Gold Gains to Near Highest Since 2013 as Bulls ‘Back in Control’
By Ranjeetha Pakiam and Rupert Rowling June 23, 2019, 9:35 PM PDT Updated on June 24, 2019, 4:14 AM PDT
Bullion is near the highest levels since September 2013
Dovish central banks, geopolitical risks add to momentum
The rally in gold is picking up fresh fuel from investors.
Two key data points on Friday suggest speculators are adding plenty of cash to the rally, which could drive prices even higher. Gold has now surpassed $1,400 an ounce, reaching an almost six-year high.
ETF Holdings: Funds backed by gold increased their assets by 32 tons on Friday, the biggest increase since 2016, according to data tracked by Bloomberg.
CFTC Positioning: Hedge funds and other large speculators boosted their net long positions in U.S. gold futures and options to the highest since February 2018. That’s based on the latest weekly data from the Commodity Futures Trading Commission.
“Gold bulls are back in control,” Edward Moya, senior market analyst at Oanda Corp., said in a note, adding the metal remains supported by rising expectations of a 50 basis point cut at the Fed’s July meeting. “The question is no longer will the Fed ease, but by how much? The Fed historically likes to kick on an easing cycle with a bang and a 50 basis point cut should become the base case.”
The rally has been driven by signs that the Federal Reserve and other central banks are turning more dovish on monetary policy. Planned U.S. sanctions against Iran, as well as the coming meeting between the American and Chinese presidents, is also creating a raft of bullish factors for the precious metal.
Gold could end the year even higher, according to Russ Koesterich, a portfolio manager at the $27 billion BlackRock Global Allocation Fund.
Spot gold climbed 0.6% to $1,407.76 at 12:04 p.m. in London. Prices soared 4.3% last week, the biggest gain since April 2016. A gauge of the greenback was near a three-month low.
Recent U.S. dollar weakness and more speculative money moving into bullion are among the factors that suggest gold has more upside than downside, Martin Lakos, division director at Macquarie Wealth Management, said in a Bloomberg TV interview. The bank forecasts $1,450 by the first or second quarter of next year, he said.
In other precious metals, silver, platinum and palladium all gained.
— With assistance by Shery Ahn
BlackRock Sees Gold Ending Year Higher on Fed's Dovish Pivot
June 23 2019, 11:44 PM June 24 2019, 7:51 AM
(Bloomberg) -- Gold’s rally to the highest since 2013 may have room to run further after the Federal Reserve indicated a readiness to cut borrowing costs, which would keep real rates low and weigh on the dollar, according to BlackRock Inc.
“Gold could end the year higher,” Russ Koesterich, portfolio manager at the $27 billion BlackRock Global Allocation Fund, said in an interview. “If we continue to see a pivot toward easier monetary policy from the Fed, then I think gold can go higher from here,” he said, adding that there is likely to be some pullback and consolidation in the near-term.
Gold is back in the limelight as investors seek havens amid slowing global growth due to the fallout from the U.S.-China trade dispute and as central banks globally adopt a more dovish tone. While the Fed left its key rate unchanged on Wednesday, it dropped a reference to being “patient” on borrowing costs and forecast a larger miss of their 2% inflation target this year. The greenback weakened to erase its 2019 gains.
“If easier policy from the Fed contains the dollar, that’s an environment, all else equal, that is supportive of gold,” Koesterich said last week in a phone interview after the central bank’s decision. “What I’d add is if we get a situation where the Fed is easing perhaps more than people thought because trade frictions are rising, that might be a particularly strong period for gold.”
The Fed would be easing at the same time as volatility would be rising and demand from investors for hedges would be going up, he said.
Spot gold rose as much as 0.8% to $1,411.23 an ounce and traded at $1,406.02 at 7:12 a.m. in London. Prices surged to $1,411.63 on Friday, the highest level in more than five years. Citigroup. said Thursday that the enthusiasm is justified, with $1,500 to $1,600 possible in the next 12 months under a bullish-case scenario that includes borrowing costs falling below zero.
The Fed last cut rates in 2008 and began its most recent tightening cycle at the end of 2015, with four hikes last year. The so-called dot plot, which the U.S. central bank uses to signal its outlook for the path of interest rates, shows that policy makers are divided for the remainder of 2019. European Central Bank President Mario Draghi last week paved the way for a rate cut, and counterparts in Australia, India and Russia have lowered borrowing costs.
