Standard Chartered: Geopolitical Risks Could Trigger Short Covering In Gold
Geopolitical risks, such as thosesurrounding Italy, could trigger a short-covering rally in gold, says StandardChartered. Prices rose sharply Tuesday, helped by Italy’s fiscal and politicalissues, before falling back around $1,200 again on Wednesday. Still, Tuesday’srally shows that gold “remains on investors’ radar” during times of uncertaingeopolitical developments, Standard Chartered says. “As we have highlightedpreviously, positioning is overextended in gold, with gross shorts [bearishpositions] close to record highs...,” Standard says. “If a geopolitical catalystboosted prices above the 100-day moving average, a significant short-coveringrally could push prices up towards $1,300/oz.” Short covering is when bearishtraders buy to get out of existing positions. “Seasonal demand for gold,alongside central-bank buying, has offset some of the weakness on the investorside, and should start to limit the downside for prices; but greater support islikely to come from a stable USD [U.S. dollar],” Standard says.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Gold ETFs Report Outflows SoFar In October
Thursday October 4, 2018 08:53
Commerzbank reports thatinvestors are continuing to move out of gold-backed exchange-traded funds earlyin the fourth quarter. The ETFs trade like a stock but give investors exposureto the price of gold, with metal put into storage to back the shares. “The gold ETFs tracked by Bloomberg have seen outflows of 14.5 tonnes since the start ofthe month,” Commerzbank says. “Apparently investors still do not see gold as anattractive investment alternative.”
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Dollar Remains Strong As Yields EnterNew Phase
Thursday October 4, 2018 08:53
A rally in the U.S. dollar remains intact as Treasury yields reach higherground, says Brown Brothers Harriman. As of 8:24 a.m. EDT, the December U.S.dollar index was up 0.119 point to 95.525. “The rise in U.S. yields hasentered a new phase,” BBH says. “After being unable to break much above 3.10% this past month, the10-year yield shot up to 3.19% yesterday. Today has seen a continuation of this,with yields trading as high as 3.23% before stalling. This is the highest ratesince May 2011.” The strength in yields was helped Wednesday bystronger-than-expected U.S. data, including the ADP report on private-sectorpayrolls and the employment component of a report from the Institute for SupplyManagement, BBH adds.
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