Category: Gold Price

All the Reasons Cryptocurrencies Will Never Replace Gold as Your Financial Hedge

RiskHedge/Olivier Garret/11-17-17

Despite what the crypto-evangelists will tell you, digital tokens will never and can never replace gold as your financial hedge.

Here are six reasons why.

#1: Cryptocurrencies Are More Similar to a Fiat Money System Than You Think.

#2: Gold Has Always Had and Will Always Have an Accessible Liquid Market.

#3: The Majority of Cryptocurrencies Will Be Wiped Out.

#4: Lack of Security Undermines Cryptocurrencies’ Effectiveness.

#5: Hype and Speculation Continue to Drive Cryptocurrencies’ Value.

#6: Cryptocurrencies Do Not Have Gold’s History as a Store of Value.

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Posted in Cryptocurrency, Gold News, Gold Price, Gold Views |

The Daily Market Report: Gold Retreats Into Range After Stalling Ahead of $1300


USAGOLD/Peter Grant/11-20-17

Gold is down in U.S. trading after tests of the upside late last week stalled shy of $1300. Stronger than expected U.S. leading indicators for October buoyed stocks and the dollar, which weighed on the yellow metal.

U.S. leading indicators rose 1.2% in October, well above expectations of +0.5%, versus a positive revised +0.1% in September (was -0.2%). This reading further reinforces expectations for a 25 bps rate hike when the FOMC meets December 12-13. Such a move has been essentially fully priced in by the markets since shortly after the Fed opted to pause the tightening cycle back in September because of soft inflation data.

While inflation data have firmed somewhat since the hurricanes, it remains to be seen whether these price pressures are sustainable. The Fed will get a look at October PCE data a couple weeks prior to the FOMC meeting. This is the Fed’s preferred measure of inflation and hints of renewed weakness could prompt a rather rapid unwind of positioning premised on the all-but assured expectations of a rate hike.

Fed Chair Janet Yellen announced today that she will leave the Fed once her successor is seated. Jerome Powell has been nominated to be the next Fed chair and is expected to get approved by the Senate. That will give President Trump another position to fill at the Fed. We’ll hear FedSpeak from Ms. Yellen tomorrow.

With gold back on the ropes within the range, a breakout in this holiday shortened week is looking unlikely. Recent pullbacks within the range however have been viewed as buying opportunities. Support is well defined at 1263.00/1260.10.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

‘New normal’ of geopolitical risk likely to boost gold prices in coming years, Citi forecasts


CNBC/Sam Meredith/11-20-17

Gold prices are likely to be buoyed by the “new normal” of elevated geopolitical tensions over the coming years, Citi analysts said Monday.

The geopolitical case for gold investment has been emboldened in recent months and it seems as strong today than at any point over the last four decades, Citi analysts said. As a result, gold prices were forecast to “push north of $1,400 per ounce for sustained periods” through to 2020.

…”Event-driven bids for gold seem to be occurring more frequently and may be the new normal… In short, even as the rates and forex channel dominate the outlook for gold pricing, the yellow metal is increasingly being used by investors as a policy and tail risk hedge,” Citi said.

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Posted in Gold News, Gold Price, Gold Views |

Gold slips on stronger dollar, but holds near one-month high

Reuters/Pratima Desai/11-20-17

Gold slipped on Monday as the dollar rose, but prices still held near one-month highs hit last week as political and economic uncertainty in the United States dominated sentiment.

…The dollar gained against the euro after German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed. Merkel said she would inform the German president that she could not form a coalition, after the pro-business Free Democrats (FDP) withdrew from negotiations.

…”For gold, there are headwinds in the guise of U.S. interest rate rises, which means higher front-end bond yield curves and an opportunity cost for holding gold,” said Societe Generale analyst Robin Bhar.

PG View: I would point out that the December rate hike remains fully priced.

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Gold retreats deeper into the range after LEI beat lifts stocks and dollar.

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Posted in Economic Data, Gold Price |

Morning Snapshot: Gold Easier Within Range

USAGOLD/Peter Grant/11-20-17

Gold is down modestly to start the holiday shortened week, but the tone within the range remains generally favorable after solid gains on Friday. Focus remains on the next tier of resistance at 1306.04/1308.80 (16-Oct high and 50% retracement of the entire move from 1357.50 to 1260.10).

Political and geopolitical tensions, along with recent weakness in stocks and the dollar, are all helping to underpin the yellow metal within the well defined range.

Negotiations in Germany to form a coalition government collapsed last night after the Free Democratic Party (FDP) walked out. The reaction in Europe has been muted thus far, with the euro recovering from initial losses. However, the risks may be considerable.