“In the near term, gold, like bonds, has had a very large move, so it would not be surprising if there was some consolidation,” said Koesterich, adding that BlackRock’s bullion holdings through exchange-traded funds have been “relatively static” over the last month. “But if we are moving into a period where the Fed or other central banks feel the need to ease monetary conditions, gold is probably going to have a better environment than it did earlier this year.”
Gold prices soar to new five year high above above $1,400
Published: June 24, 2019 1:13 p.m. ET
By MYRAP. SAEFONG & BARBARA KOLLMEYER MarketWatch
Palladium jumps above $1,500 toward highest finish since March
Gold prices rallied to a new five year high on Monday, as flows into the precious metal continued on prospects for lower interest rates from the Federal Reserve and other central banks, amid ongoing tensions in the Middle East.
Gold On Friday, gold settled above $1,400 an ounce—the first time for a most-active contract since Sept. 3, 2013, according to FactSet.
“A modestly weaker U.S. dollar, as measured on the U.S. Dollar index DXY, -0.17%and slightly lower yields on the U.S. 10-year treasury note , the German 10-year, the Italian 10-year and the U.K 10-year” were all helping to lift gold Monday, said Dana Samuelson, president of precious metals and rare coin dealer American Gold Exchange. “Gold loves cheaper money.”
“This market looks like it will tend to grind higher from here on the back of cheaper money, while yields continue to erode. The trend is your friend, and gold’s trend is clearly higher," he told MarketWatch.
August gold GCQ19, +1.30% GCQ19, +1.30% rose $18.90, or 1.4%, to $1,414.19 an ounce, trading near the session high of $1,421 an ounce. On Friday, gold settled above $1,400 an ounce—the first time for a most-active contract since Sept. 3, 2013. Prices for the metal gained 4.1% last week.
Gold’s gains last week came after a Fed meeting in which the central bank held rates steady but spoke of “uncertainties” over the U.S. economic outlook. The European Central Bank and Bank of England also made dovish comments during the week. Precious metals like gold tend to attract buyers in a low interest-rate climate.
But geopolitical tensions between the U.S. and Iran and uncertainties on the global trade front have also lured investors into gold, seen as a haven investment in times of political and economic uncertainty.
Trump on Monday signed an executive order imposing financial sanctions on Iranian leaders, according to pool reports from the White House. The moves comes days after calling a halt to airstrikes on the country which shot down a U.S. military drone. But he also suggested the two countries will eventually have a positive relationship, toning down harsher rhetoric he has employed for much of his presidency.
UBS strategists Joni Teves and Roque Montero on Monday lifted their three-month gold target to $1,430 from $1,380 an ounce. “A few years and several false starts later, we think the macro backdrop has now started moving more convincingly in gold’s favor,” the analysts said, though they added that the route for gold is “unlikely to be a straight path higher.”
They still maintain gold will end the year under that $1,400 level, lifting their end-year target to $1,370 from $1,325 an ounce. Their end-2020 forecast was lifted to $1,450 from $1,350, and from 2021 to 2023, the strategists expect gold to end those years at $1,500.
The precious metal “continues to be extremely overbought with short positions staying at their yearly lows and long positions climbing to their highest level since February 2018,” said strategists at Societe Generale, in a note published Monday. “This extreme positioning is likely to linger as [Fed Chairman] Jerome Powell reassured markets about the Fed’s capacity and willingness to support economic expansion with rate cuts and other unconventional management tools.”
Elsewhere, July silver SIN19, +0.62% rose 11 cents, or 0.7%, to $15.40 an ounce, gaining 3.3% last week.
July copper HGN19, +0.13% was down nearly 0.1% at $2.703 a pound. July platinum PLN19, -0.02% added 0.2% to $812.90 an ounce, while September palladium PAU19, +1.93% rose 2% to $1,528.80 an ounce—on track for the highest most-active contract settlement since late March.
Global equities rose cautiously Monday after China’s state-run Xinhua News Agency said Sunday that China’s President Xi Jinping will attend the G-20 summit in Japan this week, giving the first official confirmation of his attendance at the meeting, where he has been expected to talk on the sidelines with U.S.
President Donald Trump.
“With press reports that U.S and Chinese officials are working on the logistics of a meeting between the two leaders in Japan, the hope for trade progress is given fresh credence. Therefore palladium and other commodities impacted by the Chinese economy are benefiting,” said analysts at Zaner Metals.
