the authorities have in mind,” the firm says. “California is also mulling a ban of its own.”

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

 

SP Angel: Strong Dollar Pushes Gold To Seven-Week Low

Monday October 02, 2017 08:38

Continued U.S. dollar strength – on ideas that the Federal Reserve remains hawkish -- has whacked gold to a seven-week low, says commodities brokerage SP Angel. “Growing expectations of a Fed inflation rate hike have aided lifting the dollar to its best performing week of 2017, curbing the 3% quarterly growth of gold,” the firm says. Analysts note that comments late last week from Philadelphia Federal Reserve President Patrick Harker stoked the fire by ‘penciling in’ a December interest-rate increase and three more changes in 2018. The metal tumbled as the dollar advanced against the yen during China’s week-long “Golden Week” national holiday and trepidation about the euro connected to an independence vote in Spain’s Catalonia region, SP Angel says. As of 8:26 a.m. EDT, Comex December gold was $7.90 lower to $1,276.90 an ounce and bottomed at $1,273.70, its weakest level since Aug. 16. The euro was down to $1.17560 from $1.18130 at the end of Friday’s trading.

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

 

Walsh’s Lusk: Profit-Taking, ‘Overbought’ Market, Dollar Gains Knock Gold From Sept. High

Monday October 02, 2017 08:38

The pullback in gold and silver in recent weeks after a previous run-up was the result of profit-taking and U.S. dollar strength as markets factor in greater prospects for more tightening of U.S. monetary policy by the Federal Open Market Committee, says Sean Lusk, director of commercial hedging with Walsh Trading. Comex December gold peaked at a one-year high of $1,362.40 an ounce on Sept. 8, but has since slid to an early-Monday low of $1,273.70. Lusk lists three factors behind the July-September rally: seasonal buying, weakness in the dollar at the time and “geopolitical chaos” regarding the Trump administration coupled with continued nuclear threats from North Korea that made it seem to some that armed conflict was inevitable. “In short, it was the perfect storm for a bull market in gold and silver,” Lusk says. “Once new highs for the year were made for both metals, the public jumped in, increasing the speculative long position in both markets.” Traders amassed nearly 300,000 bullish positions on Comex and nearly 100,000 in silver, he says. “As daily and weekly charts showed [an] overbought technical condition, shorts emerged and profit taking ensued in the precious metals heading into the two-day meeting of the Fed on Sept. 19-20,” he says. “The FOMC decision itself offered no surprises but commentary from the Fed chair was more hawkish than previously thought. The Fed put a December rate hike back on the table and signaled that three rate hikes may be in store next year. This has spurred the dollar higher while at the same time seasonal buying in both gold and silver has ebbed for now.” North Korean fears have taken a “back seat” at the moment as U.S. tax reforms take center stage, and the S&P and Dow Jones Industrial Average pushed to all-time highs, Lusk says. “The risk on trade is alive and well as investors continue to buy dips, eschewing metals in the interim,” he adds.

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

 

MKS: Palladium Prices Maintain Premium Over Platinum

Monday October 02, 2017 08:38

Palladium prices remain higher than those for platinum as a new trading week gets under way, points out Alex Thorndike, senior precious-metals trader with MKS (Switzerland) S.A. Palladium, seen as having tighter supply/demand fundamentals, took the upper hand last week for the first time since 2001. “Palladium is still trading at a premium to its stable mate platinum, with the metal in short supply and demand from autos and speculators remaining strong,” Thorndike says. “Palladium, in contrast to gold, silver and platinum, rose an impressive 11% during September and taking the total yearly gains to a whopping plus 38% thus far.” As of 8:27 a.m. EDT, spot palladium was trading up $1.70 to $936.20 an ounce, while platinum was up $3.10 to $912.60.

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