INTL FCStone: Gold-Price Movement Could Pick Up Once FOMC Meeting Is History
Price movement in gold could pick up oncethis week’s two-day meeting of the U.S. Federal Open Market Committee is over,says INTL FCStone. Policymakers are expected to hike interest rates again onWednesday, but investors will be watching Fed commentary for clues on howaggressive tightening will be in the future. Gold has been range-bound lately.“One market that has yet to move for some time nowis gold; prices remained stuck around the $1,300 mark, although both palladiumand silver are doing better, now hovering close to a two-month highs,” INTLFCStone says. “Similar to gold, platinum remains adrift as well, but the wholecomplex could see more direction once the Fed meeting is out of the way.”
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: Positive U.S.-North Korean SummitWould Mean ‘Negative Momentum For Gold’
Monday June 11, 2018 08:27
Enthusiasmfor gold as a safe haven could be dampened if this week’s summit between theleaders of the U.S. and North Korea is a success,says Jameel Ahmad, FXTM’sglobal head of currency strategy and market research. “Such a historic meeting between a very unpredictable UnitedStates president and the leader of a nation with nuclear capabilities that hasbeen in complete isolation for decades represents an event that investors willnot be able to ignore,” Ahmad says “Assuming that the meeting goes as planned, there are a numberof potential winners and losers from alternative scenarios of the summit endingpositively or negatively.” In the markets, potential winners from a positivesummit would include the Korean won, global equities, Asian emerging-marketcurrencies and any currencies pegged to the U.S. dollar, plus high-yieldingemerging-market currencies, the analyst says. The analyst lists gold and theJapanese yen as potential losers if the summit is positive. “The yellow metal hasstruggled greatly over the second quarter of 2018 from the unexpectedresurgence in the USD [U.S. dollar],” Ahmad says. “Buying sentiment for gold is highly reliant on market uncertainty andthe potential rally in the stock markets, in addition to lower attractiontowards safe-haven assets, would be seen as negative momentum for gold.”
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: Precious Metals Could Be In For Volatile Week
Monday June 11, 2018 08:27
Gold and other precious metals could be infor a volatile week with a number of potential market-moving events on thehorizon, says Samuel Laughlin of precious-metals trading and sales with MKS(Switzerland) S.A. Gold tried to push higher overnight before backing off, andthe Comex August futures were $1.40 lower to $1,301.30 an ounce as of 8:09 a.m.EDT. “Expectthe precious complex to see volatile trade this week with a number of events onthe calendar,” Laughlin says, listing ongoing headlines following the Group ofSeven summit, the approaching meeting between U.S. President Donald Trump andNorth Korean leader Kim Jong-un, a Federal Open Market Committee meeting and aEuropean Central Bank meeting, in which traders will focus on any commentsregarding the future of quantitative easing.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Chinese Car Sales Bode WellFor Palladium
Monday June 11, 2018 08:27
The most recent Chinese car-sales data aresupportive for palladium, says Commerzbank. Chinese cars tend to havegasoline-powered engines, which rely upon palladium for catalytic converters.Analysts cite data from the China Association ofAutomobile Manufacturers showingthat 1.89 million cars were sold in China duringMay, up 7.9% year-on-year. Some 5% more cars were sold in the first five monthsof 2018 than in the same period last year, putting the Chinese auto market ontrack to achieve a new record year, Commerzbank says. “The good figures helpedensure that palladium remains firmly above the $1,000-per-troy-ounce mark,” thebank says. As of 8:11 a.m.EDT, spot palladium was up $2 to $1,006 an ounce.
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Failure Of Fed To Signal MoreAggressive Action Would Not Be ‘Dovish Hike’
Monday June 11, 2018 08:27
Should the Federal Reserve not signal moreaggressive monetary tightening, this should not be seen as a “dovish hike” ininterest rates, says Brown Brothers Harriman. Policymakers hold a two-daymeeting that winds up on Wednesday and are expected to increase the Federalfunds target rate another 25 basis points, which would be the seventh hike in thecycle that began in December 2015. “Thekey to the market’s response will not lie so much with what the Fed does, whichis just about taken for granted now, but what it says,” BBH says. “The FOMCstatement may reflect officials’ growing confidence that [the Fed] has achievedits mandate of full employment and price stability (as it defines it). There issome thought that the Fed may alter its characterization of monetary policy asaccommodative. The Fed may acknowledge that monetary setting may move need tomove beyond neutral to slightly restrictive.” However, BBH says, there is “nocompelling need” for policymakers to shift forward guidance toward fourpotential rate hikes for this year. “Tosignal a more aggressive trajectory now would risk an inversion of the yieldcurve,” BBH says. “There seems to be a split on the Fed on the issue.”BBH later adds: “We do not think thatthe failure of the Fed to signal a more aggressive path should be read as adovish hike. The Fed is still most likely to signal continued hikesnext year. The combination of rate hikes, the reduction of the Fed's balancesheet and the large fiscal stimulus makes for a very aggressive policy mix.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Trade Tensions Likely To EscalateFurther
Monday June 11, 2018 08:27
Brown Brothers Harrimanlooks for an escalation of global trade tensions after a Group of Seven summitmade no progress on the issue and U.S. President Donald Trump criticized theleader of host country Canada and hinted at more tariffs. “Trade tensions arelikely to escalate further, if the U.S., as scheduled, provides a list of $50billion of Chinese goods that will face another 25% tariff for intellectualproperty violations,” BBH says. “If the U.S. does so, China has threatened toretract some of the concessions it has made.” BBH adds that Trump positionedhimself as an outsider at the summit. “His policies, particularly the claimthat steel and aluminum imports (and possible auto imports down the road) fromcountries that have long been military allies are threats to U.S. nationalsecurity, have isolated the U.S.,” BBH says. “The U.S. president did not evendeign the summit of sufficient importance to stay for the entire meeting. Although presidential advisor [Larry] Kudlow claims this is simply afamily squabble, the dysfunctionality is palpable and likely to prove moreprofound than the spat like [George] W. Bush’s steel tariffs.”
By Allen SykoraFor Kitco News
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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.