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SP Angel: Gold ETF Holdings Rise More Than 10 Tonnes

Kitco News

Gold holdings in exchange-traded funds have continued to rise as investors await a decision and policy statement from the Federal Open Market Committee, says commodities brokerage SP Angel. U.S. President Donald Trump again “trashed convention” and urged the Fed to not hike rates, SP Angel continues. “Global [ETF] assets expanded more than 10 tonnes to the highest since July, with investors seeking havens as equities founder, and expectations of hikes in 2019 recede,” SP Angel says. “Gold snapped a six-month losing run in October, held its ground in November, and then gained this month as investors position themselves for 2019 by adding to worldwide holdings in ETFs.” Despite Truck upping the ante by appealing for the Fed to avoid making “yet another mistake” by upping rates, policymakers are still widely expected to raise borrowing costs for the ninth time since they started tightening in 2015, SP Angel says. “Gold’s been drawing demand amid expectations that U.S. hikes are now largely done, enhancing its appeal.” As of 8:20 a.m. EST, spot gold was $1.75 softer to $1,247.55 an ounce but earlier peaked at $1,251.15.

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

 

Commerzbank: Central Banks Continue Accumulating Gold

Wednesday December 19, 2018 08:47

Data compiled by the International Monetary Fund shows that a number of countries continued to buy gold for official holdings during November, says Commerzbank. The list includes Turkey with 18 tonnes and Kazakhstan with 4.4 tonnes. “The buying interest shown by central banks, particularly those in emerging economies has increased significantly this year,” Commerzbank says. “The World Gold Council envisages central bank purchases of 400-500 tonnes in 2018 (following 375 tonnes last year), so central banks again constitute an important component of gold demand.” 

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

 

BBH: Markets To Focus On Fed’s Dot-Plot

Wednesday December 19, 2018 08:47

When a meeting of the Federal Open Market Committee winds up Wednesday, traders will be closely watching the so-called dot-plot, which shows expectations for future rates by individual policymakers, says Brown Brothers Harriman. The Fed is widely expected to hike rates another 25 basis points, meaning the new range for the Fed funds rate would be 2.25% to 2.50%, BBH says. “Markets will be more interested in what the Fed sees for 2019 and 2020. In that regard, it seems likely that the dot-plots will tilt slightly more dovish,” BBH says. “However, we do not think the FOMC statement will veer much from recent Fed communications that suggest a more data-dependent path ahead.” BBH analysts say they doubt the Fed statement “will veer much more dovish” since previous comments from Vice Chair Richard Clarida and Chair Jerome Fed Powell "have already done the heavy lifting with regards to messaging, and we do not think the Fed wants to become characterized as becoming even more dovish.” Analysts look for the Fed statement to suggest more data dependency in 2019. “If this comes to pass, it would be characterized as a dovish hike,” BBH says. “The dollar would likely soften, and equities would likely catch a bid. Yet we continue to believe that markets are misreading the current macro backdrop. The U.S. economy remains firm in Q4 and we downplay the near-term risks of recession.”

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

 

MKS: Gold Nears Resistance At 200-Day Moving Average

Wednesday December 19, 2018 08:47

Gold traders will be watching to see if the yellow metal can push up through its 200-day moving average should the Federal Open Market Committee tilt more dovish after a two-day meeting ends Wednesday, says MKS (Switzerland) S.A. The committee previously indicated an expectation for three more rate increases during 2019; however, markets are looking for policymakers to scale this back and thus will be focusing on statements from Fed Chair Jerome Powell. The uncertainty lent a bid to gold during Asia-Pacific trading, MKS says. “Interest around $1,250 has turned the level into a pivot point for near-term price action…, while $1,245 should provide supportive interest underneath this level,” MKS says. “The 200 DMA at $1,253 will act as a key resistance level to further top-side gains should the Fed take a dovish skew.” As of 8:20 a.m. EST, spot gold was $1.75 softer to $1,247.55 an ounce but earlier peaked at $1,251.15.

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