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CIBC: Resumption Of Fed Tightening Not Golden For Precious Metals

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Canadian bank CIBC looks for gold to weaken into year-end since the U.S. Federal Reserve expected to maintain monetary-policy tightening for now. "We haven’t been a fan of gold in a rising rate environment, but concede that the weakness seen in the U.S. dollar - along with the general upturn in metals prices—has acted as a stronger-than-expected catalyst for prices," the bank says. "However, with the Fed continuing to eye a hike before the end of the year, the market is still underpriced for Fed tightening, and therefore may be overstating the room for further U.S. dollar depreciation ahead. Indeed, gold prices have been particularly sensitive to the expected path of U.S. short rates, and another hike by the spring of next year from Yellen and Co. could see bullion drop to levels that are closer to $1,250/oz. That’s currently our year-end target for 2018, and we have a further move lower to $1,225/oz by the end of 2019 penciled in, as the prospect of a modestly higher rate environment—and a still-benign inflation environment—diminishes the appeal of a non-yielding asset like gold. Silver could fare a bit better, given its less dollar- and rate-dependent nature."

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

 

SP Angel: Lower Gold Prices May Prompt Chinese Buying

Thursday October 05, 2017 08:03

Chinese buyers may be tempted to pick up some gold at low prices when they return from a week-long holiday next week, says commodities brokerage SP Angel. Gold Prices deteriorated for much of September before stabilizing in the last few trading days. For now, the gold market is waiting to see how Friday's release of U.S. nonfarm payrolls data impact the U.S. dollar index, with investors anticipating the data will reflect a reduction in new jobs following disruptions from hurricanes Harvey and Irma, SP Angel says. As of an early-day research note, SP Angel says the Federal funds futures were pricing in an 83% chance of a December rate hike by the U.S. central bank. "The fall in gold price is expected to peak interest in Chinese investors as they return from the week-long national holiday," SP Angel adds.

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

 

Commerzbank: Gold Market Eyes Catalonia, U.S. Jobs Report

Thursday October 05, 2017 08:03

Uncertainty about the future of Catalonia is offering some support to gold prices for now but Friday's report on U.S. nonfarm payrolls could undercut the metal if jobs growth does not slow, as expected, says Commerzbank. "Gold is finding support from the conflict that is still brewing between Catalonia and Spain," analysts say. Catalonia's president is expected to issue a statement Monday on the outcome of last Sunday’s referendum and its consequences, Commerzbank says. "It is certainly conceivable that he will declare Catalonia’s independence. This would constitute a new level of escalation in the conflict with the central government in Madrid," Commerzbank says. Meanwhile, September U.S. jobs data is scheduled for release on Friday. "The figures could be distorted to the downside as a result of Hurricane Harvey, which the market is likely to take into account," Commerzbank says. "If there is no negative surprise, the gold price risks sliding below the 100-day moving average of $1,273 per troy ounce. Given that speculative net long positions are still at a very high level, this could spark technical follow-up selling and put further pressure on the gold price."

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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