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Standard Chartered: ETP Gold Holdings Pick Up In January

Kitco News

Inflows of gold into physically backed exchange-traded products hit 32 tonnes in January after a lackluster fourth quarter, when holdings rose by a modest 10 tonnes, says Standard Chartered. “ETP inflows since the start of 2017 are at profitable levels; only if prices fall below $1,200/oz do almost 250 tonnes become loss-making, which is not our base-case scenario,” the bank says in a research note late last week. As of 8:46 a.m. EST, spot gold was $3.85 higher to $1,336.35 an ounce. “Gold prices have stalled, but we think consolidation at lower levels bodes well for prices in the coming months, particularly as the recent move higher was not accompanied by broad investor interest,” Standard Chartered adds.

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

 

RBC's Gero: Stock Sell-Off Helps Gold; Buying Of Metal Could Pick Up

Monday February 05, 2018 09:00

The continued sell-off in equities is offering some support to gold prices, although this has been “muted” so far, says George Gero, managing director with RBC Wealth Management. As of 8:46 a.m. EST, spot gold was $3.85 higher to $1,336.35 an ounce. The March S&P 500 futures were another 7.40 points lower after a sell-off on Friday. “Continued rush to cash in equities and margin calls [is] helping gold see some bids, but as traders often have stock and commodity positions, lack of new cash inhibits gold buyers to some extent,” Gero says. He later adds: “Gold may pick up later in the week as equity sellers asset allocate more to precious metals.”

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

 

Commerzbank: Gold/Silver Ratio Pokes Back Above 80

Monday February 05, 2018 08:29

The gold/silver ratio on Friday poked back over 80 again for the first time in nearly two years, says Commerzbank, although it returned just below this again early Monday morning. The ratio measures how many ounces of silver it takes to buy an ounce of gold, with a larger number meaning underperformance by silver. The price of gold fell Friday after a strong U.S. jobs report prompted a rise in U.S. Treasury yields, thereby benefiting the U.S. dollar and undercutting precious metals. “Silver’s heavy losses on Friday are probably also attributable to technical selling given that silver dropped below the technically important 100- and 200-day moving averages,” Commerzbank says. “The silver price thus looks embattled from a technical perspective, meaning that the price slide might well continue.” Shortly after 8 a.m. EST, spot gold was up $3.30 to $1,335.80 an ounce, while silver was up 25 cents to $16.809. The 100-day average for silver stood at $16.8263 and the 200-day at $16.8256.  

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

 

BBH: Too Soon To Say If Stock-Market Bull Run Is Over

Monday February 05, 2018 08:29

The biggest developments in the capital markets lately have been the sharp drop in equities after a significant rally since late last year, along with a rise in Treasury yields, says Brown Brothers Harriman. The firm says the stock-market sell-off was an overdue correction, but also added that it’s too soon to say whether the bull market is over. “The drop in the S&P 500 has unwound about half of this year’s gains,” BBH says. The German, Swiss, and Canadian markets have fallen even more and are now down on the year.  “According to various valuation metrics, many equity markets were over-valued before last month’s rally,” BBH says. “The one-week decline, as dramatic as it may have been, is of little substantive significance. The importance lies in the signal of a shift in risk appetites and an end to the recent market phase. It is too early to conclude that the multi-year bull market is over. Discipline and prudence would advise that the initial operative assumption is that it is an arguably overdue correction.  Many accounts of the stock market rise, whether attributed to speculation or earnings growth, do not seem to fully appreciate the role of low interest rates as a discounting mechanism, as a reduction in corporate debt servicing costs, and in terms of competing assets.”

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

 

TD Securities: Return Of Volatility Is Significant Market Development

Monday February 05, 2018 08:29

Volatility is back, says TD Securities, describing this as a significant development over the past few weeks. The CBOE Volatility Index, a measure of market expectations for near-term volatility based on the S&P 500 stock-index options, posted the sharpest spike since the U.S. election over the past month. “FX vols have started to take notice as well, with high-beta currencies leading the move lower over the past week,” TDS says. “The sell-off in rates has begun to dent sentiment, which is bleeding into equities and risk appetite.” The key for the forex market may be whether the interest-rate market is selling off for “good” or “bad” reasons, TDS says. “A good rate selloff is one where rates are normalizing to match the strength of the global economy, which could keep global financial conditions loose,” TDS says. “A bad one is purely a re-pricing of the term premium where inflation starts to outpace growth. The NFP [U.S. nonfarm payrolls report] showed the latter with wages pushing higher but hours worked missing expectations.”

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