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TD Securities: gold bull market 'still in its early days'

Kitco News

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Gold’s bull market “is still in its early days,” although there is potential for a correction lower in the near term, said TD Securities. Bullish positioning is already at high level. TDS said. The most recent “disaggregated” report from the Commodity Futures Trading Commission shows that in the week to Dec. 31, money managers’ net-long position was a multi-month high of 232,732 futures contracts. “Gold bulls have virtually no dry powder left, with both an extreme number of traders long, and a larger-than-expected position held on a per-trader basis,” TDS said. “This adds strength to our view that gold is overbought in the short term. However, it is worth recalling that a bull market may well translate into a new regime of higher aggregate open interest in the longer term, which is to say that while the yellow metal may retrace in the near term, we still expect strong upside momentum looking forward.”

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

 

Bannockburn: gold eases, other markets stabilize on de-escalation hopes

Wednesday January 08, 2020 08:42

Gold and oil prices have eased, while stock-index futures have recovered overnight weakness, on hopes that U.S.-Iran tensions are de-escalating, said Marc Chandler, chief market strategist with Bannockburn Global Forex, LLC. In response to a U.S drone airstrike that killed an Iranian general last week, Iran retaliated with a missile strike on U.S. bases in Iraq. That sparked a dramatic sell-off in risk markets, while gold surged overnight. However, Chandler said, the “muted response” by the U.S. coupled with signals from Tehran that it had "concluded" its proportionate measures meant markets retraced their initial reactions. Shortly before 8:30 a.m. EST, Comex February gold was down $1.40 to $1,572.90 an ounce after soaring to $1,613.30 overnight. February West Texas Intermediate crude oil was down 99 cents to $61.71 a barrel after peaking at $65.65. Futures for the Dow Jones Industrial Average were nearly flat. U.S. President Donald Trump is expected to make a statement Wednesday. “The risk of a disproportionate response, in light of the recent tweet storm, appears to have eased,” Chandler said. “The sense is that Iran made a mostly symbolic response and that a formal U.S. military response is not necessary. Still, tensions remain elevated.”

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

 

UBS: index rebalancing to have limited impact on gold, silver

Wednesday January 08, 2020 08:42

The annual commodity index rebalancing over the coming days should have a limited impact on precious metals, said UBS. The bank estimates that around 118,000 ounces of gold will be bought and about 12.6 million ounces of silver will be sold over five business days. “The typical methodology is to sell the previous year's outperformers and buy the underperformers,” UBS said. “Despite gold's outperformance, gold is due to be bought during the roll period given an increase in target weight to 13.62% from the 12.24% target in 2019 and recent effective weight of 13.41%. In contrast, the target weight for silver was lowered to 3.78% from 3.89% last year and recent effective weight of 4.10%, which results in selling silver contracts during the roll period ahead.” Normally the rebalancing is anticipated by markets, which mutes the impact. Further, volumes are small relative to the normal trade, UBS added. “More broadly, we think these flows would ultimately be overshadowed by the build in strategic positions as well as recent safe-haven demand, which benefits gold more than it does silver,” UBS said. “We think this is partly reflected in silver's underperformance relative to gold in recent weeks.”

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

 

Commerzbank: ‘gold is likely to remain in good demand’

Wednesday January 08, 2020 08:42

Gold, which has backed off from the overnight highs, is likely to remain in demand amid U.S.-Iran tensions, said Daniel Briesemann, analyst with Commerzbank. The metal topped $1,600 per ounce overnight for the first time since March 2013 in response to an Iranian retaliatory missile strike against U.S. bases in Iraq. Investors sought gold as a safe haven. “Since concerns about the situation in the region escalating further have presumably increased, gold is likely to remain in good demand, so the price will probably climb further, at least in the short term, despite having already reached a high level,” Briesemann said. He added that for the first time this year, holdings of gold in exchange-traded funds tracked by Bloomberg registered a “considerable inflow” of over 7 metric tons Tuesday. “The developments in the Middle East are overshadowing all other news, of which there is admittedly very little at present,” Briesemann added. 

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