Mitsubishi: Real Rates, Dollar To Be Favorable For Gold
Mitsubishilooks for gold to find support from two main factors in 2018 -- a favorableenvironment for real interest rates and a subdued U.S. dollar. “The U.S.Federal Reserve is likely to raise interest rates only slowly andconservatively and be disinclined to get ‘ahead of the curve’ despite the U.S.economy growing at full steam and signs of rising inflation beginning toemerge, partly as a result of a weak dollar,” the firm says. “Though U.S.government bond yields may begin to break out of a 30-year downtrend, yieldsare likely to remain subdued overall and real rates will be kept low ifinflation picks up.” Mitsubishi looks for the dollar to underperform othermajor currencies as quantitative easing is dialed back and possibly ended inEurope. “Coupled with concerns about the deterioration of the U.S. fiscalposition in the light of tax cuts and infrastructure spending, plus worriesabout downwards corrections in toppy equity markets, gold will benefit fromsome risk hedging,” Mitsubishi says. “Add to this the myriad risks anduncertainties in the world economy, holding gold as a defensive play in 2018may make sense for more investors.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Mitsubishi:Palladium Prices May Extend Record Highs But Then Recede
Wednesday January 31, 2018 10:58
Mitsubishilooks for palladium prices to recede but not as dramatically as back in 2001,when they also topped $1,000 an ounce. The metal could still hit fresh all-timehighs in the first quarter on speculative buying, the firm says. The metal wasone of the top-performing commodities in 2017. “Prices will pull back fromthese overstretched levels as investors take profit and reallocate portfolios,and as scrap supplies and above-ground stocks become mobilized,” Mitsubishi says.“This will not be like the crash in prices post-2001, however, as the marketwill remain in a supply-demand deficit and a backwardated forward market isstill likely to prevail. Primary supplies will remain tight as an increase inoutput from Russia is offset by declining underlying production in SouthAfrica.” Demand could change, the firm continues, noting that China is removingthe subsidies on new cars and the U.S. auto market is showing signs of peaking.The main industrial use for palladium is catalytic converters in automobiles.
By Allen Sykoraof Kitco News; asykora@kitco.com
BMO: Gold Lifted By Soft U.S. Dollar Ahead Of FOMC
Wednesday January 31, 2018 08:00
Gold has gotten a boost from a weaker U.S. dollar, says BMOCapital Markets. As of 7:52 a.m. EST, Comex April gold was up $6.30 to$1,346.40 an ounce. This occurred as the U.S. dollar index slipped below 89.0,BMO says. “Gold prices continue to marchhigher, buoyed by a subdued dollar ahead of Janet Yellen’s final FOMC [FederalOpen Market Committee] meeting as Fed chair,” BMO says. “Consensus expectationsare for U.S. interest rates to remain unchanged with further indication ofgradual tightening later on in the year as robust economic data and keyindicators in the labor market point towards further growth.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Trump‘Offered No Lifeline For The Dollar’
Wednesday January 31, 2018 08:00
President Donald Trump’s State of theUnion speech Tuesday night “offered no lifeline for the dollar,” says BrownBrothers Harriman. As of 7:52 a.m. EST, the euro was up to $1.24521 from$1.24021 late Tuesday. Trump focused on the strength of the U.S. economy, BBH says. “However,details of his proposed plan to boost infrastructure spending were lacking,”BBH says. “And while he talked of the need for greater bipartisanship ahead,Trump offered the Democrats very little in terms of possible compromises on themost contentious issues.”On another subject, BBH says a “hawkish hold” is the most likely outcome from aFederal Open Market Committee meeting that wraps up on Wednesday. “Growthimpulses are stronger,” even though growth in headline fourth-quarter gross domesticproduct disappointed, the firm says. “The part of the economy that is the mostresponsive to monetary policy, final domestic purchases, rose by a robust4.8%.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank:Palladium Hit By Profit-Taking; Premium Over Platinum Narrows
Wednesday January 31, 2018 08:00
Platinumhas narrowed its price discount to palladium as the latter undergoesprofit-taking, says Commerzbank. Palladium was the strongest precious metal in2017 and continued to rise during the first two weeks of 2018, before pullingback. The metal fell some 3% Tuesday. “It was presumably dragged down by basemetals,” Commerzbank says. “What is more, profit-taking probably ensued aftermarket participant sentiment towards palladium had long been close to euphoric.Since mid-last year, speculative financial investors have been continuouslybetting heavily on rising palladium prices. Hence there has been and indeedstill is considerable correction potential from this perspective.” Palladiumhas now shed all of its gains since the start of the year, the bank points out.“Platinum fared better than palladium yesterday, narrowing the price gapbetween the two precious metals to less than $60 per troy ounce,” Commerzbankadds. As of 7:50 a.m. EST, spot palladium was up $2.45 to $1,056.95, whileplatinum was up $8.90 to $1,005.05.
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.