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Analysts: ETF gold holdings rise most since mid-2019

Kitco News

Holdings of gold by exchange-traded products rose Friday by the highest level since the middle of last year, analysts reported. Most gold ETFs trade like a stock but track the price of the commodity, with metal put into storage to back the shares. Commerzbank reported that the inflow was 24 metric tons. “This was the biggest inflow since the middle of last year,” said analyst Daniel Briesemann. “ETF holdings as per the end of last week found themselves at a record high of 2,673 tons.” BMO Capital Markets put the ETF inflow on Friday at 782,000 ounces, saying it the most in eight months. “In an aggressive market sell-off, this will not necessarily stop the gold price falling, but it is likely to hold up better than other commodities,” BMO said.

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

 

Bannockburn: Gold choppy on ‘Monday meltdown’

Monday March 9, 2020 08:28

Gold prices have been volatile on a “Monday meltdown” in other markets, said Marc Chandler, managing director with Bannockburn Global Forex. “Equities plunged, and yields sank as the coronavirus threatens a global recession,” he said of the overnight price activity. “The oil-price war signaled by Saudi Arabia and Russia aggravates the desperate situation.” Stock markets in the Asia-Pacific region slumped by 3% to 7%. European stocks traded also lower, and U.S. stock index futures were also on the defensive, earlier hitting their daily limit-down moves. The U.S. 10-year yield was off roughly 30 more basis points to below 0.50%. The Japanese yen soared, and the U.S. dollar was mixed. “Gold had initially jumped above $1,700 but has reversed lower toward $1,657, before finding new bids,” Chandler said. “It is now little changed on the day (~$1,674).”

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

 

BBH: Financial markets expect more Fed rate cuts

Monday March 9, 2020 08:28

Expectations for further Federal Reserve rate cuts continue to intensify, said Brown Brothers Harriman. Global stock bourses are tumbling on worries about the economic fallout from the coronavirus. The next meeting of the Federal Open Market Committee is next week, and a forecasting tool known as World Interest Rate Probability suggests that a 50-basis-point rate cut is fully priced and a 75-basis-point cut is nearly priced in, BBH said. “Either way, another 75 bp of easing is fully priced in by the April 29 meeting, and one last 25 bp cut is nearly priced in by the July 29 meeting,” BBH said. “This would take the Fed funds target range down to the crisis-era low of 0.0-0.25%. Before the Fed’ surprise cut last week, markets were pricing in 75-100 bp of total easing vs. 150 bp that’s now expected.” However, BBH expressed doubt that policy rates would go negative in the U.S. “To us, there is no definitive example that suggests that negative rates work,” BBH said. “The euro zone, Switzerland, and Japan have all tried negative rates but have little to show for it. If rates hit the lower bound and further stimulus becomes necessary, we think the Fed would favor balance sheet expansion over negative interest rates.”

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