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RBC's Gero: gold soars as 'favored' safe haven amid Mideast tensions

Kitco News

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It's a showdown of global proportions, so don't miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

Gold is the safe haven of choice as investors buy due to worries about tensions involving the U.S. and Iran, said George Gero, managing director with RBC Wealth Management. As of 8:44 a.m. EDT, Comex February gold was $23.50 higher to $1,575.90 an ounce. Higher volume, moving averages and closes are all bullish for the metal, Gero said. “Gold is the favored haven to preserve assets and purchasing power, especially in times of stress in other markets,” Gero said. U.S. stock-index futures are pointing to a lower open on Wall Street. “While some profit taking maybe coming sooner or later with China coming to sign a tariff deal and [the] Fed on hold, longer-term holders of gold are now more convinced that some haven is needed. Look for new trading range $1,520-1,600 longer term as more headlines unfold here that are political and economic surprises.”

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

 

BMO, Commerzbank: high prices hurting India’s gold demand

Monday January 6, 2020 08:48

High gold prices took a toll on demand in India and this trend may continue, said Commerzbank and BMO Capital Markets. Analyst cited government data showing that Indian gold imports fell to a three-year low of 831 metric tons in 2019. BMO analysts noted that India imported just 267 tons in the second half despite more “auspicious days” – holidays in which gold is often given as a gift -- occurring in the second half of the year. “With prices moving higher again, we suspect that January imports will be lower again,” BMO said. Added Commerzbank, “gold demand there is unlikely to pick up any time soon given that the gold price in Indian rupees has risen sharply since mid-December and reached a new all-time high today.”

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

 

BBH: ‘Fed Still Sees Risks Tilted to the downside’

Monday January 6, 2020 08:48

The U.S. has a busy data week, and the Federal Reserve still sees risks tilted to economic weakness, said Brown Brothers Harriman. Minutes of the last meeting of the Federal Open Market Committee were released late Friday.”The Fed still sees risks tilted to the downside, but less so in recent months due to easing U.S.-China trade tensions and less risk of a hard Brexit,” BBH said. Analysts said rates are likely remain at current levels for the time being, although there are some concerns those keeping rates low would lead to excessive risk-taking. Further strengthening of the labor market was considered possible without creating “undesirable wage and price pressures.” The key economic report this week will be nonfarm payrolls on Friday, BBH said. Consensus estimates are for 162,000 new U.S. jobs after 266,000 in November, while the jobless rate is expected to hold at 3.5% and hourly earnings at 3.1%, BBH said. Other major reports will include factory orders and the Institute for Supply Management’s non-manufacturing index on Tuesday, the ADP private-sector jobs report on Wednesday, then weekly jobless claims on Thursday.

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