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FXTM: 'Gold Is Insulated From Extreme Downside Shocks'

Kitco News

While gold is softer so far Tuesday, the outlook for the metal remains favorable, says Lukman Otunuga, research analyst at FXTM. Shortly before 8 a.m. EST, spot gold was $3.90 lower to $1,323.20 an ounce. Otunuga says U.S.-China trade optimism has sent investors sprinting to riskier assets. “Although the precious metal is at risk of depreciating further in the short term amid the risk-on sentiment, the medium- to longer-term outlook swings in favor of gold bulls,” the analyst says. “For as long as geopolitical risks, concerns over plateauing global growth and speculation over the Fed taking a pause on rate hikes remain key themes, gold is insulated from extreme downside shocks.” Turning to the technical charts, the analyst says sustained weakness below $1,330 would likely to encourage a decline towards $1,318. “However, bulls still remain in control above the $1,303 higher low,” Otunuga concludes.

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

 

Commerzbank: Speculators Adding To Recent Palladium Strength

Tuesday February 26, 2019 08:12

Much of the recent strength in palladium may be buying by speculative futures traders, Commerzbank says. “After rising sharply yesterday, palladium has again achieved a new record high of $1,561 per troy ounce today,” analysts say in an early-morning research note. “Once again, the price rise is being accompanied by a high volume of trading on the futures market. Well over 10,000 contracts of 100 troy ounces were traded on each of the last five days of trading on the Nymex. That is roughly twice as much as was traded on average in the preceding days since the start of the year.” Commerzbank analysts say they do not see a fundamental justification for the sharp price increase that has occurred. “In our view, any attempt to explain it by citing possible sanctions against Russian palladium producers or the end of the trade dispute are not sufficient to justify the extent of the price rise – palladium has skyrocketed by over 80% since its August low.” Commerzbank says. “Platinum has gained noticeably in recent days, surging by almost 10% to a four-month high in the past two weeks.” Since the early-day high, the metal has backed off. Spot palladium was at $1,526.20 an ounce as of 7:54 a.m. EST

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