Mitsubishi: Sagging Dollar To Lift Gold; Rate Hikes Already Factored Into Prices
Further U.S.rate hikes have already been factored into the markets while there is potentialfor monetary tightening in Europe, all meaning potential for weakness in theU.S. dollar and conversely strength for gold in 2018, says Mitsubishi. Thedollar weakened in 2017 despite three Fed rate hikes. “Nonetheless the Fedhikes and strong growth had already been priced into the dollar, whereas economicgrowth in the euro zone together with plans to scale back quantitative easingcame as something of a surprise,” Mitsubishi says. “With the European CentralBank likely to dial back further on quantitative easing and possibly end it in2018, the euro probably has some further ground to gain. The dollar hasprobably already digested the U.S. Federal Reserve’s clear intentions to raiserates a further three times in 2018, meaning the Fed would have to become muchmore aggressive on rates in order to improve the dollar’s prospects.” Even thepotential repatriation of overseas assets by U.S. companies, which some say maybe encouraged by tax reform, may be less dollar-bullish than some think sincecompanies tend to hold small cash reserves to minimize forex risk, Mitsubishisays. Further, any economic benefits coming from personal tax cuts are largelyalready factored into markets. “All of this paints a relatively bearish picturefor the U.S. dollar and is generally positive for U.S.-denominated commodities,especially gold as a currency in its own right,” Mitsubishi concludes.
By Allen Sykoraof Kitco News; asykora@kitco.com
Mitsubishi:Gold Posts Highest January Opening Since 2013
Thursday January 04, 2017 07:56
Gold began2018 with its highest opening price for a calendar year in five years afterrising by some 13% in 2017, says Mitsubishi. Spot metal finished 2017 justabove $1,300 an ounce and has been above this psychological level since. “Goldbegins 2018 at the highest level since last September, and the highest Januaryopening since 2013. This marks only the fourth time ever that gold has openedthe year above $1,300/oz,” Mitsubishi says. “Bullion rose by over $150 (13%)last year, the best annual performance since 2010’s 30% rise. In large part,the performance of gold, and indeed the performance of many dollar-denominatedasset prices, can be explained by the weakness of the US dollar, which fell by10% last year against a basket of major traded currencies - the worst yearlyperformance since 2003.”
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: IndianGold Demand Recovers In 2017
Thursday January 04, 2017 07:56
Indian gold demandrecovered last year, says Commerzbank. Analysts cite data from Thomson Reuters GFMS showing thecountry’s gold imports in 2017 soared by 67% year-on-year to 855 tonnes.“Jewelers had replenished their stocks, particularly in the first half of theyear, while a good monsoon season contributed to high gold demand among therural population,” Commerzbank says.
By Allen Sykoraof Kitco News; asykora@kitco.com
SP Angel: Gold DownFrom Recent High After Fed Minutes
Thursday January 04, 2017 07:56
Gold has not been ableto regain Wednesday’s multi-month highs after minutes from the last meeting ofthe U.S. Federal Open Market Committee signaled continued monetary tightening,with technical factors also working against the yellow metal for now, sayscommodities brokerage SP Angel. Analysts cite a portion of Fed minutes,released late Wednesday, saying policymakers favor “continuing a gradualapproach to raising the target range” for the benchmark policy rate, therebyreminding investors that the FOMC still anticipates three rate hikes in2018.The minutes also said there is a possibility that inflation pressurescould build if output expands too much or as a result of fiscal stimulus or“accommodative” financial conditions. “The precious metal looks set to continueits fall, with technical indicators showing the metal was in overboughtterritory for past two days, recording 71.89 on Wednesday, with some traderslinking a 14-day Relative Strength Index above 70 with unsustainable climbing,”SP Angel says. As of 7:52 a.m. EST, Comex February gold was down $4.60 to$1,313.90 an ounce after peaking Wednesday at $1,323, its strongest level sinceSeptember.
By Allen SykoraFor Kitco News
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