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Commerzbank Sees $1,300 Gold By End Of 2018

Kitco News

Commerzbank analysts do not feel gold’s weakness has been justified by the fundamental backdrop and look for the metal to reclaim $1,300 an ounce by year end. “We see no real fundamental reason why the gold price should be having a hard time, given the numerous risks to the economy and financial markets,” they say in a research note. “The possibility of a disorderly ‘Brexit,’ a further escalation of the already acrimonious trade dispute between the U.S. and China, and the problems in the euro zone should really increase demand for gold as a safe haven.” The U.S.-China trade conflict is likely to slow business activity, which in turn argues against significant tightening of interest-rate policy by the Federal Reserve, Commerzbank says. “What is more, it could also accelerate consumer price inflation, which suggests very low or even negative real interest rates, and thus creates a favorable environment for gold as a means of capital preservation,” Commerzbank says. Gold fell for the sixth straight month in September, the longest losing streak since 1997, Commerzbank notes. However, “we believe the tide will soon turn for gold and envisage a potential price of $1,300 per troy ounce by year’s end.”

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

 

FXTM: ‘Bears Remain In Firm Control’ Of Gold Market

Monday October 1, 2018 08:42

Bears remain in control of the gold market for now, and the U.S. dollar will be the key influence for the yellow metal during the remainder of the year, says Lukman Otunuga, research analyst at FXTM. The analyst says the metal fell 4.9% during the third quarter due to a number of factors, including the rising interest-rate environment, robust U.S. economic growth and strong U.S. equity markets. “However, the major culprit behind gold’s painful downfall remains a broadly stronger dollar, and this continues to be reflected in price action,” Otunuga says. “As we head into the final quarter of 2018, investors may continue shunning gold in favor of the dollar, which has become the go-to-currency in times of global trade uncertainty.” Developments in emerging-market economies, which are the biggest physical gold buyers, also play a key role in gold’s fortunes, the analyst continues. When these currencies tumble, buyers in these nations lose purchasing power. “Focusing purely on the technical outlook, gold remains depressed and unloved on the monthly timeframe with prices trading within a bearish channel,” Otunuga says. There have been lower lows and lower highs since prices fell below $1,300 back in May, and with prices ending the third quarter below the $1,200 psychological level, “bears remain in firm control,” Otunuga continues. “Previous monthly support is likely to transform into a dynamic resistance that encourages a decline towards $1,160 and $1,150, respectively.”

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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