Make Kitco Your Homepage

Commerzbank: Gold Below 100-Day Average, Could Dip Some More

Kitco News

Editor's Note: Get caught up in minutes with our speedy summary of today's must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

Gold’s recent losses accelerated as the market fell below the 100-day moving average and there could be more downside in the near term as sentiment toward so-called risk assets improves, says Commerzbank. Spot metal fell to $1,272.70 an ounce Tuesday, its weakest level of the year to date. It had since bounced to $1,276.05 as of 8:27 a.m. EDT, but was still down 85 cents for the day. “Yesterday’s price slide saw gold shed all of the gains it had accrued since the start of the year,” Commerzbank says. “We attribute the price fall yesterday to technical selling after the price dropped below the technically important 100-day moving average.” There were further outflows from exchange-traded funds, the bank adds. “We do not understand why the gold price should be weak given the very loose monetary policy pursued by many Western central banks – apparently the ECB [European Central Bank] is even considering price-level targeting. That said, we do see a further short-term downside risk for the gold price in the current market environment, which is characterized by extreme complacency among market participants and increased risk appetite.”

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

 

SP Angel: Gold Remains Softer As Chinese Data Aid Risk Sentiment

Wednesday April 17, 2019 08:58

Gold remains near the 2019 lows as global equities hold near six-month highs on renewed optimism about global growth after China’s economy unexpectedly held up in the first quarter, says commodities brokerage SP Angel. China’s growth domestic product rose 6.4% in the December-March period. “China’s first-quarter GDP figures out Wednesday exceeded economist estimates, and March retail sales and industrial production were also better than expected,” SP Angel says. “That’s easing concerns about a slowdown that had rattled investors. Technical indicators for gold also signal bearing trends, with the metal breaking below its 100-day moving average.” As of 8:27 a.m. EDT, spot gold was 85 cents softer to $1,276.05 an ounce after hitting a 2019 low of $1,272.70 on Tuesday.

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

 

Metals Focus: UAE Gold Market Faces Continuing Challenges

Wednesday April 17, 2019 08:58

Many of the challenges for the United Arab Emirates’ gold market last year have carried over into 2019, say analysts with Metals Focus after attending a precious-metals conference in the country. Factors hurting the local gold-jewelry market included the introduction of a 5% value-added tax at the start of last year, the high costs of doing business, consumers’ changing buying behavior, increasing competition from consumer electronics and fashion jewelry, and job-security concerns, Metals Focus says. "The levying of VAT hit tourist buying from India, as the arbitrage between there and Dubai collapsed," the consultancy says. "The issue of ongoing job insecurity was one of the main factors for purchases by locals and rising dollar gold prices were also seen as a clear negative. Thankfully, falling rental prices offered some relief on household budgets." The UAE approved refunds for tourists of most of the VAT. However, many buyers from India are reluctant to collect on this because they want to remain anonymous. "Their chief concern has been that their personal information would be shared with Indian tax authorities and their gold seized at the border entry points," Metals Focus says. "In addition, their purchase could lead to scrutiny of their wealth versus reported income." Still, despite the challenges, Metals Focus is "cautiously optimistic" that Dubai will remain a key Middle East market as "industry participants increasingly try to devise ways individually and through cooperation to respond to some of the challenges that the whole industry faces."

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

 

MKS: Fib Level, 200-Day Average Next Support For Gold

Wednesday April 17, 2019 08:58

A Fibonacci retracement level and the 200-day moving average are the next key support levels for gold, says MKS. The metal is slightly softer early Wednesday, even though the Chinese on-shore premium extended toward $22 overnight. Gold has now made a “clean break” below the 100-day moving average of $1,289.50 an ounce, MKS says. “With regards to further supports, we see the 38.2% Fib retracement of the August 2018-to-February 2019 run higher at $1.275.95, while below this the 200 DMA cuts in at $1,250.55.” As of 8:27 a.m. EDT, spot gold was 85 cents softer to $1,276.05 an ounce.

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

 

BBH: 'Any Notions Of Fed Easing This Year Are Way Overdone'

Wednesday April 17, 2019 08:58

Any market expectations of the Federal Reserve cutting interest rates this year are “overdone,” with Treasury yields ticking higher, says Brown Brothers Harriman. “The U.S. economy looks to be in much better shape this year than previously thought,” BBH says. “That in turn has pushed U.S. interest rates back up. Today’s 10-year yield of 2.61% is the highest since March 20, likewise for the two-year yield of 2.42%.  The three-month to 10-year curve has steepened to 19 bp [basis points], the steepest since March 14, as the U.S. bond market is finally catching up to the U.S. equity market in signaling reduced recession risks.  Indeed, we believe that any notions of Fed easing this year are way overdone.  When market expectations readjust to a less dovish take on the Fed, the dollar rally should gather more steam.”

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.