INTL FCStone: Gold 'Relative Winner' As Trade Tensions Escalate
Gold has recouped Tuesday’s losses as atrade war between the U.S. and China escalates, says INTL FCStone. After abrief respite in tensions, the U.S. listed items on which it will impose duties,and China responded by doing the same 11 hours later on 106 products, includingsome agricultural commodities. Copper, oil and the dollar index are all lower,although the decline in the greenback is “relatively modest, all thingsconsidered,” INTL FCStone says. Analysts add that “one relative winner today is gold.” As of 9:37 a.m. EDT, Comex June gold was $9.80 higherto $1,347.10 an ounce.
By Allen Sykoraof Kitco News; asykora@kitco.com
Standard: Gold-Silver Ratio, FundamentalsFavor Silver Prices
Wednesday April 04, 2018 08:13
The gold-silver ratio and supply/demandfundamentals favor silver, says Standard Chartered. The gold-silver ratio hashit a two-year high. This measures how many ounces of silver it takes to buy anounce of gold and currently is around 81.6. “Usually, when the ratio has risenabove 75, a mean reversion is driven by silver prices rising rather than goldprices falling,” Standard says. “However, more than just technical factors lookfavorable for silver, in our view. We expect silver’s fundamental deficit towiden this year, predominantly driven by robust industrial demand growth.”Analysts point out that China’s silver imports are up 36% year-on-year so farin 2018, while India’s silver imports are up 63%. Analysts also look forincreased demand for use in solar cells. “The laggard dynamic, which happens tobe crucial for price recovery, is subdued investor appetite,” Standard says.Speculators hold a net bearish position in Comex silver futures.Exchange-traded product flows were positive in February and March, but arestill down for the year to date. “Silver prices tend to outperform when bothindustrial and investment demand are growing; we expect investor demand to turnmore favorable amid a weaker USD [U.S. dollar] and rising inflationexpectations,” Standard says. “The strength of industrial demand should limitdownside risk, and provide a boost over the gold price rally.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Trade Developments Rattle Markets
Wednesday April 04, 2018 08:13
The continued move toward a trade war between the U.S. and China hasrattled global markets, says Brown Brothers Harriman. The U.S. dollar is mixed,but weaker against the euro. Stock-index futures are pointing to a sharplylower opening. Commodities are mostly lower, including oil and copper, althoughsafe-haven gold is one of the commodities to benefit. Late Tuesday, the U.S.announced that specific tariffs and goods that would be targeted forintellectual property violations. China responded by slapping tariffson a wide range of U.S. products, including soybeans. “This sent reverberationsthrough the capital markets, driving down equities as well as corn and soybeanprices (subject to Chinese tariffs),” BBH says. “The U.S. dollar was sold,especially against the yen, euro, and sterling. The dollar-bloccurrencies lagged.” As of 8:08 a.m. EDT, the euro was up slightly to $1.22780from $1.22689 late Tuesday, while the dollar was down to 106.226 Japanese yenfrom 106.580. The June S&P 500 futures were 36.40 points lower, while NymexMay crude oil was down 93 cents. Comex June gold was up $11.80 to $1,349.10.“The billion-dollar question is whether the U.S. initiates counter-retaliatorymeasures,” BBH says. “If the U.S. does, it would seem to be a clear escalation. Currently, the U.S. provocations have escalated the chronic low-leveltension. China took small steps in response to the U.S. actions onwashing machines, solar panels, steel and aluminum. Now, in response tothe tariffs for intellectual property violations, it has ratcheted up itsresponse.”
By Allen SykoraFor Kitco News
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