TDS: Gold To Ease If Stocks Recover, But Metal To Rise Later In Year
TD Securities says gold could slide whenever equities rightthemselves up again, but gold should rise later in the year since the FederalReserve will be cautious about hiking U.S. interest rates. Gold fell as lastweek wound down after a strong U.S. jobs report, with equity and bond pricesalso falling on ideas that the Fed will hike more in the coming year than was previously expectedand traders starting to contemplate the possibility of four hikes in 3017.“However, considering that rates still remain near historical lows, equityinvestors could very well re-anchor their investment theses, as the recentlyhigher rates are also accompanied with improving macroeconomic conditions,” TDSsays. “And, should equity fears subside, gold and its precious-metal friendsshould begin to give in to higher rates and increased Fed expectations - whichwe expect will help to drive the yellow metal toward $1,316/oz. That beingsaid, we anticipate that the Fed will increase rates only cautiously, and giventhat the hurdle rate for U.S. data to continue beating expectations should growas analysts move their expectations higher. Still low real rates, a flattishyield curve, a weak USD [U.S. dollar] and fewer data surprises all tend tosupport a stronger precious environment, which should see prices head backhigher later in the year.”
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: Gold Traders Monitoring Equities For Next Move
Tuesday February 06, 2018 08:18
Gold’s next move may hinge on equities, with more buying of themetal if the stock-market sell-off continues but some potentiallong-liquidation selling if equities recover, says Sam Laughlin, seniorprecious-metals trader with MKS (Switzerland) S.A. The metal rose inAsia-Pacific trade as Monday’s sharp sell-off in U.S. stocks spread around theglobe. “In lieu of dollar moves, the global equity market weakness underpinnedinterest in the precious, sending gold to a $1,346.10 session high...,” Laughlinsays. Flows have softened since but there is still an “underlying bid tone”keeping the metal buoyant around $1,340, he continues. “Gold positioning,although recently lightened, still lends itself to further position squaring,notably with regards to the recent build in longs should we see a reversal tothe recent stock-market weakness (longs at around 65% of all-time high),” MKSsays. “That being said, we may see further moves out of equities should therecent weakness persist, lending itself to a reallocation of funds intosafe-haven assets and further precious gains.” Laughlin says the$1,340-per-ounce area offers initial chart support for gold, but strongersupport from $1,330 to $1,335 will act as a pivot point over the near term.“Bulls will be focusing on a sustained break above $1,350 for a test toward thelate-January high around $1,365,” he adds. Around 7:44 a.m. EST, spot gold was 95 cents higher to$1,340.20.
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH:Stock Tumble Not Enough To Seriously Hurt Consumer Sentiment
Tuesday February 06, 2018 08:18
The sharp drop in U.S. equities on Monday really only cost themarket a month of gains and may not be enough to seriously damage consumersentiment, says Brown Brothers Harriman. The Dow Jones Industrial Average lost 1,175.21 points Monday for itsbiggest one-day point drop ever. “Yet it is important to put the priceaction in perspective,” BBH says, pointing out that the major bourses gave up last month'sgain and a little more, with the Dow now off just 1.5% for the year. TheS&P 500 was off less than 1% coming into Tuesday. “If one was concernedthat equity valuations were elevated, the recent drop may have simply skimmedoff some froth.” The initial reaction seems to be two-fold, BBH says. “One isthe broad de-risking, and the second is the economic implications,” BBH says.“The idea is that the sharp decline in equities will impact consumer sentimentand undermine the wealth impact. Given the strength of the U.S., EMU, andJapanese economic momentum, it may take more than giving back a few weeks’worth of gains to pose a serious challenge.”
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.