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BMO: Strong Dollar Pushes Gold To Six-Week Low

Kitco News

Spot gold has hit a six-week low as the U.S. dollar benefits from strong U.S. economic data, says BMO Capital Markets. “Gold prices are trading towards six-week lows as a stronger dollar was buoyed by upbeat U.S. economic data as spot prices trade towards $1,181/oz early on this morning,” BMO says. “Building on momentum from Wednesday's Fed rate hike, yesterday saw the release of initial jobless claims as well as final Q2 GDP [second-quarter gross-domestic-product] data, which both supported a bullish outlook for the U.S. economy, pushing the dollar almost 1% higher against a basket of currencies this week.” Global exchange-traded-fund holdings of gold have declined by almost 5 million ounces since May, while spot prices have lost 13% since April and have struggled to hold above $1,200/oz, BMO says. As of 8:01 a.m. EDT, spot gold was up 20 cents to $1,182.60 an ounce after bottoming at $1,181.05.

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

 

Commerzbank: Weak Gold Price Vs. Euro Is ‘Mystery’

Friday September 28, 2018 08:06

Gold remains under pressure as the U.S. dollar firms in the wake of robust U.S. economic data and renewed budget uncertainty in Italy, says Commerzbank. However, analysts are puzzled that the precious metal was weak in euro terms on Thursday. Gold has been as soft as $1,181.05, its weakest level since mid-August. “While this is understandable to some extent in view of the USD [U.S. dollar] strength, it is becoming increasingly difficult to explain the weakness of the gold price in euros,” Commerzbank says. “In the budget for next year that it presented yesterday, the Italian government is targeting a deficit of 2.4%. This is well above the target agreed with the EU [European Union], and has resulted today in a sharp rise in yields on Italian government bonds. Italy could thus trigger a new debt crisis, as can be seen from the significant depreciation of the euro against the U.S. dollar. It is a mystery why the gold price in euros dropped to its lowest level since early 2016 nevertheless.”

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

 

MKS: Gold ‘Susceptible To Post-FOMC Greenback Strength’

Friday September 28, 2018 08:06

Gold remained soft in overnight trading, in particular vulnerable due to strength in the U.S. dollar since Wednesday’s meeting of the Federal Open Market Committee, says MKS (Switzerland) SA. “Dollar strength continues to be the main driver of downward pressure on prices, with a mild bid tone out of China reversed in late-afternoon trade as the greenback extended higher,” MKS says. “Shanghai saw the metal toward an $8 premium to provide underlying supportive price action; however, sellers soon wrestled back control to see the yellow metal ease through the New York low print as Europe filtered in. Bullion continues to be susceptible to post-FOMC greenback strength as well as month/quarter end USD demand, pressuring the metal toward support at $1,180, with risks extending through $1,172 to the August low print of $1,160.” MKS notes that a Chinese holiday next week will remove physical interest from the market during Asian trading hours. As of 7:53 a.m. EDT, spot was 15 cents lower to $1,182 an ounce.

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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