The U.S. economic calendar is light today with just October leading indicators. Expectations are for a 0.5% rise, after a 0.2% decline in September.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |

Gold easier at 1292.16 (-1.67). Silver 17.21 (-0.10). Dollar lower. Euro higher. Stocks called better, U.S. 10-year 2.35% (+1 bp).

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Posted in Gold Price, Markets, Silver Price |

The Daily Market Report: Gold Surges to Approach $1300 For the First Time in a Month


USAGOLD/Peter Grant/11-17-17

Gold is up significantly heading into the weekend. The yellow metal surged to new 4-week highs 1289.50, bolstering expectations for short-term tests back above $1300.

Support is coming from political and geopolitical tensions, which have generated some risk aversion and weighed on both the dollar and stocks. December rate hike expectations have retreated somewhat, but remain above a 90% probability. While this may be seen as a limiting factor on the upside, that rate hike is fully priced and therefore the risk there arguably one-sided toward steady policy.

Gold has sold off into year-end for the past 4-years, premised largely on expectations of Fed tightening (either QE tapering or actual rate hikes). This year — with another rate hike decidedly on the table — gold remains resilient. The yellow metal is a mere 4.7% off the high for the year at 1357.50.

Since that high was set in September, the market has coiled in an increasingly narrow range. Such price action is typically associated with a continuation pattern, favoring eventual breakout in the direction of the trend. That breakout may have commenced today, and the underlying trend is up. We’ll see if we get upside follow-through above the next significant tier of resistance at 1306.04/1308.80 (16-Oct high and 50% retracement of the entire move from 1357.50 to 1260.10).

There are a number of events upcoming that could spur gold higher. October PCE inflation is slated for release on November 30. This is the Fed’s preferred measure of inflation and if there are signs of continued weakness, it could conceivable tank rate hike expectations rather quickly. The December FOMC meeting is December 12-13.

While Congress is very focused on tax reform right now, a budget agreement and some accord on the debt ceiling is going to be needed in early December. As noted in yesterday’s DMR, Congress is on break next week for Thanksgiving and the Christmas recess starts on December 18. There really aren’t many working days left this year and by kicking the budget/debt ceiling can in September.

Hold onto your hats! The remainder of the year could be really interesting.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold jumps to new 4-week highs above 1289.50, now up more than $14 intraday.

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Gold gains as dollar dips on uncertainty over Trump tax bill

Reuters/Eric Onstad/11-17-17

Gold rose on Friday as the dollar softened on uncertainty about the progress of what would be the biggest overhaul of U.S. taxes since the 1980s.

…”They’re pricing out Trump’s tax reform once again as a result of those two proposals in Congress that are quite far apart from each other,” said Jonathan Butler, commodities analyst at Mitsubishi in London.

The dollar weakened against a basket of six major currencies and was set for its biggest weekly loss in more than a month.

“There’s also a lot of concern that the equity market rally is possibly becoming a little exhausted for now, and that should be supportive of gold in the short term,” Butler added.

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Morning Snapshot: Gold Edges Higher Within the Range

USAGOLD/Peter Grant/11-17-17

Gold is up in early U.S. trade, underpinned by escalating political uncertainty and geopolitical tensions. The dollar and stocks remain somewhat defensive as well, providing additional support for the yellow metal.

The Wall Street Journal reported yesterday that more than a dozen Trump campaign officials were issued a subpoena by Special Counsel Robert Mueller last month, requesting documents and emails “that reference a set of Russia-related keywords.” This comes at a time when the Trump administration is trying to shepherd tax reform legislation through Congress, deemed critical to keeping their broader economic agenda on track.

North Korea has reportedly rejected Chinese overtures to give-up their nuclear program. “[T]here is no way other than standing against the repressive U.S. imperialists only with a nuclear deterrent of justice,” declared the state-run newspaper Rodong Sinmun.

U.S. housing starts for October came in much better than expected, surging 13.7% to a 1.290M pace. That’s the extent of the U.S. data today.

It’s worth mentioning that Canadian CPI slowed in October to 1.4% y/y, versus 1.6% in September. Median core CPI slowed to 1.7% y/y, down from 1.8% in September. These inflation data come in the month after the BoC surprised with a 25 bps rate hike in September.

A breach of the high from earlier in the week at 1289.50 is needed to clear the way for renewed probes above $1300. Key resistance is marked by the mid-October high at 1306.04, which is the trigger for a retest of the 1357.30 high for the year.

Meanwhile, the low end of the range is well defined at 1263.00/1260.10. Intervening barriers are at 1269.60 and 1264.70.

