FXTM: Gold Pressured By Dollar Amid Rising Trade Tensions
Goldhas “descended into the abyss” despite intensifying trade tensions rattlingfinancial markets and leaving investors on edge, with an appreciating U.S.dollar the main factor pushing the precious metal lower, says Lukman Otunuga, research analyst atFXTM. “Withthe dollar likely to find ample support amongst the bullish sentiment towardsthe U.S. economy and heightened expectations of higher U.S. interestrates, gold could be poised for further punishment,” Otunuga says. “Whilethe argument for the precious metal to potentially rebound may be basedaround trade tensions and geopolitical uncertainty, an appreciating dollarcould continue obstructing any upside gains.” Based on the technical charts,gold is under pressure on the weekly timeframe, the analyst says. “Sustainedweakness below [the] $1,280 level could be an early indication that bearsare back in the game,” Otunuga continues. “Previous support at this level couldtransform into a dynamic resistance that opens a path towards $1,264.” As of8:50 a.m. EDT, spot gold was $4.40 lower to $1,273.50 an ounce.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Gold ETFs PostOutflows Of 4.5 Tonnes
Tuesday June 19, 2018 08:55
Gold exchange-traded-fundinvestors have exited some of their bullish positions as global trade tensionsintensify, says Commerzbank. “We find it incomprehensible that gold should notbe in demand in the current market environment, characterized as it is by highlevels of uncertainty, and is trading instead close to its lowest level sincelate 2017,” the bank says. “And as if this were not enough, ETF investorsactually jettisoned some of their holdings yesterday. The gold ETFs tracked byBloomberg registered outflows of 4.5 tonnes. It may be that investors areselling gold just now to offset losses in other asset classes.” Silver is nowfalling, as are other industrial metals, after silver had been pulled higher byrising prices for base metals last week, Commerzbank says. “Silver has more orless reversed its outperformance of gold again now, and the gold/silver ratiohas climbed back to over 78,” the bank adds.
By Allen Sykoraof Kitco News; asykora@kitco.com
BBH: Escalation of Trade Tensions Scaring Investors
Tuesday June 19, 2018 08:55
Theescalation of trade tensions between the U.S. and China, which are the world'stwo largest economies, is scaring investors, who are liquidating equities andbuying bonds, says Brown Brothers Harriman. The U.S. dollar and Japanese yen are thestrongest of the major currencies, although the Swiss franc is mostly steady asbenefits some from the unwinding of risk trades, analysts report. The mainimpetus comes from the Trump administration,” BBH notes. In response to China's retaliationfor the 25% tariff on $50 billion of Chinese goods for intellectual-propertyrights violations, the U.S. has announced that it will put an additional 10% on$200 billion of Chinese goods, plus threatened even more if China retaliates.“China goods imports from the U.S. amount to around $130 billion,” BBH says. “Chinacannot play a tit-for-tat strategy unless it doubles and triples up on tariffsfor existing goods.” However, BBH later adds, “The inability of China to matchthe escalation by the U.S. invites an asymmetrical response. Thatmeans if China cannot win in this space that it will look for another place toexpress its displeasure with the U.S. action. There are numerous areas inwhich the U.S. seeks China's cooperation, such as North Korea, Iran, terrorismand the South China Sea.”
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