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FXTM: Gold To Be 'Star Of The Show' While Trade Fears Persist

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Gold will “remain star of the show” as long as fears about a trade war continue, says Lukman Otunuga, research analyst at FXTM. Gold experienced “incredible appreciation” as prices sprinted toward $1,300 early in the week as investors rushed into so-called safe-haven assets, the analyst says. “Appetite for the precious metal is set to remain robust amid market fears over sizzling trade tensions negatively impacting global economic growth,” Otunuga says. Technically, he says, gold is turning bullish on the daily charts as prices have broken above the previous higher low at $1,290. “A solid breakout and daily close above $1,300 is likely to encourage a move higher towards $1,310 and $1,324, respectively,” Otunuga says. Around 8:55 a.m. EDT, spot gold was down $1.30 to $1,298.30 an ounce.

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

 

RBC’s Gero: Asset Allocators Bargain Hunting In Gold

Tuesday May 14, 2019 09:02

Gold has benefitted from bargain hunting at the start of the week, says George Gero, managing director with RBC Wealth Management. The metal rose sharply Monday as equities tumbled. The metal is “readjusting to stocks” so far Tuesday, easing slightly as the Dow Jones Industrial Average futures rise, Gero says.  Still, Gero continues, gold remains near the $1,300-an-ounce area. A number of geopolitical worries are helping prevent a sell-off in gold, including escalating Iran tensions, Brexit problems and Venezuela’s political crisis, Gero says. He says he “would not be surprised to see finally gold over $1,305 technical area sooner than later as asset allocators have recently also been bargain hunting as open interest has jumped….” As of 8:40 a.m. EDT, Comex June gold was $2.10 softer to $1,299.70 an ounce. The Dow futures were up by around 108 points.

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

 

Commerzbank: ETF Gold Holdings Rise

Tuesday May 14, 2019 09:02

Holdings of gold by exchange-traded funds rose Monday along with the price of the metal, says Commerzbank. The moves occurred amid a meltdown in equities. “Gold lived up to its reputation as a safe haven yesterday,” Commerzbank says. “It climbed to $1,300 per troy ounce on the back of the noticeably higher risk aversion amid the trade dispute between the U.S. and China, and is still trading [near] this level this morning. The increased risk aversion among market participants has also been reflected in ETF inflows this time (5.6 tonnes).”

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

 

TD Securities: Gold Backs Down Slightly After Presidential Tweets

Tuesday May 14, 2019 09:02

Gold has given up some of the prior day’s gains after U.S. President Donald Trump tweeted that he expects a trade deal with China, says TD Securities. Gold soared Monday as equities plummeted amid worries about an escalating trade war. “The yellow metal found a safe-haven bid, as equity volatility bounced off the lows created by the ‘perma-hold’ narrative embedded since the start of 2019,” TDS says. However, analysts say, “risk markets have found support from presidential tweets this morning, adding marginal pressure to gold.” Trump says a deal will happen “much faster than people think.” Around 8:55 a.m. EDT, spot gold was down $1.30 to $1,298.30 an ounce.

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

 

BBH Doubts China Will Sell Off U.S. Treasury Holdings

Tuesday May 14, 2019 09:02

Nervousness about a trade war continues, especially amid conjecture that China might start selling its U.S. Treasuries, says Brown Brothers Harriman. Still, BBH expressed doubt that China will actually start unloading its UST holdings. “The big surprise was that China is reportedly discussing the sale of UST holdings,” BBH says. “Higher tariffs (25%) from China were a given, which will start June 1. So too was China halting purchases of U.S. agricultural goods. With total reported holdings of $1.13 trillion as of February, selling USTs risks harming its own portfolio. We simply don't think China will go down this road, but this certainly serves as a shot across the bow.” Analysts noted that Treasury yields, which move inversely to the price, are lower than when the China headlines first hit. This “likely means that the market is not that fearful of possible Chinese dumping of USTs,” BBH says.

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