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UBS: More Gold Upside Needed To Spur Interest In Silver

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Investors may have to become much more friendly to gold for silver prices to improve materially, said UBS. Analysts described interest in silver as “pretty much non-existent.” Silver often follows gold although also has more industrial demand, meaning any perceived weakness in the economy can hurt silver. Silver has suffered due to both a broad range in gold in the past few years and slower global growth, as well as growing downside risks amid uncertainty around trade, UBS said. Money managers are net short in the silver-futures market, and exchange-traded-fund holdings have fallen more than 11 million ounces for the year through Wednesday, UBS continued. The gold-silver ratio has soared to 90, meaning an underperformance by silver. Some wonder if the high ratio might mean a buying opportunity for silver, however, UBS noted. “The challenge is that it will probably take much stronger conviction that gold would break the top side of the broad range this time around in order for investors to feel more comfortable expressing that view in silver as well,” UBS said. “At the moment, our recent conversations suggest that although most people are getting bullish on gold, they are doing so only up to a point, at least for now. Conviction starts to falter beyond the $1,375 highs printed in the last few years.”

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

 

FXTM: Gold Prices Make ‘Rapid Sprint Up The Hill’

Thursday June 6, 2019 08:36

Gold should continue to shine in the foreseeable future, said Lukman Otunuga, research analyst at FXTM. The metal “has stormed back into fashion” throughout the week due to weakness in the U.S. dollar, the analyst said. “Vulnerability in the dollar has played an influential role in gold’s rapid sprint up the hill, with prices punching above levels not seen in over three months to above $1,340,” Otunuga continued. “Market speculation over the Federal Reserve cutting interest rates amid trade tensions, a weaker dollar and geopolitical risks should ensure gold remains in demand moving forward.” As of 8:30 a.m. EDT, spot gold was $7 stronger at $1,336.80 an ounce.

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

 

UBS: U.S. Car Sales Supportive For Palladium Prices

Thursday June 6, 2019 08:36

Recent U.S. auto-sales data for May bode well for palladium, said UBS. U.S. car sales in May surprised to the upside, with the seasonally adjusted annual rate of 17.3 million units reflecting a 0.6% year-over-year increase higher than the consensus estimate of 16.9 million and the previous month's rally of 16.4 million. “This bodes well for palladium given its exposure to the U.S. car market, providing some relief after growing worries over weakening global vehicle sales,” UBS said. “One month does not make a trend, though, so we think market participants are likely to remain vigilant, watching auto data in the U.S. and China closely – especially given news flow on growing trade tensions and corresponding risks to growth.”

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

 

Commerzbank: ‘Gold Should Profit’ From Italy-EC Dispute

Thursday June 6, 2019 08:36

Gold could benefit from the continuing budget-deficit dispute between Italy and the European Commission, said Commerzbank. Analysts outlined the situation like this: “The European Commission has recommended a deficit procedure against Italy due to its high levels of national debt. If approved by the EU member states, the procedure could be initiated in two weeks’ time. Italy would then be given specific guidelines and conditions for lowering its debt. If it ignored these, it would risk being fined, and the budget dispute between the EU and Italy would escalate. Gold should profit from this.” 

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