Metals May Be Setting Up for Some Fireworks This Summer - Bloomberg
Prepare for some "fireworks" in the metals markets this summer, this according to one NY-based analyst at Bloomberg Intelligence.
"With 60-day index volatility at 10% -- the lowest since the 10-year bottom in 2014 at 9% -- the stage could be set for the next breakout move in metals," noted Mike McGlone, Bloomberg Intelligence commodity analyst, in a report Tuesday.
"A ho-hum May is pressuring volatility on the Bloomberg All Metals subindex to its lowest level in three years, just prior to the big dollar rally and metals collapse in 2014. Metals peaked as the dollar bottomed in 2011. They appear poised to continue to retrace that selloff, notably if the dollar has peaked."
Gold prices rallied to a seven-week high Tuesday, settling the day just shy of $1,300 an ounce, driven by a weak U.S. dollar and safe-haven demand. Meanwhile, silver prices notched a five-week high and are in a near-term uptrend.
The precious metals are up against a few key events this week starting with the U.K. elections and ECB meeting in Europe as well as former FBI director James Comey's testimony on Thursday.
However, it is really next week's Federal Open Market Committee meeting that seems to stand out, which is what McGlone focused most of his attention on in the report.
"Anticipating a rate-hike endgame or more increases with rising inflation, gold is poised to continue to perform well," he wrote.
"Since the Fed's March 15 rate hike, gold is up 5.6% vs. 3.2% for stocks."
According to CME's Fed Watch tool, markets are pricing in a 96% chance the FOMC will announce a 25-basis-point hike at its next policy meeting on June 14.
By Sarah BenaliFor Kitco News
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sbenali@kitco.comwww.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 precious metal products, 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.  |