Market Nuggets
Mitsubishi: Gold Helped By Geopolitical Tensions
Mitsubishi looks for gold to continue to draw some support from geopolitical tensions. Analysts note that spot metal hit a three-month high around $1,365 an ounce last week after international condemnation of a suspected chemical-gas attack in Syria. “Bullion, as well as other perceived safe-haven assets such as the [Japanese] yen and Swiss franc, hit multi-month highs amid rising geopolitical tension between the U.S. and Syria’s key allies -- Russia and Iran,” Mitsubishi says. “Just as crude-oil prices have taken strength from the current geopolitical situation, rising to a three-year high on fears of Middle East supply interruption, so too we expect precious metals to remain well supported as traditional safe havens. Following targeted air strikes by the U.S., U.K. and France, which took place on alleged chemical-weapons sites in Syria over the weekend, gold is likely to begin the new week strongly on geopolitical tensions, though such tensions can quickly be priced out of the situation eases.” Meanwhile, Mitsubishi says silver prices remain in their range from the last two months, although “with the possibility that they may break out on further geopolitical concerns.”
By Allen Sykora of Kitco News; asykora@kitco.com
Mitsubishi: Palladium Benefits From Worries About U.S. Sanctions
Monday April 16, 2018 09:05
Palladium rose 9% last week on worries about potential U.S. sanctions against key producer Norilsk Nickel, even though such sanctions may never come about since the U.S. has few alternative sources to obtain palladium, Mitsubishi says. Palladium rose 9% last week. Russia’s Norilsk Nickel is the world’s largest producer of palladium, accounting for around 40% of the world’s annual mine supply, Mitsubishi says. “While so far Norilsk Nickel itself has not been placed under sanctions, fears that the company could be sanctioned in future – and any related disruption to the palladium market – appear to have stimulated renewed investor and industrial buying interest,” Mitsubishi says. Still, Mitsubishi expresses doubt that the U.S. will impose sanctions against Norilsk, since nickel and palladium are more strategic metals than aluminum and there is limited U.S. production to cover any supply gaps. “Around a third of U.S. demand for palladium currently comes from metal imported directly from Russia, and Russian-branded metal is important in global supply chains for auto catalysts and other fabricated products,” Mitsubishi says. “A ban on trading with Norilsk, or Norilsk-branded metal, would have profound implications for global carmakers and other industrial users, and the risk of damage to U.S. industry from this may stay the hand of the Treasury Department. Nonetheless, the tail risk of this occurring in the current uncertain climate still remains and should keep palladium prices well bid as industrial users and investors alike move to secure their requirements.” As of 8:57 a.m. EDT, spot palladium was $12.15 higher to $999.15 an ounce.
By Allen Sykora of Kitco News; asykora@kitco.com
Commerzbank: ETF Gold Holdings Rise During April
Monday April 16, 2018 08:25
Gold holdings in global exchange-traded funds are higher so far in April, Commerzbank says. This means investors want increased exposure to the precious metal. The ETFs trade like a stock but track the price of the commodity, with metal put into storage to back the shares. “ETF investors are slowly beginning to show increased buying interest in response to the geopolitical risks and resulting uncertainty,” Commerzbank says. “Gold ETFs saw inflows of 16.6 tonnes last week and of no less than 36 tonnes since the beginning of the month. This is already nearly twice as much as in the whole of March.”
By Allen Sykora of Kitco News; asykora@kitco.com
BBH: Syria Strikes Unlikely To Have Major Impact On Capital Markets
Monday April 16, 2018 08:25
Weekend military strikes by the U.S. and others against Syria may not have a great impact on markets, plus there has been a “respite” in trade tensions, although the latter continue, says Brown Brothers Harriman. “The weekend strike by the U.S., British and French forces against Syria appear to have been conducted in ways that minimize the risks of escalation by Russia,” BBH says. “The limited nature of the strike and objectives suggest that the impact on the constellation of forces in Syria will be minimal. There is unlikely to be much of an impact in the global capital markets, though thin markets in early Asia could see a knee-jerk effect. The fact that strike took place may lift some uncertainty seen ahead of the weekend.” Meanwhile, BBH says trade tensions remain high but there appears to be a “respite,” as U.S. President Donald Trump “has chosen to hear a conciliatory tone by President Xi last week and went as far as suggesting that perhaps tariffs might not be implemented. NAFTA negotiations are proceeding. Trump also instructed his top economic and trade advisers to look into possibly joining the Trans-Pacific Partnership, which the 11 remaining members signed an agreement last month.”
