Goldman: Hedging Against Inflation 'Best Done' Through Commodities
Commoditiesare “still the best hedge against rising inflation risks,” says Goldman Sachs.In a research note, analyst point out that whereas inflation risks had beensubdued during the recovery from the financial crisis, market participants areincreasingly starting to worry about “overheating” due to economic growth andincreasing labor-market tightness. “In summary, while central-bank inflationtargeting has certainly helped to lower overall inflation volatility, thereremains one key cause of inflation volatility -- commodity prices, and morespecifically, energy prices,” Goldman says. “Hedging this risk is best done byinvesting into the commodities themselves.”
By Allen Sykoraof Kitco News; asykora@kitco.com
RBC's Gero:Gold Remains Strong After FOMC Meeting
Thursday March 22, 2018 09:27
Gold hasretained its muscular tone due to “expected” short covering and bargain huntingin the aftermath of a Federal Open Market Committee meeting Wednesday, says George Gero, managing director with RBC WealthManagement. Policymakershiked interest rates 25 basis points, as expected, but continued to signal onlytwo more hikes this year, rather than the three that many market participantsfeared, analysts say. “Gold rallycontinues after Fed notes and BOE [Bank of England] leaving rates unchanged,”Gero says. He adds that Fed rate hikes “were priced in and are inflationarysigns.” As of 9:12 a.m. EDT, Comex April gold was $8.10 stronger to $1,329.60 an ounce.
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: SofterPost-Fed U.S. Dollar Underpins Gold Prices
Thursday March 22, 2018 09:27
A less-hawkish-than-expected Federal Reserveresulted in a softer U.S. dollar that in turn has underpinned gold, says Lukman Otunuga, research analyst at FXTM.Spot gold Wednesday traded as high as $1,335.80 an ounce, a two-week high,before backing off slightly Thursday and trading at $1,329.20, a loss of $2.65for the day. “It’s remarkable how gold prices soared on Wednesdaydespite the Federal Reserve raising interest rates,” Otunuga says. “The reasonbehind gold’s incredible rebound could be linked to the fact the FederalReserve was less hawkish than anticipated, which simply weakened the dollar.With the dollar tumbling after the U.S. Federal Reserve disappointed investors,gold found itself back in fashion. The yellow metal could build on the currentupside momentum, if political uncertainty in Washington and lingering trade-warfears support the flight to safety.” Technically, gold broke above $1,330 chartresistance, and the metal’s fortunes may hinge on what happens around thislevel, the analyst says. “Previous resistance at $1,330 could transform into adynamic support that encourages an incline higher towards $1,340,” Otunugasays. “Alternatively, a failure for bulls to keep above $1,330 could invite adecline back towards $1,314.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Gold Continues Rate-Hike Trend
Thursday March 22, 2018 09:27
Gold has continued its normal trading pattern around FederalReserve meetings, at least based on the last few years, Commerzbank says. Goldfell in the run-up to a meeting that ended Wednesday with a 25-basis-point ratehike that markets had largely factored into prices. This was the sixth rate hike in the current cycle, and theFed expressed optimism over the U.S. economy, Commerzbank says. Still,officials continued to suggest only three rate hikes this year rather thanmore, enabling gold to rise. “The fact that further rate hikes are beingforecast for the next two years was ignored by the market, however,”Commerzbank says. “In his first press conference, the new Fed Chair JeromePowell stressed the central bank’s gradual approach, seamlessly following onfrom the strategy pursued by his predecessor Janet Yellen.” Commerzbank says“the gold price has also shown the same trading pattern this time around is itdid before other ‘major’ Fed meetings -- weak before the meeting and thensignificantly recovered afterwards. The recovery may well continue for a fewmore days.”
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.