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Commerzbank: Gold Would Benefit If Fed Hints At 'More Gradual Approach'

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Gold could get a lift if Federal Reserve Chair Jerome Powell and his fellow policymakers are more dovish than the market might be expecting, says Commerzbank. The Federal Open Market Committee begins a two-day policy meeting Tuesday. Another rate hike of 25 basis points is expected and thus such a move would be unlikely to have any noticeable impact on the gold price, Commerzbank says. “What Fed Chair Powell says at the subsequent press conference will have far more of a bearing. Some Fed representatives had raised the prospect in recent weeks of further rate hikes, which has been pressuring gold. If Powell now indicates a more gradual approach, on the other hand – the key rate is nearing what is viewed as a neutral level, after all – the gold price is likely to rise.” Should this happen, there likely would be short covering by speculators in the futures market, the bank says. This is when traders with short, or bearish, positions start buying to exit their trades.

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

 

Mitsubishi: Palladium Helped By Receding Trade Concerns; Threat Remains

Tuesday September 25, 2018 08:40

Palladium prices rose sharply last week and are adding to those gains slightly so far this week, but Mitsubishi cautions that ongoing trade tensions remain a threat to a market that is otherwise tight. Spot palladium has traded as high as $1,059.35 an ounce so far Tuesday, its strongest level since February. The metal posted its highest weekly close since February last week as fears over trade tensions receded, Mitsubishi says. “This occurred against the backdrop of an extremely tight market, with palladium well bid by industrial users and a further squeezing of supplies with reports of a fire at a European refinery,” Mitsubishi says. “The easing of the dollar to a two-month low also helped palladium prices, as did the rally in base metals and equities.” The trade war remains a danger to the metal, however, Mitsubishi explains. Analysts say that “if China’s economy slows because of the trade war – the Shanghai stock market is down 20% in the year to date, there are signs that GDP [gross-domestic-product] growth is slowing – should China sneeze, then the not only would domestic demand for palladium fall, but the rest of the world could catch a cold.” The main industrial use for the metal is catalysts for gasoline-powered automobiles, which as popular in the U.S. and China, the two biggest car markets in the world.

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

 

MKS: Gold Range-Bound Ahead Of FOMC Meeting

Tuesday September 25, 2018 08:40

Gold remained range-bound in overseas trading during the night, with “participants seemingly happy to sit on the sidelines and await the results from the upcoming FOMC meeting,” says MKS (Switzerland) S.A. Federal Open Market Committee policymakers are widely expected to hike U.S. interest rates by another 25 basis points Wednesday, with traders focusing on Fed commentary for clues on future tightening. “China returned from Monday’s holiday and provided little in the way of price direction as USD/China held relatively stable to keep the on-shore premium towards USD $6-$7,” MKS says. “Participants remain on the offer through $1,200 to cap any tests above the figure, while interest toward $1,192-$1,195 continues to provide support.” Around 8 a.m. EDT, spot gold was $2.80 higher to $1,201.60 an ounce.

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

 

BBH: U.S. Dollar Sideways Ahead Of Fed Meeting

Tuesday September 25, 2018 08:40

The U.S. dollar is not moving much while traders await the outcome of a Federal Open Market Committee policy meeting on Wednesday, says Brown Brothers Harriman. The greenback affects base and precious metals alike, as they have a tendency to move inversely to the U.S. dollar. “The dollar is trading largely sideways as the two-day FOMC meeting begins today,” BBH says. “A decision to hike rates 25 bp [basis points] tomorrow pretty much seen as a sure thing, and the U.S. 10-year yield is trading today at a new high near 3.11%. Markets will instead be focused on the forecast revisions and dot-plots [graph with expectations of individual Fed officials].  That said, we suspect there will not be any significant changes to either in light of [Fed Chair Jerome] Powell’s more cautious stance at Jackson Hole last month.”

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

 

CME Group: Copper Options Post Record For Volume

Tuesday September 25, 2018 08:40

CME Group reports that Comex copper options volume hit a record daily high of 8,089 contracts (91,727 metric tons) on Friday. This was nearly double the previous record of 4,255 contracts (48,250 metric tons) set on July 5. Copper options average daily volume has grown nearly 340% to 1,260 contracts (14,288 metric tons) per day for the year to date based on increased customer demand, especially outside the U.S., CME Group says. More than 20% of copper options trading volume today comes from global participants during non-U.S. trading hours. Open interest, the total number of open positions in any market, topped 31,000 contracts (351,535 metric tons) for copper on Friday. This is an increase of more than 175 percent since the start of the year, CME Group says.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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