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Standard Chartered: $1,220 Could Be Turning Point For Gold

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Gold’s recent move back above $1,220 an ounce may signal a turning point for the precious metal, as investor buying has picked up, says Standard Chartered. Prices must still break up through a number of technical-chart levels to reach the psychologically important 1,300-per-ounce level, Standard says. “We continue to believe price risks are skewed to the upside, particularly as $1,220/oz was a key level watched by the market and it has triggered investor inflows,” Standard continues. “ETP [exchange-traded-product] buying has turned positive, and tactical positioning shows signs of recovering from 2001 lows. Should the USD [U.S. dollar] stabilize or even weaken, the macro backdrop looks more favorable for gold, particularly if its safe-haven status strengthens. Gold reasserted its safe-haven status amid Italy’s latest political woes, and last week’s equity-market weakness again stoked interest in gold.” A floor has emerged in the physical market on price dips below $1,200, Standard Chartered adds. “We expect India’s demand to firm as the Diwali holiday period approaches.”

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

 

BBH: Markets May Be Underestimating Fed’s Willingness To Tighten

Thursday October 18, 2018 08:18

Wednesday’s release of minutes from the last meeting of the U.S. Federal Open Market Committee suggests markets may have been underestimating the potential for the Fed to keep hiking interest rates, says Brown Brothers Harriman. “FOMC minutes are usually a ho-hum affair, but not this time,” BBH says. “The key takeaway is that several Fed officials are openly discussing a move to a restrictive policy.” Policymakers appear to believe that short-term neutral rate has moved above the long-term neutral rate of 3%, “which to us suggests 3.5%,” BBH says. “That in turn suggests that a restrictive rate would be in the neighborhood of 4%.  A lot can happen (a U.S. slowdown) before the Fed can ever reach that restrictive rate.  However, minutes underscore the fact that the markets are vastly underestimating the Fed’s capacity to tighten.” The Fed news could signal the start of the next leg higher in U.S. Treasury yields, BBH adds.  As of any early-morning BBH research note, the 10-year yield was trading at 3.21%, the highest since Oct. 10. “At some point, we think markets will start thinking about a fourth hike next year,” BBH says. 

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


Commerzbank: Kazakhstan, Mongolia, Poland Add Gold To Reserves

Thursday October 18, 2018 08:18

The central banks of Kazakhstan, Mongolia and Poland were noted gold buyers last month, while there was selling from countries like Turkey and Argentina that are facing a currency crisis, notes Commerzbank. Analysts cite data collected by the International Monetary Fund showing that the Polish central bank increased its holdings by a further 4.4 tonnes. Kazakhstan bought 3.7 tonnes, and Mongolia added 3.4. “By contrast, gold reserves in Turkey were reduced by 104 tonnes, though this was not necessarily due only to central bank sales [as] commercial banks are also likely to have reduced the amount of gold they hold at the central bank,” Commerzbank says. “The IMF likewise reported lower gold reserves for Argentina. Both countries are facing a currency crisis at present due to homegrown problems.” 

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

 

MKS: Gold Holding $1,220 But Could Slip If Stocks Recover

Thursday October 18, 2018 08:18

MKS (Switzerland) S.A. lists a number of technical-chart levels to watch for spot gold, which was up $2.20 to $1,224.25 as of 7:45 a.m. EDT. “Gold continues to trade resiliently above $1,220; however, could see a break toward support around $1,215 should equity markets recover markedly from recent weakness,” MKS says. “Top-side resistance initially cuts in around $1,230; however, more importantly $1,235 remains the key pivot point, while recent short positioning is likely to unwind through to $1,240.”

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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