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Gold higher at 1283.16 (+3.66). Silver 17.10 (+0.004). Dollar steady. Euro better. Stocks called mixed. U.S. 10-year 2.37% (-1 bp).

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The Daily Market Report: Gold Little Changed as Softer Dollar/Firmer Stocks Create Opposing Forces


USAGOLD/Peter Grant/11-16-17

Gold is up slightly within the range. While the dollar remains somewhat defensive, stocks have rebounded, resulting in opposing forces acting on the yellow metal.

The House appears poised to advance their version of tax reform legislation; likely without any support from the minority party. However, some GOP opposition to the Senate bill has emerged. Senator Ron Johnson of Wisconsin has already said he can not vote for the bill and there are a number of other key Republicans that have not committed.

Political uncertainty is likely to remain elevated in the coming weeks as tax legislation either advances or stalls. The key being, whether a bill will reach the President’s desk before year-end.

In the interim, and likely complicating matters, will be the budget discussion and the debt ceiling in early December. That can got kicked back in September, averting a government shutdown and allowing the majority party to focus on tax reform. However, that can may not have been kicked far enough.

The debt ceiling is back in play on December 8, which may provide the Democrats leverage to impact the tax legislation if something doesn’t get to the President before then. Congress is on Thanksgiving break all of next week and the Christmas recess starts on December 18. There really is very little time to get anything done.

Even if tax reform does get done, the long-term implications to the national debt are likely to be significant. Be assured, the debt ceiling will get raised, albeit perhaps not in a timely manner. As the debt continues to rise, servicing costs will continue to rise as well.

This is all coming to a head just as the Fed contemplates another rate hike at the December 12-13 FOMC meeting. The prospects at that time for fiscal stimulus will certainly weigh in the decision making process, as will the long-term debt trajectory.

This all sets the stage for potentially heightened volatility going into the holidays. With gold and silver still well contained and off the highs for the year, now is likely a good time to be boosting your protective hedges.

Precious metals research and consultancy firm GFMS believes gold has “formed a base for a more sustainable move above $1,300 later this year and to rise still further in 2018 as it averages $1,360 and hits a 2018 peak of almost $1,450.” They cite growing equity market risks and continued geopolitical tensions as forces that will likely push the yellow metal higher.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold steady as investors weigh U.S. rate moves against fiscal outlook

Reuters/Zandi Shabalala/11-16-17

Gold has traded in a tight range spanning about $24 in November.

ICBC Standard Bank precious metals strategist Tom Kendall said gold was stuck in a range, with the prospect of a rise in U.S. interest rates exerting pressure while uncertainty about the direction of U.S. fiscal policy offered support.

“The two are kind of pushing and pulling on global yields and on the gold price,” he said.

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Morning Snapshot: Gold Little Changed After Mixed Data, Tax Reform Concerns

USAGOLD/Peter Grant/11-16-17

Gold is up slightly in early New York trading, underpinned by recent softness in the dollar and mounting doubts about the prospects for tax reform legislation. Geopolitical tensions remain elevated as well, providing additional support to the yellow metal.

Senator Ron Johnson of Wisconsin has vowed not to vote for the Senate version of tax reform. “If they can pass it without me, let them,” said Johnson. There are reportedly some other potential defectors as well.

Today’s U.S. data were kind of a mixed bag. Industrial production for October was better than expected. The Philly Fed index sunk more than expected. Initial jobless claims jumped by 10k. Import and export prices were weaker than expected, dealing perhaps another blow to hopes that inflation is picking up.

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Gold steady at 1280.28 (+0.72). Silver 17.11 (+0.078). Dollar steady. Euro easier. Stocks called higher. U.S. 10-year 2.35% (+3 bps).

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The Daily Market Report: Gold Softens After Reaching 4-Week Highs in Earlier Trade


USAGOLD/Peter Grant/11-15-17

Gold is down modestly midday, but only after setting fresh 4-week highs above 1288.70. After retail sales and CPI came out, the dollar index rose from corresponding 4-week lows, knocking the yellow metal back into the range.

The uptick in core CPI inflation to a 1.8% annualized pace has pushed December rate hike expectations back north of 96%. As I mentioned in the Morning Snapshot, it was the first uptick since January. I would suggest that one uptick does not mean the trend in inflation is now up, but the Fed is pretty desperate for a victory on the policy front.

Risk aversion is also helping to underpin gold, driven by yet another escalation in the rhetoric between the U.S. and North Korea, a Venezuelan default and now an apparent coup in Zimbabwe.

The House has perhaps further complicated the reconciliation process for tax reform legislation with the late addition of language that repeals the Obamacare individual mandate. Getting the legislation across the finish line and to the President’s desk by year end may now be even more difficult.