Gold Jumps to Highest in Six Years as Rising Risks Boost Havens
Bullion climbs above $1,430 as U.S. dollar continues decline
Uncertainty in markets is fueling price, Vanguard’s Innes says
Gold’s rally shows no signs of abating, with prices climbing afresh to a six-year high as cash keeps pouring into exchange-traded funds.
New U.S. sanctions on Iran added to uncertainty in global markets, bolstering gold’s appeal as a haven. Investors are also looking to the G-20 summit this weekend, where presidents Donald Trump and Xi Jinping are scheduled to meet to discuss U.S.-China trade. Another key event on traders’ watchlist is Federal Reserve Chairman Jerome Powell’s speech in New York later Tuesday.
Bullion’s been on a tear this month as the dollar weakened after the Fed opened the door to a U.S. interest rate cut and other central banks also pivoted to a more dovish stance. Investors are taking note -- boosting net long positions in U.S. gold futures and options. And ETFs have been on the rise, with the largest fund in the commodity space seeing record inflows at last week’s end.
“The combination of dovish central banks, continued trade tensions, falling yields, geopolitical tensions and central-bank buying poses further upside risk to prices,” Suki Cooper, precious metals analyst at Standard Chartered Bank in New York, said in a report Tuesday. She expects retail investors “could drive another leg higher.”
In addition to the Fed’s stance on interest rates, the latest worsening of U.S.-Iran relations furthered the sharp rally in gold this week, “with the easier way out -- diplomacy -- now off the table, according to Iranian officials,” said Jingyi Pan, strategist at IG Asia Pte in Singapore. “The rise in gold prices into Tuesday had likely been a knee-jerk as the market ponders what could come next in this conflict.”
However, “the elephant in the room remains the U.S.-China trade talks and any deterioration into next week should shift us towards the resistance at $1,480,” Pan said. “This may not be a one-way street either given the overbought situation, but amid the uncertainties, the market may be keen to buy any dips.”
Chinese officials this week said both sides need to be prepared to compromise for talks to succeed, but U.S. officials have so far maintained a hard line.
“The global capital market’s mood is shaky due to the fear of the unknowns, and it’s this uncertainty that will continue to provide the jet fuel for an already high-octane gold market,” Stephen Innes, managing partner at Vanguard Markets Pte, said in a note. A significant withdrawal by investors from the U.S. dollar, which intensified after last week’s Fed policy meeting, “further adds to the glimmering gold market appeal,” Innes said.
Gold futures for August delivery climbed as much as 1.7% to $1,442.90, the highest for a most-active contract since May 2013, and traded at $1,433.50 at 12:14 p.m. in New York. A gauge of the U.S. dollar hit a three-month low before paring some of the losses.
In other precious metals, silver rose on the Comex, palladium gained on the New York Mercantile Exchange, while platinum dipped. The gold/silver ratio widened to about 93, the most since 1992.
Silver deserves a gold
It makes beautiful bling but is also good for keeping bacterial bugs away
Mark Blaskovich | Kolkata | June 26, 2019 12:19 pm The Statesman
Silver has long played second fiddle to other elements. In sport, it is the symbol of second place, giving way to gold in the medals. In jewellery, airline frequent flyer programmes and credit cards, silver is also topped by gold and platinum. But in the world of useful elements, silver should be gold.
My interest in silver originated when growing up in Canada, searching through loose change for pre-1968 quarters (25 cents) that were made from 80 per cent silver (currently worth at least US$2.24 each). More recently, in my current scientific role fighting antimicrobial resistance, my interest has been piqued by silver’s association with killing bacteria.
The silver medical treatment
Silver has a long history of antibacterial activity. The Phoenicians lined clay vessels with silver to preserve liquids (around 1300 BCE), the Persians and Greeks used silver containers to store drinking water (around 5000-300 BCE) and Americans travelling west during the 1880s added silver coins into water barrels. More recently, both American and Russian space programmes have used ionic silver to purify water, including on the International Space Station.
Colloidal silver, a suspension of very small nanoparticles of silver metal, has found widespread use as a popular home remedy for a range of ailments, but is often marketed with dubious claims and is not supported by the scientific community.
