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Standard Chartered: Geopolitical Risks Could Trigger Short Covering In Gold

Kitco News

Geopolitical risks, such as those surrounding Italy, could trigger a short-covering rally in gold, says Standard Chartered. Prices rose sharply Tuesday, helped by Italy’s fiscal and political issues, before falling back around $1,200 again on Wednesday. Still, Tuesday’s rally shows that gold “remains on investors’ radar” during times of uncertain geopolitical developments, Standard Chartered says. “As we have highlighted previously, positioning is overextended in gold, with gross shorts [bearish positions] close to record highs…,” Standard says. “If a geopolitical catalyst boosted prices above the 100-day moving average, a significant short-covering rally could push prices up towards $1,300/oz.” Short covering is when bearish traders buy to get out of existing positions. “Seasonal demand for gold, alongside central-bank buying, has offset some of the weakness on the investor side, and should start to limit the downside for prices; but greater support is likely to come from a stable USD [U.S. dollar],” Standard says.

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

 

Commerzbank: Gold ETFs Report Outflows So Far In October

Thursday October 4, 2018 08:53

Commerzbank reports that investors are continuing to move out of gold-backed exchange-traded funds early in the fourth quarter. The ETFs trade like a stock but give investors exposure to the price of gold, with metal put into storage to back the shares. “The gold ETFs tracked by Bloomberg have seen outflows of 14.5 tonnes since the start of the month,” Commerzbank says. “Apparently investors still do not see gold as an attractive investment alternative.”

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

 

BBH: Dollar Remains Strong As Yields Enter New Phase

Thursday October 4, 2018 08:53

A rally in the U.S. dollar remains intact as Treasury yields reach higher ground, says Brown Brothers Harriman. As of 8:24 a.m. EDT, the December U.S. dollar index was up 0.119 point to 95.525. “The rise in U.S. yields has entered a new phase,” BBH says. “After being unable to break much above 3.10% this past month, the 10-year yield shot up to 3.19% yesterday. Today has seen a continuation of this, with yields trading as high as 3.23% before stalling. This is the highest rate since May 2011.” The strength in yields was helped Wednesday by stronger-than-expected U.S. data, including the ADP report on private-sector payrolls and the employment component of a report from the Institute for Supply Management, BBH adds.

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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