The Trump administration needs this legislative victory to keep hope alive for their broader pro-business, reflation agenda. Whether they can do that without blowing up the deficit in the process remains to be seen.

That’s something that the Fed should take into consideration come the December FOMC meeting. Further complicating matters will be the reinstatement of the debt ceiling on December 8, just several days prior to the FOMC meeting.

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Gold has retraced earlier gains as the dollar index recovers from 4-week lows.

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Posted in Gold News, Gold Price, Gold Views, U.S. Dollar |

Gold rises for third day after U.S. inflation data


Reuters/Peter Hobson/11-15-17

Gold prices rose for a third day on Wednesday as the dollar weakened and U.S. bond yields fell despite solid U.S. economic data that reinforced expectations that the Federal Reserve will press ahead with increases to U.S. interest rates.

…the outlook for U.S. tax cuts that could stimulate economic growth was clouded after U.S. Senate Republicans created new political obstacles by linking the repeal of a key component of Obamacare to the tax reform plans.

“The biggest factor right now shoring up gold is the weaker dollar,” said Robin Bhar, head of metals research at Societe Generale.

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Morning Snapshot: Gold Hits 4-Week Highs, Remains Firm After Today’s Data

USAGOLD/Peter Grant/11-15-17

Gold is up, reaching new 4-week highs above 1288.70. The yellow metal was being buoyed by a weaker dollar and risk aversion going into this morning’s data, and is sustaining those gains post-data.

Geopolitical tensions remain high, with an apparent coup in Zimbabwe adding to the risk-off mindset.

U.S. CPI for October came in pretty much in line with expectations. Headline CPI slowed to a 2.0% annual pace, down from 2.1% in September. Core CPI on the other hand accelerated to 1.8% y/y, versus 1.7% in September. It was the first uptick since January.

That may keep December rate hike expectations elevated, but one uptick in 9-months does not a trend make. I don’t think it will be enough to sway the more dovish members of the Fed that are leaning toward keeping policy on pause through year-end.

U.S. retail sales rose 0.2% in October, above expectations of +0.1%. However, ex-auto rose just 0.1% on expectations of +0.3%. September was revised higher in both instances, but it appears that hurricane distortions are fading.

While gold remains confined to the range that has dominated for the last month, upticks in more recent weeks bode well for renewed tests above $1300. A breach of resistance at 1306.04 (16-Oct high) is still needed to return attention to the high for the year at 1357.50 (08-Sep high).

The bottom of the range at 1263.00/1260.10. This level was reinforced by unsustained tests of the downside earlier in the week. Yesterday’s low at 1269.60 now provides a good intervening barrier.

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Gold higher at 1287.06 (+6.06). Silver 17.18 (+0.136). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.33% (-4 bps).

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The Daily Market Report: Gold Bounces Off of Short-Term Support, Keeping Range Intact


USAGOLD/Peter Grant/11-14-17

Gold is up slightly ahead of the European close after significant buying interest surfaced in the futures market. The yellow metal bounced from in front of support at 1264.70/1263.10, on what Zerohedge called “massive volume,” leaving the low end of the range at 1260.10 well protected.

Today’s PPI data suggests inflation, at least at the producer level, remains elevated in the wake of the hurricanes. Whether these price pressures are sustainable or not remains to be seen. Additionally, the PPI data may be a harbinger of hotter than expected CPI. Those data are out tomorrow.

While the market sees a December rate hike as a forgone conclusion, although Minneapolis Fed’s Kashkari and St. Louis Fed’s Bullard (non-voter) have expressed opposition. Meanwhile, Philly Fed’s Harker said he has a December hike “lightly penciled in,” suggesting he may be on the bubble.

With Fed funds futures reflecting a 91.5% probability of a rate hike — down slightly from 96%+ recently – arguably the risk is in one direction. If the data disappoints at any point in the next month, there is potential for a pretty significant unwind.

Keep in mind that the Fed went on pause in September because inflation pressures had reversed course. While prices may have firmed back up in September and October, there is some concern that those gains are transitory, even as the central bank would have you believe it is the negative pressures that are transitory.

Gold may be setting up for a win/win situation. If the Fed remains on pause, the dollar will likely come under pressure, boosting gold in the process. If on the other hand, inflation is picking up and is sustainable, gold is of course the classic inflation hedge.

At this juncture, I would suggest the former is the more likely scenario, particularly with the other major central banks maintaining dovish tones. Further policy divergence on the part of the Fed and a continued rise in the dollar would be detrimental to the reflation agenda that is arguably hanging by a thread at this point.

