Commerzbank: Gold To Benefit Long Term From U.S. Election Outcome
Gold may well benefit two ways from U.S. midterm elections,says Commerzbank. Democrats won control of the House of Representatives,although Republicans maintained the Senate. This presumably will put an end anyfurther tax cuts, “which means in the longer term that the Fed will need to implementfewer rate hikes, which per se will have a negative impact on the U.S. dollar,”Commerzbank says. “U.S. President Trump may instead focus more on foreignpolicy, which is likely to generate additional uncertainty. Gold would profitlong term from both factors.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: U.S. Election Best Outcome ForMarkets
Wednesday November 07, 2018 09:05
Democratic control overthe House of Representatives will provide a check to keep Republicans fromcontinuing to increase the budget deficit, and the Federal Reserve is likely tohike interest rates, says Brown Brothers Harriman. Democrats won control of theHouse in midterm elections Tuesday, while Republicans kept the Senate. This wasthe outcome markets had factored in and may be the best for markets, BBH says.“Why? The legislative branch will now fulfill one of its most importantfunctions, which is to provide checks and balances on the executive branch,”BBH says. The U.S. fiscal stance and macroeconomic outlook remain intact,meaning the Fed will feel comfortable continuing to hike U.S. interest rates,BBH says. “We have expressed serious concerns about the U.S. fiscal outlook,”BBH says. “As it currently stands, the budget deficit is widening even as theU.S. economy is growing robustly. Another shot of fiscal stimulus would beill-advised, and the split Congress means that is now very unlikely.” BBH looksfor wage and price pressures to keep rising, leading the Fed to tighten in December, followed by atleast three hikes in 2019.
By Allen Sykoraof Kitco News; asykora@kitco.com
TDS: Gold May Not Benefit From CTA Buying Yet; Palladium InterestFades
Wednesday November 07, 2018 09:05
Commodity Trading Advisers are not rushing into gold yet eventhough the metal rose as the U.S. dollar eased after midterm congressionalelections, TDS says. There is a risk of CTA selling of palladium, however, thefirm adds. Around 9 a.m. EDT, spot gold was $1.50 higher to $1,228 an ounce.The spot U.S. dollar index was down 0.513 point to 95.804. “While the marketwill likely continue to assess the potential market impact of the midterms, wesuspect that precious-metal buyers will not receive any substantial supportfrom CTAs [Commodity Trading Advisers] for the time being,” TDS says. “Weestimate that CTA buying interest in palladium is fading, and are keeping aclose eye on the $1,070/oz range as a break below would imply substantial flowto the downside. In contrast, CTAs could turn to modest buyers in sister-metalplatinum should prices break the $900/oz range as momentum signals reverse.”
By Allen SykoraFor Kitco News
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