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INTL FCStone: Gold 'Frustratingly Range-Bound' During Trade Dispute

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INTL FCStone says gold remains “frustratingly range-bound” despite escalating trade friction between the U.S. and China. Not only did the latest round of trade talks wrap up without an agreement last week, but the U.S. is moving ahead with plans to hike tariffs on many Chinese imports. This has pressured global equities, although the dollar has remained well supported, particularly against China’s currency. “In the precious-metals arena, we would've expected gold to perform much better during much of last week when equity markets were under pressure,” INTL FCStone says. “Instead, the precious metal has been frustratingly range-bound, with prices trading between a $15/ounce band for much of the week.” Shortly after 9 a.m. EDT, Comex June gold was $6.40 higher to $1,293.80 an ounce.

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

 

BMO: Substitution To Platinum Won’t Be Easy But Likely To Occur

Monday May 13, 2019 08:23

Despite palladium’s price premium over platinum, a switch from palladium to platinum in auto catalysts will not be an easy one, says BMO Capital Markets. Nevertheless, substitution is coming, the bank says. One of the main uses for both metals is auto catalyst. Analysts issued a report after attending lectures at the start of Platinum Week activities. Palladium has had an average premium of some $500 for half a year now, thus industry is likely to start taking substitution seriously, the bank says. Still, there are obstacles to consider, says the bank in paraphrasing some of the speakers. “Notable obstacles include security of supply; cost of switching; adherence to stricter global emissions regulations – and with it higher catalyst complexity; technical limitations of substitution; and a long development timeline,” BMO says. With expectations for tighter emissions standards still to come, BMO says industry may be hesitant to take on the risk. “Even with the technical difficulties, which critically for automakers is the instability of platinum at high temperatures, we expect new platforms beyond 2020-21 to substitute for platinum, with concerns over palladium supply concentration and a structural deficit accelerating substitution,” BMO says. The bank adds that increasing emissions standards may make recycling more difficult, meaning limited potential for this source of metal to reduce the palladium deficit four to five years from now.

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

 

SP Angel: Gold Pressured By Dollar Strength Amid Trade Spat

Monday May 13, 2019 08:23

Gold prices are retreating on U.S. dollar strength during the ongoing U.S.-China trade dispute, with financial markets awaiting the specifics of China's response to the latest round of tariffs by the Trump administration, says commodities brokerage SP Angel. According to news reports, Beijing is working on its own retaliation to last week’s move by the U.S. to impose a 25% tariff on more than 5,700 products. "The latest breakdown has prompted an escalation in the standoff that looks increasingly like the International Monetary Fund and others’ worst-case scenario for a global economy already forecast to grow this year at its slowest rate since the immediate aftermath of the 2008 financial crisis," SP Angel says. Around 8 a.m. EDT, spot gold was $3.10 lower to $1,282.70 an ounce.

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