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Gold catches a bid from in front of support at 1264.70/1263.10, now higher on the day, leaving the range low at 1260.10 well protected.

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Gold hits one-week low as higher U.S. yields weigh

Reuters/Maytaal Angel/11/14-17

Gold hit a one-week low on Tuesday after U.S. Treasury yields touched fresh highs as investors priced in a rate hike next month, but the precious metal’s losses were limited by rising uncertainty over the U.S.
growth outlook.

…rising nearby yields flattened the U.S. treasury yield curve, in part reflecting market wagers that rising rates this year and next will eventually slow the economy.

These fears, coupled with uncertainty over the outlook for U.S. tax reforms, kept gold’s losses in check, hitting investor risk appetite and increasing gold’s appeal as a safe haven asset.

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Morning Snapshot: Gold Pressured Within Range, Despite Weaker Dollar/Stocks

USAGOLD/Peter Grant/11-14-17

Gold is down in early New York trading, still well within the recent range. However, both the dollar and stocks are also weaker this morning, which should limit the downside for the yellow metal.

U.S. PPI came in hotter than expected in October. Both headline and core rose 0.4%, on expectations of +0.1% and +0.2% respectively. If CPI data beat expectations tomorrow, it will go a long way toward validating the exceedingly high expectations for a December rate hike.

However, if inflation really is picking up, that ultimately will be good for gold. The yellow metal is the classic hedge against inflation.

The dollar index is trading at a three week low on euro strength, after German GDP came in better than expected. While the German economy is humming along, it’s worth noting that German investors are hedging their bets by buying a lot of gold. Smart.

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Gold lower at 1274,51 (-3.60). Silver 16.99 (-0.049). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.39% (-2 bps).

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The Daily Market Report: Gold Recovers Modestly Within Range


USAGOLD/Peter Grant/11-13-17

Gold is edging higher within the range and has recouped a little more than half of Friday’s intraday losses. Gold came under pressure ahead of the London close on Friday, when 30,000 futures contracts were dumped in about a minute.

The fact that those losses stalled well shy of the range lows at 1263.00/1260.10 offers some encouragement. However, with gold so narrowly confined, a rebound above $1300 is really needed to stoke optimism and return focus to the high for the year set in early-September at 1357.50.

So what might be the catalyst to get that ball rolling? Weak October inflation data this week might do the trick. That may temper December rate hike expectations, which would weigh on the dollar and buoy gold.

Skepticism that Congress will deliver tax reform legislation to the President’s desk by year-end might prove to be a catalyst as well. Many agree that U.S. stocks are overvalued, but that condition is arguably acute if corporate tax cuts will be significantly delayed; or perhaps not happen at all. If stocks roll-over, gold will likely catch a safe-haven bid.

Finally, there are the geopolitical risks. The inflammatory rhetoric seems to have escalated once again in the waning days of President Trump’s diplomatic tour of Asia.

The President has said there would be a major announcement this week on North Korea. Meanwhile, South Korea is apparently concerned that another DPKR missile test is imminent.

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Gold firms as U.S. tax reform uncertainty stokes risk aversion


Reuters/Jan Harvey/11-13-17

Gold recouped some of the previous session’s sharp price drop on Monday as uncertainty over a U.S. tax reform plan stoked risk aversion, pulling equities from their recent record highs.

However, prices remained hemmed in a narrow range as investors awaited more clues on the path of U.S. interest rates.

…”Geopolitical risks have been substantially higher in the second half of the year … and there have been record highs in U.S. equities, (which are) probably starting to make some investors nervous.”

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Morning Snapshot: Gold Edges Up Within Range

USAGOLD/Peter Grant/11-13-17

Gold is up modestly, attempting to retrace Friday’s sharp intraday sell-off. Just about half of those losses have been recovered, but the yellow metal remains well contained within the recent range.

A softer dollar and weakness in stocks are offering support to gold. Focus remains on political uncertainty surrounding the House and Senate versions of tax reform legislation. There are concerns about the reconciliation process; what might ultimately reach the President’s desk and when that might happen.

Not much on the economic calendar today, but we have important inflation data coming out this week. October PPI is out tomorrow, with expectations calling for further slowing to 2.3% y/y. CPI is out on Wednesday. A small m/m increase is expected, which will likely result in a downtick to the annualized rate. Core CPI is expected to hold steady at 1.7% y/y.

The market continues to see a Fed rates hike next month as a given, despite persistently soft inflation. However, those expectations may be tempered if further weakness is evident in the October data. That would likely put the dollar under additional pressure, offering further support to gold.

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Gold better at 1277.23 (+1.58). Silver 16.89 (+0.038). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.38% (-2 bps).

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