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Gold To Still End 2019 At $1,400, Markets 'Pricing In Too Much Fed Easing': Capital Economics

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Gold prices are soaring on expectations of more Federal Reserve rate cuts in light of the escalating U.S.-China trade war, according to Capital Economics. “U.S. rate expectations plummeted in the wake of the tariff news, fanning the flames of the ongoing rally in the gold price. However, a solid U.S. employment report, released on Friday, suggests that markets may be pricing in too much Fed easing,” Capital Economics economists say in a note. The firm continues to expect gold to end the year at around $1,400 an ounce. Only a surprise move by the Fed could force Capital Economics to upwardly revise its forecast. “Our view remains that there will be one further rate cut this year, in December, and only 75 basis points in total in this cycle. However, clearly an earlier move can’t be ruled out and, if we change our Fed view, we would revise up our gold price forecast,” the economists write.

By Anna Golubova of Kitco News; agolubova@kitco.com

 

Gold’s Next Target Is $1,500 As Trade War Escalates: MKS PAMP Group

Monday August 5, 2019 08:55

Gold prices are starting the week with solid gains, driven by a currency war between the U.S. and China, MKS PAMP Group writes in a note. “The fact that the PBOC did not defend the 7.00 handle was viewed as a clear signal that China is willing to go toe-to-toe with the U.S. on trade, resulting in a firm risk off session across Asia to see regional equities sharply lower,” MKS says. The next target for gold is $1,500 an ounce, according to the note. “Gold firmed on the currency moves, pushing above USD $1,450 post-Yuan fix … From a technical perspective, the strength above USD $1,450 should now allow for a further extension of the recent strength, with initial targets extending to USD $1,500.”

By Anna Golubova of Kitco News; agolubova@kitco.com

 

Chinese Gold Output Is Down 5% In First Half Of 2019

Monday August 5, 2019 08:41

China’s gold output is down 5.05% at 180.68 tonnes in the first half of 2019, according to the China Gold Association. The decline is due to “environmental clampdowns and deepened supply side reform,” writes BMO Capital Markets managing director of commodities research Colin Hamilton. “Gold consumption fell 3.27% y/y to 523.54t in 1H19, as consumption in jewelry increased 1.97% y/y to 358.77t, while consumption in gold bars dropped 17.29% y/y to 110.51t,” Hamilton says. Also being noted by BMO is China’s central bank adding gold to its gold reserves. “China add[ed] 74.03t to its gold reserves, which now stand at 1,926.55 [tonnes]. The People's Bank of China has added to its reserves for 7 consecutive months.”

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