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TDS: Gold Range-Bound For Now; Silver To Hit $17 In 2019

Kitco News

Gold remains range-bound near six-year highs and may need weaker U.S. economic data to keep moving higher, but silver has “considerable” upside potential, said TD Securities. Investors remain generally bullish on gold, with more than $13 trillion in bonds globally posting negative yields and  major central banks seen as accommodative on monetary policy, including the U.S. Federal Open Market Committee. There is also speculation that the U.S. Treasury may pursue a weak dollar policy. “A potential currency war along with the Trump appointment of relatively dovish FOMC officials are additional reasons markets like gold, despite the recent headwinds,” TDS said. For now, analysts said they see gold averaging $1,400 for the balance of the year due to well performing high-risk corporate bond market and strong equities. “Conversely, once equity correction risks and vols rise and as U.S. data starts turning lower convincingly, low Fed rate expectations and insurance premiums should lift gold toward $1,500 in the final months of 2020,” TDS said. “However, the poorly performing silver should have a better time of it as it plays catch up. We expect the silver ratio to improve and the market start to more aggressively position in the ‘poor man's gold.’ We expect that the white metal should get a lift from a generally favorable precious-metal environment, and tightening fundamental's as investment and industrial demand tilt the supply-demand balance into deficit territory.” Analysts said they expect silver to challenge $17 an ounce in late 2019, with prices averaging $18.75 in the final three months of 2020.

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

 

Commerzbank: Precious Metals Pressured By U.S. Debt Deal

Tuesday July 23, 2019 09:49

The reported deal on a spending cap in the U.S. underpinned the U.S. dollar and worked against gold, said Commerzbank. As of 9:37 a.m. EDT, Comex August gold was $1.40 lower to $1,425.50 an ounce. “Gold and the other precious metals are under pressure this morning after congressional leaders in the U.S. reached agreement in the U.S. debt dispute,” Commerzbank said. The deal must still be passed by both chambers of Congress and signed by President Donald Trump, but this appears to be a mere formality, Commerzbank noted. “In the wake of this report, risk appetite among market participants has increased and the U.S. dollar has appreciated…which is weighing on precious metals.”

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

 

BBH: Yield Curve ‘Signaling Reduced U.S. Recession Risks’

Tuesday July 23, 2019 09:49

News of an agreement on a spending cap in the U.S. has supported the dollar and led to reduced worries about a recession, said Brown Brothers Harriman. Congress and the White House have reportedly reached a budget deal in which the debt ceiling will be suspended until July 31, 2021. “The deal averts the risk of a shutdown as well as any automatic cuts,” BBH said. “However, the deal also guarantees another tense period in two years.” The news helped move the U.S. yield curve out of inversion,” BBH said. “At +4 bp [plus 4 basis points] currently, the slope of the three-month to 10-year curve is the steepest since May 21,” BBH said. “As the U.S. data improve, the curve should get even steeper, though we acknowledge that the slope is likely to oscillate between negative and positive near term.  Nevertheless, the curve is (for now) rightfully signaling reduced U.S. recession risks.”

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