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Eureka Mining Report's Baker: The Good, Bad And Ugly

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Richard Baker, editor of the Eureka Miner Report, sees potential for gold to keep rising in the wake of the most recent round of global economic data. “The good and the bad this week are reflected in this morning's February jobs report; we find ugly far from our shores,” Baker says. “Low [U.S.] headline unemployment and strong wage growth suggest a vibrant domestic economy. The bad part is a big miss on jobs added (by separate survey) supporting notions that the economy is indeed slowing.” Meanwhile, he says, China and Europe both had “ugly” economic numbers, and European Central Bank President Mario Draghi expressed concerns about the continent’s economy Thursday as the ECB reintroduced stimulus measures. Overall, gold did not move much this week. The metal fell near the $1,280 level Thursday but then tested $1,300 after Friday’s job report. “Importantly, gold made solid value gains relative to equities and commodities for the week,” Baker says. “This is a bullish for more gains next week as 10-year real rates still remain below 1%.” 

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

 

Price Group's Flynn: Economic Worries Underpinning Gold

Friday March 8, 2019 10:02

Phil Flynn, senior market analyst with at Price Futures Group, looks for gold to keep rising as long as markets are looking at the proverbial glass of water as half empty, or in this case fretting over weak economic data and ignoring the good. Gold is higher on Friday on growing concerns about a global economic slowdown, particularly after European Central Bank President Mario Draghi on Thursday expressed concerns about the European economy. “Gold is getting a safe-haven rally today and it should continue into next week,” Flynn says. He also cites the soft U.S. jobs report, with nonfarm payrolls rising only 20,000 in February. However, Flynn cautions, hiring may have been crimped by cold weather in much of the nation, thus may have looked weaker than otherwise would be the case. Furthermore, housing starts rose sharply in January. Still, traders are focusing more on the disappointments at the moment, Flynn continues, and this works to the benefit of gold. “The market is looking at the glass as half empty right now,” Flynn says. As of 9:51 a.m. EST, Comex April gold was $9.70 higher to $1,295.80 an ounce.

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

 

SP Angel: China’s Central Bank Becoming Major Gold Buyer Again

Friday March 8, 2019 09:03

Now that China’s central bank has resumed buying gold, the country may be on pace to become the second-largest official-sector buyer behind Russia, says commodities brokerage SP Angel. Analysts cite data on the People’s Bank of China website showing that holdings increased to 60.26 million ounces in February from 59.94 million a month earlier. “In response to a falling global outlook, China has expanded its gold reserves for the third consecutive month, putting the Asian nation on track to be the biggest buyer after Russia,” SP Angel says. Analysts later add, “Last month’s inflow of 9.95t [tons] follows the addition of 11.8t in January and 9.95 tons in December, when buying restarted after a two-year pause. Russia leads the pack among central banks, taking in 274.3t in 2018. China’s decision to boost purchases comes amid signals of slowing domestic growth and a transition to diversify total reserves away from the U.S. dollar, which has counterparty risk.” SP Angel analysts cite World Gold Council data showing that China’s gold holdings are the sixth-largest by country, but account for only 2.4% of China’s reserves, compared with more than 70% in Germany and the U.S.

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

 

RBC's Gero: Gold Bounces From 'Oversold Territory'

Friday March 8, 2019 09:03

Gold is continuing its comeback from the 2019 low on Thursday, getting further help from Friday’s U.S. jobs report for February, says George Gero, managing director with RBC Wealth Management. As of 8:46 a.m. EST, Comex April gold was $11.50 higher to $1,297.60 an ounce. The metal is bouncing from “oversold territory,” with some of the buying in the form of short covering, Gero says. Weak global economic data are also helping, he adds. In the U.S. Friday morning, the Labor Department reported a rise of only 20,000 nonfarm jobs during February, when expectations were for around 180,000. “This could be a good support for gold,” Gero says, explaining this means less chances of Federal Reserve rate hikes.

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

 

CIBC: Feb. U.S. Jobs Data Weak But Fed May Consider ‘One-Off’

Friday March 8, 2019 09:03

CIBC says the Federal Reserve is likely to treat the weak February jobs report as an aberration and only worry if the pattern continues in future months. U.S. nonfarm payrolls rose by a paltry 20,000 in February. “Coming off the back of such a strong January print, there was always the risk of a disappointing February job gain,” says Andrew Grantham of CIBC Economics. “However, the mere 20K increase in total non-farm payrolls was even weaker than we had anticipated, and puts a question mark over just how resilient the labor market is and how supportive household income growth will be in driving a pick-up in consumer spending.” Still, Grantham describes some of the details of the report as encouraging, such as the unemployment rate dipping to 3.8% from 4% in January and wages rising by an above-consensus 0.4% for the month and 3.4% year-over-year. “The U.S. dollar will likely trade lower and short-term yields could fall on the back of the large jobs surprise,” Grantham says. “However, given the recent volatility in the data, the Fed will likely discount this as a one-off and only begin to worry if we see some more weaker results in the months ahead.”

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