Weak Global iPhone Sales Could Boost Gold's Safe-Haven Appeal - FXTM
(Kitco News)- Negative sentiment continues to build around tech giantApple (Nasdaq: AAPL), and some analysts have warned that slower iPhone sales could havebroader implications on global growth that could benefit safe-haven assets like gold.
In a report Tuesday, Hussein Sayed, chief market strategistat FXTM, said the little smartphone had a significant impact on U.S. grossdomestic product growth and the global economy. The comments comes followinggrowing concerns that smartphone demand has started to fall, which could be an indicationof weaker economic activity moving forward.
"When looking from a global perspective, mobiletechnology and services are estimated to have added $3.6 trillion or 4.5% to2017 global GDP, according to the IMF. China exported $128 billion worth ofsmartphones representing 5.7% of its total exports. Meanwhile, in Korea,semiconductors alone accounted for 17.1% of total exports," he said in thereport. "That's what makes the iPhone and other smartphone sales a vitalindicator of global economic growth."
In an emailed statement to Kitco News Wednesday, JameelAhmad, global head of currency strategy & market research at FXTM, saidthat in the long term, gold looks attractive in an environment of lower globalgrowth. However, he added that near term the yellow metal faces significantheadwinds from surging in momentum in the U.S. dollar.
"It is the dollar that is driving global marketsright now and more so than fears over global stock market volatility, which iswhy gold has slipped over recent sessions," he said. "Until themarket redirects attention away from the dollar and accepts the concerns overglobal economic growth, it is difficult to see where gold finds the inspirationto drive past the three-month highs seen a few weeks ago anytime soon."
While U.S. dollar strength will keep a lid on gold, Ahmadsaid that another round of aggressive equity market weakness and risingvolatility could provide some support for the beleaguered precious metal.
Comex December gold futures last traded at A$1,201.70 anounce, relatively flat on the day. Meanwhile, the U.S. dollar index continuesto hover near its highest levels since June 2017, last trading at 97.16 points,up 0.22% on the day.
In equity markets, major banks are downgrading their outlooks for Apple and iPhone sales. Wednesday, Guggenheim downgradedApple to neutral from buy; at the same time, both UBS and Goldman Sachs loweredtheir price targets for the tech company.
By Neils ChristensenFor Kitco News
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