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Aberdeen Investments: Trade-War Concerns Could Lift Gold To $1,400/Oz

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Global trade disputes are creating a bullish case for precious metals since they “have thrown a wrench into the global growth outlook,” said Maxwell Gold, director of investment strategy at Aberdeen Standard Investments. Equities have mostly shrugged off concerns about a slowdown, yet there have been periods of volatility, such as when the S&P 500 index fell over 6% in May, with yields falling and gold rising back above $1,300. With the trade war persisting, there are expectations the Federal Reserve and other central banks may cut interest rates. “Further uncertainty and lack of resolution in this trade war may see gold and silver reach bullish scenario levels of $1,400/oz and $18/oz, respectively, by year end,” Gold said. “The continued catalyst for this remains falling real interest rates, which continue to precipitate lower in 2019 and are at 21-month lows. The probability of several rate cuts by the Federal Reserve also rose this month and supported the demand outlook for gold and silver as real interest rates hover around 0.35% on a 10-year basis.”

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

 

INTL FCStone: Gold Bulls May Be Paring Positions Ahead Of FOMC

Wednesday June 19, 2019 09:42

Gold futures are modestly softer, with some bullish traders possibly starting to second guess themselves on just how dovish the Federal Open Market Committee might be when a two-day meeting wraps up Wednesday afternoon, said INTL FCStone. As of 9:28 a.m. EDT, Comex August gold was $3.40 softer to $1,347.40 an ounce. INTL FCStone noted “yet another push to the upside faltered late in yesterday’s afternoon session. Perhaps the gold market is also sensing that the Fed will not come across as easy as what is being expected and bulls are possibly paring some length in anticipation of a less dovish statement.”

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

 

Commerzbank: Gold Traders Watching For Any Clue Of Fed Rate Cut

Wednesday June 19, 2019 08:44

Gold traders will be watching to see if the U.S. Federal Open Market Committee offers any hints that monetary policy eventually will be loosened, Commerzbank said. Comex August gold traded as high as $1,358.50 an ounce on Tuesday, but eased to $1,347.80 as of 8:17 a.m. EDT, which was a loss of $2.90 for the day. “That said, its price rise could gain momentum if the U.S. Fed gives indications at its meeting today that a rate cut is imminent,” Commerzbank said. “If so, this would mean that it is yielding to political pressure -- in a tweet, U.S. President Trump described [European Central Bank President Mario] Draghi’s remarks [Tuesday suggesting that a European rate cut could occur] as ‘unfair to the U.S.,’ thereby also stepping up the pressure on the Fed. Trump has been attempting for some weeks to push the Fed to cut interest rates.” Gold shed some of its recent gains after Trump announced that he would have an extended meeting with Chinese President Xi Jinping during next week’s Group of 20 summit, Commerzbank added. This led to increased optimism about a trade deal.

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

 

TDS: Any Fed Disappointment Could Underpin Gold Due To Equity Weakness

Wednesday June 19, 2019 08:44

Gold could benefit some even if the Federal Open Market Committee is not as dovish as markets expect, said TD Securities. Policymakers wrap up a two-day meeting Wednesday. Both gold and equities have risen lately on hopes the Fed will signal a rate cut in the not-too-distant future. “The stage is set for some fireworks, with positioning aggressively tilted to the dovish side, which should make it a difficult meeting for [Fed Chair Jerome] Powell to meet the market's expectations,” TDS said. “For gold bugs, there could still be a silver lining as a failure to meet expectations should simultaneously weaken equities, providing offsetting demand for gold with portfolios increasingly allocating resources to gold in response to growing tail risks.”

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