Standard Chartered: $1,220 Could Be Turning Point For Gold
Gold’s recent move back above $1,220 anounce may signal a turning point for the precious metal, as investor buying haspicked up, says Standard Chartered. Prices must still break up through a numberof technical-chart levels to reach the psychologically important1,300-per-ounce level, Standard says. “We continue to believe price risks areskewed to the upside, particularly as $1,220/oz was a key level watched by themarket and it has triggered investor inflows,” Standard continues. “ETP[exchange-traded-product] buying has turned positive, and tactical positioningshows signs of recovering from 2001 lows. Should the USD [U.S. dollar]stabilize or even weaken, the macro backdrop looks more favorable for gold,particularly if its safe-haven status strengthens. Gold reasserted itssafe-haven status amid Italy’s latest political woes, and last week’sequity-market weakness again stoked interest in gold.” A floor has emerged inthe physical market on price dips below $1,200, Standard Chartered adds. “Weexpect India’s demand to firm as the Diwali holiday period approaches.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Markets May Be Underestimating Fed’sWillingness To Tighten
Thursday October 18, 2018 08:18
Wednesday’s release of minutes from the last meeting of the U.S. FederalOpen Market Committee suggests markets may have been underestimating thepotential for the Fed to keep hiking interest rates, says Brown BrothersHarriman. “FOMC minutes are usually a ho-hum affair, but not this time,” BBHsays. “Thekey takeaway is that several Fed officials are openly discussing a move to arestrictive policy.” Policymakers appear to believe that short-term neutralrate has moved above the long-term neutral rate of 3%, “which to us suggests3.5%,” BBH says. “That in turn suggests that a restrictive rate would be in theneighborhood of 4%. A lot can happen (a U.S. slowdown) before the Fed canever reach that restrictive rate. However, minutes underscore the factthat the markets are vastly underestimating the Fed’s capacity to tighten.” The Fed news could signalthe start of the next leg higher in U.S. Treasury yields, BBH adds. As ofany early-morning BBH research note, the 10-year yield was trading at 3.21%,the highest since Oct. 10. “At some point, we think markets will start thinkingabout a fourth hike next year,” BBH says.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank:Kazakhstan, Mongolia, Poland Add Gold To Reserves
Thursday October 18, 2018 08:18
The central banks of Kazakhstan, Mongolia and Poland werenoted gold buyers last month, while there was selling from countries likeTurkey and Argentina that are facing a currency crisis, notes Commerzbank.Analysts cite data collected by the International Monetary Fund showing thatthe Polish central bank increased its holdings by a further 4.4 tonnes.Kazakhstan bought 3.7 tonnes, and Mongolia added 3.4. “By contrast, goldreserves in Turkey were reduced by 104 tonnes, though this was not necessarilydue only to central bank sales [as] commercial banks are also likely to havereduced the amount of gold they hold at the central bank,” Commerzbank says.“The IMF likewise reported lower gold reserves for Argentina. Both countriesare facing a currency crisis at present due to homegrown problems.”
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: Gold Holding $1,220 But Could Slip IfStocks Recover
Thursday October 18, 2018 08:18
MKS (Switzerland) S.A. lists a number oftechnical-chart levels to watch for spot gold, which was up $2.20 to $1,224.25as of 7:45 a.m. EDT. “Gold continues to trade resiliently above $1,220;however, could see a break toward support around $1,215 should equity marketsrecover markedly from recent weakness,” MKS says. “Top-side resistance initiallycuts in around $1,230; however, more importantly $1,235 remains the key pivotpoint, while recent short positioning is likely to unwind through to $1,240.”
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.