Goldman Sachs: Trade-War Retaliation Could Boost Gold Demand
One of the potential outcomes of a tradewar is that other nations start dumping U.S. Treasury securities, which couldboost gold demand, says Goldman Sachs. Analysts put out a detailed researchreport outlining how U.S. President Donald Trump’s proposed tariffs on aluminumand steel could impact those metals as well as the industries that rely onthem, both producers and consumers. Yet another impact could be capital flows,particularly from U.S. trade partners that are net savers, Goldman says.“Because these trade partners are large holders of U.S. Treasuries, it is oftencited that they may retaliate by dumping U.S. securities at time when the U.S.Treasury needs to access global capital markets,” Goldman says. “Ifmaterialized, a reduction in U.S. Treasury holdings may boost the demand forgold, supporting our bullish view on gold prices.”
By Allen Sykoraof Kitco News; asykora@kitco.com
TDS onTrade War: Gold May Be‘Winner In Relative, If Not In Absolute Terms’
Tuesday March 06, 2018 08:50
Gold wouldbe the “winner” at least in “relative” terms compared to other commodities ifthe U.S. triggers a global trade war, says TD Securities. The metal initiallyfell last week on hawkishly construed congressional testimony from new FederalReserve Chair Jerome Powell, before recovering amid growing trade tensionsafter U.S. President DonaldTrump proposed tariffs on aluminum and steel. After falling to nearly $1,300 anounce, gold found “some respite as investors rushed for safety,” TDS says. TheTrump tariffs could prompt retaliation by other nations, as well as an“unwinding of existing geostrategic relationships, with the center shiftingtoward China,” TDS says. “These policies look to be negative for aluminum, steel, base metals, crude oil,and PGMs [platinum group metals] due to the negative impact on demand. Goldwould likely be the winner in relative, if not in absolute terms.”
By Allen Sykoraof Kitco News; asykora@kitco.com
RBC’s Gero: GoldFutures Lifted By Short Covering
Tuesday March 06, 2018 08:50
Gold is rallyingon short covering, with the U.S. dollar softer, says George Gero, managing director with RBC Wealth Management. Gold is stronger even thoughU.S. 10-year Treasury yields remain near 2.9% and stock-index futures arepointing to a higher open on Wall Street. Short covering is when traders buy tooffset bearish positions in which they previously sold the metal. “Gold istechnically improving thanks to the weaker dollar and ag products, and metalsmay become of greater interest going forward to asset allocators,” Gero says.He adds that he is “still looking at $1,400 by year-end, maybe sooner.” Around8:30 a.m. EST, Comex April gold was $10.80 higher at $1,330.70 an ounce, whilethe euro was up to $1.24025 from $1.23350 late Monday.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: ItalianPolitics, Trade Issues To Support Gold
Tuesday March 06, 2018 08:50
Gold prices may remain underpinned by worries about globaltrade and Italian politics, says Commerzbank. The Trump administration hasproposed tariffs on aluminum and steel, prompting worries about retaliation andreduced global trade that leads to a softer economy. Meanwhile, weekendelections left Italy with no party holding a majority and anti-establishmentcandidates making a strong showing, leading to the resignation of the leader ofthe previous ruling party. “The issue of import tariffs is likely to preoccupythe market for some time yet and to unsettle market participants, meaning thatgold should remain in good demand in the medium term,” Commerzbank says. “Theongoing political uncertainty in Europe in the wake of the elections in Italyalso points to solid gold demand, in our opinion.”
By Allen SykoraFor Kitco News
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