Make Kitco Your Homepage

RJO's Pavilonis: Weak Equities Mean Boost For Gold Prices

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!

Look for gold to continue to benefit from weaker equities, said Daniel Pavilonis, senior commodities broker with RJO Futures. As of  9:55 a.m. EDT, Comex August gold futures were $10 higher to $1,302.40 an ounce. The rise came with the Dow Jones Industrial Average nearly 300 points lower after U.S. President Donald Trump threatened Mexico with more tariffs over immigration. “If equities continue to come off, that will be supportive for gold,” Pavilonis said. He also commented that gold has bounced hard off of its 50-month moving average on a monthly chart. The market overall has been largely sideways since 2016, Pavilonis said. “Sentiment has been getting stronger since mid 2017,” he said. “The ultimate bias is to be buying gold.”  

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

 

Commerzbank: ‘Gold Living Up To Its Role As A Safe Haven’

Friday May 31, 2019 08:32

Gold is benefitting from U.S. plans for tariffs on Mexican goods and could also draw further support from potential U.S. interest-rate cuts, Commerzbank said. As of 8:24 a.m. EDT, spot gold was trading $10.40 an ounce higher to $1,298.70. “In the present market climate, gold is living up to its role as a safe haven,” the bank said. “It gained 0.7% yesterday and is continuing the advance this morning towards $1,300 per troy ounce.” Analysts cited U.S. President Donald Trump’s tweets saying that tariffs would be imposed on all imports from Mexico starting in mid-June, initially 5% but possibly rising to 25% by October unless the Mexican government stops illegal immigration into the U.S. “Gold might also have been supported by vice Fed chairman [Richard] Clarida stating yesterday that if inflation remained low, global growth remained weak and/or the financial markets became strained, the Fed would rethink its monetary policy,” Commerzbank said. “The market is now factoring in three Fed rate cuts totaling 75 basis points by the end of 2020. If it does come to this, the U.S. dollar would no doubt also suffer accordingly. From this point of view, we see considerable scope for gold gains.” 

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

 

TDS: Gold Shines As Spotlight Shines On Diversification Assets

Friday May 31, 2019 08:32

Gold is catching the attention of investors amid global economic-growth worries and expectations for a U.S. rate cut, TD Securities said. “Global growth worries suggest that appetite for diversifiers is growing, which could put a shine on gold,” TDS said. This, along with low inflation, has led investors to buy U.S. Treasuries, driving yields lower and increasingly pricing in a Federal Reserve rate cut, TDS said. Meanwhile, gold positioning “remains uncharacteristically low,” particularly for the late stage of the cycle, when tail risks tend to escalate, TDS said. “An above-average number of traders are reporting long positions but also remain under-positioned, suggesting that a herd of bulls could come out of hiding with traders keeping their finger on the trigger for a break out of the extremely tight range in prices of late,” TDS said. “At the same time, with futures trading north of $1,289/oz, we see a high likelihood that CTAs [Commodity Trading Advisers] could be set to load up on their gold holdings just as the technical set-up is challenged, opening the door for a break towards $1,297/oz….Unfortunately for the machines, we see a high risk of a whipsaw, as trend signals remain weak.”

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

 

Bannockburn: U.S. Companies To Be Impacted If China Opts To ‘Weaponize’ Rare Earths

Friday May 31, 2019 08:32

U.S. companies that use rare earths for manufacturing goods may be forced to move production away from the country if China should “weaponize” rare earths in its trade war with the U.S., points out Bannockburn Global Forex. “Reports in Chinese press warn that [China] has drawn up plans to weaponize rare earths,” the firm says. “There should be no doubt that China has such contingency plans. “ This does not mean such a move is imminent or inevitable, the firm said. However, analysts continued, “If China would embargo rare earth to the U.S., U.S. companies would likely respond in two ways.  First, seek alternatives from other producers, like Australia.  This would likely push prices higher.  Second, businesses would move offshore the manufacturing that required the rare earths. So, instead, of making super magnets, for example with the imported rare earths, the company, for example, would import the super magnets.” 

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.