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Commerzbank: Gold To Benefit Long Term From U.S. Election Outcome

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Gold may well benefit two ways from U.S. midterm elections, says Commerzbank. Democrats won control of the House of Representatives, although Republicans maintained the Senate. This presumably will put an end any further tax cuts, “which means in the longer term that the Fed will need to implement fewer rate hikes, which per se will have a negative impact on the U.S. dollar,” Commerzbank says. “U.S. President Trump may instead focus more on foreign policy, which is likely to generate additional uncertainty. Gold would profit long term from both factors.”

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

 

BBH: U.S. Election Best Outcome For Markets

Wednesday November 07, 2018 09:05

Democratic control over the House of Representatives will provide a check to keep Republicans from continuing to increase the budget deficit, and the Federal Reserve is likely to hike interest rates, says Brown Brothers Harriman. Democrats won control of the House in midterm elections Tuesday, while Republicans kept the Senate. This was the outcome markets had factored in and may be the best for markets, BBH says. “Why? The legislative branch will now fulfill one of its most important functions, which is to provide checks and balances on the executive branch,” BBH says. The U.S. fiscal stance and macroeconomic outlook remain intact, meaning the Fed will feel comfortable continuing to hike U.S. interest rates, BBH says. “We have expressed serious concerns about the U.S. fiscal outlook,” BBH says. “As it currently stands, the budget deficit is widening even as the U.S. economy is growing robustly. Another shot of fiscal stimulus would be ill-advised, and the split Congress means that is now very unlikely.” BBH looks for wage and price pressures to keep rising, leading the Fed to tighten in December, followed by at least three hikes in 2019.

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

 

TDS: Gold May Not Benefit From CTA Buying Yet; Palladium Interest Fades

Wednesday November 07, 2018 09:05

Commodity Trading Advisers are not rushing into gold yet even though the metal rose as the U.S. dollar eased after midterm congressional elections, TDS says. There is a risk of CTA selling of palladium, however, the firm adds. Around 9 a.m. EDT, spot gold was $1.50 higher to $1,228 an ounce. The spot U.S. dollar index was down 0.513 point to 95.804. “While the market will likely continue to assess the potential market impact of the midterms, we suspect that precious-metal buyers will not receive any substantial support from CTAs [Commodity Trading Advisers] for the time being,” TDS says. “We estimate that CTA buying interest in palladium is fading, and are keeping a close eye on the $1,070/oz range as a break below would imply substantial flow to the downside. In contrast, CTAs could turn to modest buyers in sister-metal platinum should prices break the $900/oz range as momentum signals reverse.”

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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