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TDS: Gold May Be On Verge Of Catalyst To Top $1,300/Oz

Kitco News

Gold may be on the verge of getting the catalyst it needs to break higher from its recent trading range and poke back above $1,300 an ounce, says Bart Melek, head of commodity strategy with TD Securities. “The yellow metal may get support from a low inflation narrative coming from the Fed,” Melek says, pointing out that Fed Chair Janet Yellen – who is scheduled to appear before Congress this week -- has cautioned that aggressive monetary tightening may be unwise since the central bank's inflation targets are not being reached. “At the same time, while Fed funds hike expectations through 2018 have moved higher, real rates continue to be depressed,” Melek says. “The yield curve remains firmly placed on a flattening trajectory, suggesting both carry and opportunity costs of holding precious metals remain low. The robust buying of longer maturities, the
unwinding of the Fed's balance sheet and tepid inflation expectations have resulted in the two-year versus 10-year yield spread collapsing to just 59 bps [basis points], which is the lowest since 2007.” Melek later adds: “The uncertainty about the timing or potential delay of future rate hikes should lift gold above $1,300/oz.”

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

 

Commerzbank: China's Oct. Gold Imports From Hong Kong Up From Sept.

Tuesday November 28, 2017 08:26

The most recent data show Chinese imports of gold from Hong Kong rose month-on-month in October but fell year-on-year, says Commerzbank. Analysts track data from the Census and Statistics Department of Hong government as a proxy on China’s gold demand. These data show that China imported 46.5 tonnes of gold on a net basis from Hong Kong in October. “This was 56% up on the extremely weak previous month’s figure, which had constituted the lowest import volume in a good three years,” Commerzbank says. “Imports were down 24% year-on-year, however. They were also below average based on this year so far. From January to October, net Chinese gold imports from Hong Kong totaled 561.4 tons, which is just shy of 108 tonnes below the figure for the same period last year. The weaker import demand is probably due to the lack of central-bank purchases – by its own account, the Chinese central bank has bought no gold in the past 12 months.”

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

 

Walsh's Lusk Advises 'Extreme Caution' On Bitcoin

Tuesday November 28, 2017 08:26

Sean Lusk, director of commercial hedging with Walsh Trading, offers caution about chasing Bitcoin higher at a time when prices are soaring. He also says time will tell whether a collapse in Bitcoin – should it occur – will mean spillover selling in gold or if cryptocurrency owners instead will seek a hedge. Bitcoin topped $9,500 per unit early in the week. Some 100,000 accounts have opened since Thanksgiving, according to news reports. “I’m advising extreme caution here to those invested and who are thinking to invest,” Lusk says. Typically when investors enter a position in any market en masse such as this, the rally is near the end, Lusk says. “The public is usually the last segment into a trade that has already made a sizable percentage move and when the dominos fall, the last ones out,” he says. “It can get ugly and get ugly real quick. Exchanges and Wall Street have taken notice for some time as the CME Group will be offering futures and options contracts in the near future on the cyber currency, potentially adding some validity to what was previously thought as a millennial fad. We shall see how this plays out but I’m concerned…if we see a sizable sell-off in Bitcoin, do we see a selloff in the Comex 100-ounce [gold] futures contract in tandem or do the Bitcoin users use the futures markets as a hedge?”

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