MKS: Gold In Consolidation Phase; ETF Holdings Stable
Gold couldbe in for a period of sideways consolidation, and exchange-traded-fund holdingsheld up despite a recent price decline in the precious metal, says AlexThorndike, senior precious-metals trader with MKS (Switzerland) S.A. While spotmetal touched a fresh 2018 low of $1,282.20 on Monday, the market has mostlysideways since falling below $1,300 support on May 15. “For now we see stubborn resistance at $1,298-$1,300, withthick offers from producers, real money and leveraged sellers alike prevalenton runs higher,” Thorndike says. “To the downside, [support] sits at theprevious low and 61.8% Fibonacci retracement levels between $1,282-86. We thinkthe gold will be in for a period of consolidation in the short term and aremonitoring moves in ETF holdings, which have surprisingly held rather steadilygiven the move through $1,300 support.” He points out that holdings in SPDRGold Shares, the world’s largest gold ETF, have only shed around 4.13 tonnes,or 133,000 ounces, since the price collapse on May 15.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Gold/Silver Ratio Narrows; Silver Holds Up AsGold Falls
Wednesday May 23, 2018 08:30
The gold/silver ratio has narrowed slightly, meaning a modestoutperformance by silver, points out Commerzbank. The ratio measures how manyounces of silver it takes to buy an ounce of gold. “The gold/silver ratio hasfallen to 78 because silver has resisted gold’s downward pull of late,”Commerzbank says. “Silver is clearly finding support from the high base-metalsprices at present; at $16.50 per troy ounce, [silver] is trading in the middleof the corridor of $16-$17 in which it has found itself since early Februaryand - unlike gold - well above its 2018 low.”
By Allen Sykoraof Kitco News; asykora@kitco.com
MetalsFocus: Italian Developments To Weigh On Gold In Short Term Only
Wednesday May 23, 2018 08:30
MetalsFocus says Italy’s political situation may pressure gold but in the short termonly, as safe-haven buying could ultimately develop. In Italy, the coalitionformed between the Five Star Movement and The League resulted in some “radicalproposals” that could “significantly impact” the country’s fiscal deficit,Metals Focus says. Further, analysts point out that the parties have been infavor of a referendum on the country’s participation in the euro. Italy’s bondyields have climbed and there is a risk of a further downgrade to Italy’s debt.“Overall therefore, it is not surprising to see that the euro has weakenednoticeably following the election result, giving up the gains realized over thefirst four months, in the process adding to the near-term downward pressure onthe gold price,” Metals Focus says. Still, the impact on gold has been limitedso far, analysts say, with no tangible rise in gold bar and coin demand inGermany, Europe’s largest physical investment market, or gold exchange-tradedproducts. “At present, there seems to be a wait-and-see approach, given thatdiscussions about the choice of prime minister have only just started,suggesting that policy announcements may not be an immediate concern,” MetalsFocus says. “However, safe-haven demand may then emerge, in response to agrowing anti-EU [European Union] mandate or as fears develop concerningexcessive fiscal slippage, and the potential for this to spread to otherEuropean countries. Although we are not prescribing another eurozone debtcrisis (as occurred in 2010), populist movements similar to those in Italycould benefit should the crisis in Italy deepen.”
By Allen SykoraFor Kitco News
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