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RBC's Gero: Gold Up On Bargain Hunting But Interest Rates Are Concern

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Gold has ticked modestly higher early Wednesday as some market participants use the recent price plunge as a buying opportunity, says George Gero, managing director with RBC Wealth Management. As of 9:14 a.m. EST, Comex April gold was $1.30 higher to $1,319.90 an ounce but earlier traded as high as $1,322.60. “Small bargain hunters this morning after yesterday’s selling triggered by Fed’s Powell…and outlook for rate hikes, which are headwind for gold,” Gero says. He was referring to congressional testimony from new Fed Chair Jerome Powell, who signaled a continued gradual rate-hiking approach. “Rate hikes are a double trouble as they make gold more expensive in dollar terms and present alternate interest bearing assets,” Gero adds. 

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

 

INTL FCStone: Precious Metals Stabilize But ‘Vulnerable’

Wednesday February 28, 2018 09:36

Precious metals have stabilized Wednesday but remain “vulnerable” after Tuesday’s heavy sell-off, says Edward Meir, commodities consultant with INTL FCStone. As of 9:14 a.m. EST, Comex April gold was $1.30 higher to $1,319.90 an ounce after falling by $14.20 on Tuesday. May silver was 1.6 cents higher to $16.45. “Precious metals got hit hard yesterday in the wake of stronger dollar and rising bond yields, but seem to be holding their ground today, although we still see them as being vulnerable in the short term,” Meir says.

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

 

Metals Focus: Silver Output In Mexico, Peru To Grow Further

Wednesday February 28, 2018 08:22

Silver production is likely to keep growing in key producing nations Mexico and Peru, says Metals Focus. Analysts from the consultancy made a research trip to the countries. Mexican output rose by an estimated 5% last year while Peruvian production rose 1%, compared to a 4% decline in global output, Metals Focus says. “Feedback from our contacts reaffirmed their optimism about silver production in the coming years, as a few new mines are expected to come on stream and many we spoke to are keen to explore new projects both domestically as well as in other parts of Latin America,” Metals Focus says. “In some cases, this reflects the still-healthy margins for primarily silver mines. Meanwhile, silver is also expected to benefit from the recovery in the base-metal sector.

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

 

BBH: Market Moves To Fully Factor In Third U.S. 2018 Rate Hike

Wednesday February 28, 2018 08:22

Tuesday’s congressional testimony by Federal Reserve Chair Jerome Powell prompted the financial markets to factor in three rate hikes this year, but not four, says Brown Brothers Harriman. “Many market participants think they heard Fed Chair Powell give a fairly strong signal that he favored a more aggressive course,” BBH says. “The implied yield on the December Eurodollar futures rose five basis points to 1.535%. The December Fed funds futures contract rose three basis points. The market moved not to pricing in a fourth hike this year, but to fully price in the third hike, which the December dot-plots implied. A third hike would bring the effective Fed funds rate to 2.17% and the implied yield of the January 2019 Fed funds futures contract is 2.155%. It took Powell's apparent comfort with a more aggressive path to convince the market of something the Fed's dot-plot indicated more than two months ago.”  

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

 

Commerzbank: China’s Gold Imports From Hong Kong Rise

Wednesday February 28, 2018 08:22

The approach of Chinese New Year festivities helped boost China’s gold imports from Hong Kong last month, says Commerzbank. Analysts cite Hong Kong data showing China imported a net 51.6 tonnes of gold from Hong Kong in January. “This was approximately 20 tonnes more than in December and than in last January, as well as the highest import figure in six months,” Commerzbank says. “One role was probably played by the Chinese New Year’s Festival, ahead of which jewelers doubtless topped up their stocks.”

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

 

FXTM: Key Chart Level For Gold Lies At $1,324.15

Wednesday February 28, 2018 08:22

Gold needs to reclaim failed support at $1,324.15 an ounce for the bulls to regain their footing, says Lukman Otunuga, research analyst at FXTM. The metal came under heavy selling pressure on Tuesday due to a stronger dollar. “The yellow metal’s downside was fueled by hawkish remarks from Federal Reserve Chairman Jerome Powell, which heightened speculations of higher U.S. interest rates this year,” Otunuga says. He describes the technical charts as now bearish for gold, with prices below the 50-day simple moving average, while moving average convergence/divergence has crossed to the downside. “Previous support at $1,324.15 could transform into a dynamic resistance that encourages a decline to $1,310 and $1,300, respectively,” Otunuga says. “For bulls to jump back into the game, gold prices need to break back above $1,324.15.”

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