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TDS: Powell Prepared Remarks Underpin Gold

Kitco News

Prepared remarks for Congress from Federal Reserve Chairman Jerome Powell have underpinned gold prices, said TD Securities. “While the bar was low for the Fed chair to meet the market's expectations, the fact his prepared remarks beat market expectations should keep gold prices anchored north of the $1,400/oz mark, as he opted to look past the strong jobs report and rather focus on other incoming data that suggest ‘uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook,’” TDS said. Analysts later added that “gold remains the most likely winner as the precious metal has historically been the preferred choice for portfolio managers and central bankers alike.” As of 9:45 a.m. EDT, spot gold was $12.10 higher to $1,409.20 an ounce.

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

 

CIBC: Fed Chair’s Comments Hint ‘July Rate Cut Could Be A Lock’

Wednesday July 10, 2019 09:55

In prepared remarks for Congress, Federal Reserve Chair Jerome Powell did nothing to discourage markets from anticipating an interest-rate cut later this month, said CIBC Capital World Markets. “The Fed chair had a chance to disabuse markets of the notion that a July rate cut is sure thing, and he didn't take that opportunity,” CIBC said. The key part of the statement for markets, according to CIBC, was when Powell said "it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted." The Fed chairman justified policymakers’ prior policies by saying that the economy did "reasonably well" over the first half, but noted the downdraft in the second quarter in some key cyclical sectors, such as housing, and the fact that first quarter benefited from gains in exports and inventories that don't tend to persist. “All told, nothing in here to warn markets against assuming a July cut is coming, and if tomorrow’s core CPI [Consumer Price Index] readings don't show a reheating, a July rate cut could be a lock,” CIBC said.

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

Commerzbank: Central-Bank Buying To Keep Supporting Gold Prices

Wednesday July 10, 2019 09:55

Last week’s news of large gold purchases by Poland’s central bank is yet another sign that official-sector buying will remain a key part of the gold market, said Commerzbank. Analyst cited news reports that the Polish central bank bought nearly 126 tonnes of gold in the past 12 months, with 100 of them purchased this year. This brings Poland’s reserves to 228.6 tonnes, Commerzbank continued. This puts Poland in 21st place worldwide, analysts added, citing World Gold Council data. “So far, the lion’s share of Poland’s gold holdings have been kept at the Bank of England. Half of this gold is now to be transported to Warsaw,” Commerzbank said. “It is becoming increasingly clear that central banks will also constitute a major component of gold demand this year, and as such will support the price.”

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