TDS Looks For Dollar Strength To Fade, Supporting Gold
TD Securities says it looks for a weakening U.S. dollar and areversal in positioning to buoy gold. Analysts say they anticipate that thedollar’s recent upward momentum will fade, particularly after U.S. PresidentDonald Trump accused America's trading partners of currency manipulation andbroke with tradition to criticize Federal Reserve monetary policy. “The severeflattening of the U.S. yield curve and the lack of positive carry across theTreasury curve when hedging costs are factored in will be major headwinds thatstart to work against the greenback into 2018,” TDS says. With the EuropeanCentral Bank planning to unwind quantitative easing, TDS sees the euro trendingtoward the low $1.20 area later this year. “Positioning USD optimism, trade andEM [emerging-market] angst have prompted investors to shun gold, dragging netpositioning near the lower bound as money managers hold excessive shorts andare significantly underweight,” TDS says. “In fact, further analysis suggestsgold traders hold significant amount of dry powder to increase their bullishbets, but are constrained on the short side.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Price Group’s Flynn: Gold Market ‘GettingOversold’
Friday July 20, 2018 08:31
The gold market may be "gettingoversold” and ready to stage a rebound, says Phil Flynn, senior marketanalyst with at Price Futures Group.Comex August gold on Thursday hit itslowest level in more than a year. As of 8:18 a.m. EDT, the contract was up 30cents to $1,224.40 an ounce. “It’s due for a bounce,” Flynn says. “I think mostpeople believe the market is getting oversold.” A possible catalyst for abounce is U.S. President Donald Trump’s comments criticizing Federal Reserverate hikes, Flynn notes. On the one hand, the president does not set interestrates. But on the other hand, “sometimes you need a change in psychology to getpeople to take profits,” he continues. In this case, he suggested traders withbearish positions could buy to offset them and capture profits.
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: Gold ‘Vulnerable’ Due to U.S. DollarStrength
Friday July 20, 2018 08:20
Gold remains “vulnerable” due to recentstrength in the U.S. dollar, says Lukman Otunuga, research analyst at FXTM. As of 8:02 a.m. EDT, spot goldwas $1.90 higher to $1,224.50 an ounce a day after hitting its lowest level inmore than a year. “Theaggressive depreciation witnessed in recent days continues to highlight how theprecious metal remains heavily influenced by the dollar’s performance and U.Srate-hike speculation,” Otunuga says. “With [Federal Reserve Chair] JeromePowell reinforcing market expectations over the Fed gradually raising rates,gold is likely to remain vulnerable despite trade tensions weighing onsentiment.” The technical-chart outlook remains bearish, the analyst says.“Sustained weakness below $1,236 could encourage a decline toward $1,209 and$1,200, respectively.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Potential Strike Looming InSouth Africa’s Gold Sector
Friday July 20, 2018 08:20
A strike is looming in the South Africangold-mining sector, reports Commerzbank. Analysts note that the nation was oncethe world’s largest gold producer although it wasonly ranked seventh last year. They point out that the National Union ofMineworkers has rejected a pay offer from the mining association, calling it an“insult,” and is demanding wage increases of 15% to 18.5% for a two-year deal.The Association of Mineworkers and Construction union “also regards the offeras unacceptable,” Commerzbank adds.
By Allen SykoraFor Kitco News
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