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FXTM: Gold 'Likely To Witness Further Downside' With Dollar Strong

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Gold could weaken further as the metal reacts to a stronger U.S. dollar, says Lukman Otunuga, research analyst at FXTM. The yellow metal fell on Tuesday as the greenback flexed its muscles. “The heavily bearish price action witnessed on the yellow metal confirms how its trajectory remains heavily influenced by the dollar’s performance and U.S. rate-hike expectations,” the analyst says. “With the dollar likely to remain supported by safe-haven flows and expectations of a rate hike in December, gold is likely to witness further downside. Sustained weakness below $1,214 could inspire a move back towards the psychological $1,200 level.” As of 8:30 a.m. EST, spot gold was $1.30 softer at $1,213.30 an ounce.

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

 

BBH: Fed Leaves Markets Expecting December Rate Hike

Wednesday November 28, 2018 08:36

The Federal Reserve has done nothing to dissuade markets from thinking that it will hike interest rates again in December, says Brown Brothers Harriman.  “Rather, the adjustment in market expectations has taken place further out,” BBH says, referring to scaled-back expectations for rate hikes in 2019. Traders will be closely scrutinizing remarks Wednesday from Fed Chair Jerome Powell. “His comments will be the most closely watched in light of perceived dovish comments earlier this month that helped significantly reset market Fed expectations,” BBH says. “Of course, he will be asked about [U.S. President Donald] Trump’s criticism, but Mr. Powell is unlikely to take the bait.  We see zero chance that Fed policy will be impacted by such criticism.” BBH adds that Fed Vice Chair Richard Clarida on Tuesday sounded less dovish than in a previous appearance.  “He said gradual hikes are called for since the neutral rate is uncertain,” BBH says. “Clarida added that he’d adjust the policy outlook if inflation moves above target. This is a balanced viewpoint.”

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

 

Commerzbank: ‘We Cannot Understand’ Gold’s Recent Weakness

Wednesday November 28, 2018 08:36

Analysts with Commerzbank say “we cannot understand why” gold fell Tuesday considering the political and geopolitical risks, especially with the “increasingly belligerent rhetoric” between Ukraine and Russia. U.S. President Donald Trump has raised doubts about whether a meeting with Russia’s president will occur during an upcoming Group of 20 summit, which “should really add to the uncertainty,” Commerzbank says. Analysts says Trump’s most recent remarks criticizing the Federal Reserve included “pithy language,” with Trump saying that the Fed is “a much bigger problem than China” and adding that he is “not even a little bit happy” that he chose Powell as the central bank’s chairman. “This was also water off a duck’s back to gold, however,” Commerzbank says. “Gold was pulled down by the firm U.S. dollar, which appreciated when the Fed’s Vice Chair [Richard] Clarida talked yesterday of a gradual normalization of monetary policy.”

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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