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TDS: Gold Prices To Consolidate Until Next Catalyst For Up Move

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TD Securities does not expect a substantial retreat in gold and looks for the yellow metal to consolidate until some new catalyst prompts the next move higher. Gold got a sharp boost last week from Federal Reserve Chair Jerome Powell’s apparent willingness to cut interest rates if necessary and from a softer U.S. dollar and economic data, as well as a tumble in market-set interest rates. However, the metal gave back some of its gains Monday when it appeared that Mexico has avoided tariffs from the U.S. and Treasury Secretary Steven Mnuchin talked up progress on the trade situation with China. “Indeed, with Fed pricing suggesting a nearly 80% [probability] of interest-rate cuts in July, the market may be pricing too much dovishness too early,” TDS said. “Any improvement in the economic data this week, particularly inflation or retail sales, could see a portion of the implied cut probabilities priced out.” Analysts later added, “While we do not expect any material weakness, we see the yellow metal consolidating at these higher levels until another catalyst, such as additional equity weakness, prompts the next move higher.” As of 8:48 a.m. EDT, spot gold was $5.20 softer to $1,322.20 an ounce.

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

 

Commerzbank: Gold Prices On ‘Shaky Ground’

Tuesday June 11, 2019 09:02

Gold prices may be on “shaky ground” after running sharply higher last week, with the market vulnerable to back-and-forth moves based on whether global trade tensions are getting worse or easing, and with the market prone to profit-taking after a big run-up in bullish positioning in the futures market, said Commerzbank. Spot metal fell back to $1,322.20 an ounce as of 8:48 a.m. EDT after it had traded just below $1,348 on Friday. The metal was not in demand at the start of the week after U.S. President Donald Trump announced that he would not be introducing threatened tariffs on Mexico for now. Then on Monday, Trump threatened to impose further tariffs on China if President Xi Jinping does not meet with him at the upcoming G20 summit. Demand for gold should continue due to various trade conflicts and resulting uncertainties, Commerzbank said. “That said, the latest upswing in the gold price is on shaky ground because it was driven to a large extent by speculation,” Commerzbank continued. The most recent positioning data from the Commodity Futures Trading Commission showed that the net-bullish position of futures traders soared 96,182 contracts as of June 4 from 26,274 the prior week. “That puts them at their highest level in over a year and makes gold susceptible to profit-taking,” Commerzbank said.

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

 

BMO: Gold May Stabilize Due To Continuing Tariff threat

Tuesday June 11, 2019 09:02

Gold may be start finding support after its recent pullback due to continuing worries about the impact of tariffs on the economy, said BMO Capital Markets. The metal eased on Monday and so far Tuesday after previously staging a sharp rally. “However, gold prices remain well supported around current levels on safe-haven buying on fresh threats of additional tariffs [by the U.S.] on Chinese imports ahead of the G20 summit due to be held at the end of this month,” BMO said. “After steady outflows throughout the first four months of the year, total known ETF [exchange-traded-fund] holdings of gold stabilized throughout May, with June so far seeing a reversal of the trend as holdings increased 1.4moz [1.4 million ounces], up 2% month to date.”

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

 

TDS: Palladium May Rise After China’s Auto-Market Stimulus

Tuesday June 11, 2019 09:02

Palladium could be poised for another run higher despite bearish sentiment in other industrial metals, said TD Securities. The optimism is due to new Chinese measures to stimulate the auto industry in the No. 1 car-buying nation in the world. Palladium is used in catalytic converters. “While the announced measures are not as bullish as the speculation and do not include new spending by the government, the ban on new restrictions and encouragement for the local government to ‘support’ rural purchases if capable could help reverse the dismal trend in the Middle Kingdom's auto market,” TDS said. “Furthermore, the recent selloff and shakeout of speculative length make the palladium market ripe for an additional speculative bid should market risk appetite recover or the auto stimulus measures prove successful. Indeed, the structural deficits in the palladium market remain, and any improvement in demand expectations could send the market surging once again.” As of 8:47 a.m. EDT, spot palladium was $15 stronger to $1,375 an ounce.

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