Standard Chartered: Inflation Expectations Could Boost Interest In Gold
StandardChartered sees potential for interest in gold as an inflation hedge to pick upagain. “Rising inflation expectations as a driver of gold prices have providedlittle motivation for investors to buy gold over the past year,” analysts say.This has occurred since inflation has not materialized despite quantitativeeasing in key developed nations. “The relationship between gold and inflationexpectations has been mostly in neutral territory over the past two years,”Standard Chartered says. “But after the hiatus, investors are once againlooking to gold as a potential inflation hedge.” For now, gold has the strongestcorrelation with the U.S. dollar, followed by five-year U.S. Treasuries,analysts say. “Gold tends to perform well as an inflation hedge if it isbought before inflation picks up and in periods of high inflation,” StandardChartered continues. “Our economists forecast the y/y increase in inflation toaverage below 2% in the U.S. and euro area, 2.7% in China and 4% in India in2018. We do not expect inflation to be a key driver this year, but risinginflation expectations could be more important to track. We believe the macroenvironment sets a positive backdrop in 2018 given our expectations for the USDto weaken, and our global growth and inflation expectations amid continuedgeopolitical and political uncertainty.”
By Allen Sykoraof Kitco News; asykora@kitco.com
RBC's Gero: Gold Nearing $1,360 Technical Breakout Area
Wednesday January 24, 2018 08:53
Gold prices are now within “hailing distance” of a technicalbreakout area around $1,360 an ounce, says George Gero, managingdirector with RBC Wealth Management. Around 8:50 a.m. EST, Comex February gold was $15.60 higher to $1,352.30 anounce and peaked at $1,353.50, its strongest level since September. Gero saysthe most recent rise occurred as the dollar index fell below 90.
By Allen Sykoraof Kitco News; asykora@kitco.com
SP Angel: ETF Gold Holdings Highest Since 2013
Wednesday January 24, 2018 08:09
Holdings of gold by global exchange-traded funds have hit thehighest level in nearly five years, says SP Angel. The metal has rallied forfive straight sessions, and investors have been moving into gold ETFs, thecommodities brokerage says. The ETFs track the price of the metal but tradelike a stock. “The precious metal is up almost 3% in the spot market this year,sustaining the surge throughout 2017 as the dollar continues to slide,” SPAngel says. “The total known holdings in bullion-backed ETFs rose to 2,254tonnes as of Tuesday, the highest since May 2013.” Commerzbank analysts say Tuesday marked the sixth dailyinflow in a row, with holdings now up by 30 tonnes since the beginning of theyear.
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH:Mnuchin Talks Down U.S. Dollar
Wednesday January 24, 2018 08:09
Thedollar remains weak, with the latest wave of selling brought on by commentsfrom U.S. Treasury Secretary Mnuchin, BBH says. Analysts note that while inDavos, Mnuchin was quoted as saying: “Obviously a weaker dollar is good for us as it relates totrade and opportunities.” BBH points out that Treasury secretaries since RobertRubin (1990s) have never deviated from the strong-dollar mantra. “That mantrahas never really meant much, but to deviate from it suggests that U.S.policymakers desire a weaker dollar,” BBH says. “Rubin started this ‘policy’after his predecessor Lloyd Bentsen used the exchange rate to pressure Japaninto opening its markets. Mnuchin's comments pack an even bigger punch comingafter the U.S. trade actions announced this week.” BBH points out that the U.S. dollar hashit multi-year lows against the euro. Metals traders tend to monitor moves inthe dollar since base and precious metals alike tend to trade inversely to theU.S. currency.
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: DollarWeakness Means Continued Support For Gold
Wednesday January 24, 2018 08:09
Gold hasdrawn recent support from a weak U.S. dollar and this may well continue, saysAlex Thorndike, senior precious-metals dealer with MKS (Switzerland) S.A. “Interestingly,the gold has shrugged off any correlation to moves in equities and rates forthe time being and is moving more in sync with the dollar,” he says. “Giventhat the sell-off in USD looks to continue, for the time being, we seeconditions remaining supportive for the metal.” Spot gold has hit afour-month high of $1,351.55 as the dollar hit a three-year low.
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.