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INTL FCStone: Gold Prices May Stage 'Another Upside Push'

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Gold has risen sharply and could climb even higher, says Edward Meir, commodities consultant with INTL FCStone. Prices climbed since Federal Reserve communications on Wednesday were seen as more dovish than markets expected. For starters, the Fed’s projections suggest no rate hikes in 2019. “In the precious-metals space, we think gold (currently at $1,317, up $15/ounce) is well positioned to mount yet another upside push,” Meir says. “The last rally petered out rather disappointingly for the bulls at around $1,350, but it is not inconceivable for gold to retest that level, especially if the weak dollar/low rate/poor macro backdrop continues to persist.”

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

 

MKS: Gold Continues Ascent, Approaches Near-Term Resistance

Thursday March 21, 2019 08:43

Precious metals surged upward in Asia-Pacific trading, building on gains from Wednesday following a dovishly construed U.S. Federal Open Market Committee, says MKS (Switzerland) S.A. Gold remains stronger as the New York trading day gets under way, with spot metal up $3.70 to $1,316.10 an ounce as of 8:36 a.m. EDT. Gold has been as high as $1,319.80. “While the dollar saw some respite from the late New York declines, precious metals continued to firm as participants considered the implications of the Fed’s growth projections,” MKS says. “Gold saw the $1,310 pivot level remain intact, while seeing a generally orderly ascent throughout the session toward $1,320.” Chinese demand remains firm, MKS says. “Broadly speaking, $1,320-$1,325 will see resistance, and consolidation above this level should pave the way for a move back toward the February $1,346 print,” MKS says.

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

 

SP Angel: Lofty Palladium Prices May Start Supporting Platinum

Thursday March 21, 2019 08:43

The investment case for buying platinum may be growing as the continued ascent in palladium prices at some point may mean substitution of platinum for some palladium in auto catalysts, commodities brokerage SP Angel says. Palladium this week topped $1,600 an ounce for the first time ever. As of 8:36 a.m. EDT, spot palladium was trading $9 higher to $1,587 an ounce, while platinum was $10 stronger to $871, giving palladium a premium of $716. This has traders trying to assess when and whether lofty palladium prices will start driving demand for platinum in emissions-controlling devices, SP Angel says. Analysts note that platinum 30-day volatility has jumped to the highest level since September, with platinum prices gaining around 7% for the year so far. “The investment case for owning platinum is growing as substitution risk for palladium rises, with the current price differential creating a very compelling case for using more platinum in catalytic converters,” SP Angel concludes.

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

 

Commerzbank: ETFs Gobbling Up Excess Platinum Supplies

Thursday March 21, 2019 08:43

Investors are continuing to warm up to platinum, based on flows into global exchange-traded funds, says Commerzbank. ETFs for precious metals trade like a stock but track the price of the commodity, with metal put into storage to back the shares. “Bloomberg has reported the next big inflow into platinum ETFs; this week alone, inflows have now amounted to 113,000 ounces, and to nearly 500,000 ounces since the start of the year,” Commerzbank says. “Clearly the surplus material on the platinum market is currently being pumped into the ETFs.”

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

 

Bannockburn: Fed Policymakers Surprisingly Dovish

Thursday March 21, 2019 08:43

The Federal Open Market Committee was more dovish than expected Wednesday after a two-day policy meeting, says Marc Chandler, chief market strategist with Bannockburn Global Forex, LLC.  “The one rate hike many economists, including ourselves, anticipated was pushed into next year,” Chandler says. “The balance-sheet unwind will be taper sooner than expected, and the confirmed end in September, the earliest date expected. The Fed's forecasts reflect an economy that is perceived to be past its cyclical peak.” He notes that Fed Chair Jerome Powell described the U.S. economy as fundamentally strong. “Despite projecting above-trend growth this year and next and below 4% unemployment, with inflation remaining around the 2% target, the Fed deems it necessary to still provide monetary stimulus,” Chandler says.

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

 

BBH: Fed Stance ‘Implies Much More Concern’ Than Policymakers Are Saying

Thursday March 21, 2019 08:43

A surprisingly dovish Federal Open Market Committee on Wednesday hints at concerns about the economy and might not necessarily calm financial markets, says Brown Brothers Harriman. Analysts say the Fed’s second straight dovish surprise may have been meant to calm markets. “However, we think it will likely do just the opposite,” BBH says. “Markets often need to see confidence emanating from policymakers to feel confident as well. How can the Fed justify moving from ‘a long way from neutral’ back in the fall to the current stance that rates may go up or down? We simply do not believe the fundamental picture has changed that much.” The Fed cut its forecast for economic growth, now seeing 2.1% this year compared to a 2.3% outlook issued in December, and Fed Chair Jerome Powell described the recent economic slowdown as temporary. “If that is so, then why did the Fed revise its growth and tightening forecasts so much?  What the Fed is doing implies much more concern about the U.S. economy than what the Fed is saying,” BBH says. 

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