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Metals Focus: Macroeconomic Backdrop Favorable For Gold Prices

Kitco News

Metals Focus says the global macroeconomic environment should remain favourable for gold during the rest of this year and well into 2018. “Of course, the prospect of one further (U.S.) rate hike in December this year, two to three more in 2018 and the start of balance sheet normalization by the Fed poses headwinds for the metal, says Neil Meader, research and consultancy manager at the consultancy. Still, he says, “the speed at which monetary authorities move towards ‘normal’ monetary policies will continue to be slow and probably no faster than markets are currently pricing in.” Analysts with Metals Focus forecast that negative rates will persist across other key currencies, including the euro, even if the European Central Bank starts to tighten policy in the near future. The consultancy also warns that the future performance of the U.S. economy is likely to fall short of expectations, and potential for geopolitical risks may offer support. Meader says that with a still-low “opportunity cost” of holding gold, “we believe that institutional investors will once again be convinced by the positives.” Silver should benefit from a recovery in investor interest for gold, the consultancy adds.

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

 

ICBC Cautions Against Attempts To Short Palladium

Wednesday October 04, 2017 09:21

ICBC Standard Bank says palladium very well may retain its strength. Palladium prices moved to a premium over sister metal platinum last week for the first time since 2001. This has occurred as futures traders have established bullish positions in palladium more heavily than in platinum, meaning potential for this to unwind. However, ICBC says it would be wrong to characterize the situation as one of speculative excess. “Underlying market indicators support the view that palladium is currently fundamentally tighter than platinum,” says ICBC. “Indeed, palladium continues to trade in a backwardation that contrasts with platinum’s contango.” The bank says it looks for substantial supply deficits to continue in palladium, while platinum could drift into a small deficit in the next 18 months. “Some investor may still view a tactical opportunity to take the other side of what has been a relatively one-sided trade of late,” ICBC says. “We would, however, caution against attempts to short palladium, looking for a near-term correction.” As of 9:12 a.m. EDT, spot palladium was $4.90 higher to $920.40 an ounce, while spot platinum was up $2.60 to $913.60.

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

 

Commerzbank: Gold Finds Support Around 100-Day Average

Wednesday October 04, 2017 09:21

Gold is back above its 100-day moving average after a temporary blip below, plus the metal may draw support from political uncertainties following the weekend vote in favor of independence by Catalonia, says Commerzbank. As of 9:10 a.m. EDT, spot gold was up $3.90 to $1,276 an ounce. Commerzbank says the 100-day average, which stands around $1,272, “appears to be lending support to the price.” Further, the bank says, “gold is likely to remain in demand, for example, on the back of the political uncertainties in Europe. By its own account, the Catalan regional government plans to declare Catalonia independent in a few days’ time following last Sunday’s chaotic referendum. This is unlikely to be taken lying down by the Spanish government in Madrid.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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