SP Angel: Fed Rate-Hike Expectations Still Pressuring Gold
Gold remains under pressure after commentsabout the economy this week from Federal Reserve Chairman Jerome Powell sustained expectationsfor another U.S. interest-rate increase in September, says commoditiesbrokerage SP Angel. As of 8 a.m. EDT, Comex August gold was $12.30 lower to$1,215.60 an ounce and bottomed at $1,214.40, its weakest level in more than ayear. SP Angel cites comments from Powell suggesting that the U.S. economy maynot yet have reached full employment, while noting that risks to central bank’sinflation forecast are “roughly balanced.” SP Angel concludes: “Gold hastumbled more than 10% from a 17-month high reached in January as resilienteconomic growth boosts speculation that the Fed will continue raising interestrates.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Dow-Gold Ratio Hits 11-YearHigh
Thursday July 19, 2018 08:17
The ratio of the Dow Jones Industrial Average to gold has hitits highest level in more than a decade, which “reflects how cheap gold is atpresent,” says Commerzbank. “The last time it was this high was 11 years ago,when gold cost just shy of $680 and the Dow Jones was trading at 14,000points,” the bank says. “Subsequent months saw gold make considerable gains,partly because there was a correction on the stock markets. It remains to beseen whether something similar will happen this time.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Metals Focus: Gold Recovery May HelpPlatinum Recoup Lost Ground
Thursday July 19, 2018 08:17
Platinum’s hope for a recovery may hinge on gold, since platinum’ssupply/demand fundamentals are not favorable at the moment, says Metals Focus.“The increasingly negative tone towardsplatinum reflects several issues,” the consultancy says in a report this week.Supply from key producer South Africa is not expected to fall meaningfullydespite profit-margin pressures, as costs such as electricity rise, theconsultancy says. For one thing, the industry would have to contend withpressure from the government in a nation with an unemployment rate of around27%. Meanwhile, demand has been hurt by the “ongoing and steep market sharelosses” for the light-duty diesel-car market in Europe, which requires platinumfor catalytic converters. “The combination of lackluster demand along withsticky global supply means that platinum must contend with market surpluses,”Metals Focus says. As a result, the ability of platinum prices to strengthen“will remain largely contingent on the trend in gold,” the consultancy says.And, analysts say, gold may rise later in the year as U.S. economic growthslows and markets start to factor in monetary tightening by the EuropeanCentral Bank. “As a result, some rotation in favor of gold should graduallyemerge, driving prices higher late in 2018, with a peak in the upper $1,300spossible in our view,” Metals Focus says. “This move should also benefitplatinum. As a result, the platinum price may well end the year closer to$1,000 than $800.”
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.