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Standard Chartered: Trade-War Fears Put Floor Under Gold

Kitco News

Worries about a trade war halted the slide in gold last week that had threatened to carry prices below $1,300 an ounce, says Standard Chartered. “Expectations of a steeper hiking trajectory have weighed on gold, coupled with a stronger USD [U.S. dollar], but gold also caught a safe-haven bid on the back of the uncertainty surrounding the possibility of a global trade war,” the bank says. “Rising inflation expectations could lift prices longer term but hedging against heightened geopolitical tensions is more likely to provide a short-term price lift.” Analysts are referring to a Trump administration announcement that officials are considering a 10% tariff on imported aluminum and 25% tariff on steel. Spot metal early Wednesday climbed as high as $1,329.55 an ounce, its most muscular level this month so far, before backing down to $1,331.20 around 8:47 a.m. EST.

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

 

Standard Chartered: Diesel News ‘Stubborn Hurdle’ For Platinum

Wednesday March 07, 2018 08:50

Negative news reports about diesel-powered vehicles are a “stubborn hurdle” for platinum for now, but the metal is likely to hold up over the longer term, says Standard Chartered. As of 8:42 a.m. EST Wednesday, spot metal was down $8.65 at $960.20 an ounce after last trading above $1,000 on Feb. 27. On that day, a German court ruling allowed cities to ban diesel vehicles showed that platinum prices remain highly sensitive to diesel air-pollution headlines, Standard Chartered says. The metal is used for catalytic converters in diesel-powered vehicles. The bank says its European auto-catalyst demand forecast for platinum is almost 200,000 ounces lower than the forecast two years ago mainly due to diesel engines’ falling market share. “Further exacerbating demand for platinum this year is the projected lower loadings due to 6d-TEMP regulations that are expected to drive a shift towards non-PGM [platinum group metals] technology,” Standard Chartered says. “However, we believe the floor is better supported than previously for several reasons: increasing price-elastic demand emerging from China’s jewelry sector; fuel-cell vehicles gaining traction, albeit from a low base; the heavy-duty diesel sector is set to grow in India and China; and perhaps most importantly, CO2 emissions have risen in markets where diesel is losing market share, thus in order to meet targets, diesels will not be entirely neglected. We see some downside risk to near-term prices, but expect platinum to be trading back above $1,000/oz on a more sustained basis in H2.”

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

 

BBH: Investors Anxious Over Renewed Threat Of Trade War

Wednesday March 07, 2018 08:50

The resignation of White House chief economic advisor Gary Cohn has “sent ripples through the capital markets,” says Brown Brothers Harriman. Analysts call him one of the few "globalist" advisers in the administration. “Stocks have been marked down across the world,” BBH says. “The prospects of a trade war are also not good for growth and it may be adding to the pressure on yields.” BBH cites two consequences of Cohn’s resignation. “As Cohn goes, so does the last-ditch effort of forces within the administration seeking to deter the tariffs,” BBH says. “Treasury Secretary [Steve] Mnuchin seems more supportive, though probably would have preferred a more targeted approach. The industry summit Cohn was trying to arrange has been canceled. That means that Congress is the next potential check on the unilateral trade power of the executive, which has largely been transferred from the legislative branch. Second, we suspect that investors are also responding to the implications for future trade policy. It means that the Ross and Navarro wing will set the tone. This signals a more confrontational and aggressive trade policy.” 

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