Some websites claim the use of silver cutlery and dinnerware by wealthy Europeans in the Middle Ages may have helped favour their survival during the bubonic plague, though evidence supporting this is scant. On a related note, one version of the origin of the term “blue blood” to describe the wealthy is based on their use of silver dinnerware, with significant silver ion ingestion known to cause argyria, or purple-grey skin. Despite these non-scientific associations, silver has found widespread acceptance in the medical community for specific applications of its antibacterial properties.
Silver for burns
Silver nitrate solutions were found to prevent eye infections in new-borns in the 1880s, and were still commonly used for this in the 1970s. Solutions were also used to treat burn injuries, leading to many scientific reports in the 1960s, such as a 1968 study on treating extensive thermal burns with 0.5 per cent silver nitrate solution that describes an apparent reduction in death. Both 0.5 per cent silver nitrate solution and one per cent silver sulfadiazine cream are still used in burn care and are accompanied by new silver-based wound dressings. The antimicrobial use of silver has crept into consumer products, such as antibacterial bandages, socks and deodorants, and antibacterial coatings on a range of products such as refrigerators.
While this may sound like a good idea, there are concerns that widespread use of silver could cause bacteria to become resistant, not only to silver, but also to our important antibiotics. It’s not known exactly how silver kills bacteria, but it seems to work by multiple mechanisms, including cell membrane damage and free radical generation.
Our work on silver is looking at whether it can help existing antibiotics work more effectively, especially against resistant bacteria. This research, which has been ongoing for more than five years, has identified that there is better synergy between silver and some types of antibiotics than others, but we don’t yet know why.
Eventually, this research could lead to new formulations of antibiotics with better activity, where the actual antibiotic remains the same but it is delivered as a salt with silver, instead of a more common ion like sodium.
The silver resources
The actual word silver stems from the Anglo-Saxon name for it, siolfur, while its chemical symbol Ag comes from the Latin name for silver, argentum.
Silver can sometimes be found as nuggets of pure metal, though this form is more rare than gold. Most often it is found combined with other elements in ores such as argentite (with sulphur) or galena (with lead). The ores are mined and the silver generally removed by smelting (heating combined with chemical reactions). It is believed this technique was discovered before 2000 BCE.
Historically, the major use of silver has been as coinage and in jewellery. Traditional photography uses silver halides for the photosensitive film, while mirror backings and Christmas ornaments use silver-plated glass.
Silver lies in the middle of the periodic table. It is encircled by other useful and well-known metals such as (clockwise from above) copper, zinc, cadmium, mercury, gold, platinum, palladium and nickel. I would argue that silver shines brightly above its neighbours — it actually does, as it has the highest reflectivity of any metal — and also is the best at conducting electricity and heat. So silver really does deserve top of the podium — a gold for silver!
Why Is Gold Morgan Stanley’s Top Commodity Pick?
WRITTEN BY ANURADHA GARG June 27, 2019 Market Realist
Morgan Stanley is warming up to gold
Morgan Stanley (MS) is another investment bank that’s warming up to gold. As reported by CNBC, Morgan Stanley’s commodity strategist, Susan Bates, said that gold is the company’s number-one commodity pick. Bates said, “Morgan Stanley’s forecasts of falling real rates and a bearish US dollar outlook, against an uncertain macroeconomic outlook, should lend significant upside to gold’s price through 2H19 and into 1H20.”
MS sees the Fed cutting rates by 50 basis points in July. The US Federal Reserve’s policy U-turn in 2019 is well known. After cutting rates four times in 2018, the Fed has started talking about monetary easing. During its June policy meeting, the Fed indicated that it would be open to interest rate cuts (TLT). In fact, CNBC reports that traders are now pricing in 100% odds of a Fed rate cut in July. The question now is not if but by how much the Fed will cut the rate in July.
Morgan Stanley increased its price target for gold
MS has increased its price target for gold to $1,435 per ounce in the second half of 2019 and $1,338 per ounce in 2020. MS analysts believe that strong prices for gold should continue through the first half of 2020 before stabilizing as rates are kept on hold and economic activity recovers.
Morgan Stanley, however, sees risks skewed to the upside for gold.
GLD and GDX
The SPDR Gold Shares ETF (GLD) and the VanEck Vectors Gold Miners ETF (GDX) are trading 11.7% and 22.6% above their 200-day moving averages, respectively, due to the recent impetus for gold provided by central banks. Although there may be a short-term pullback in prices, the factors outlined above should keep supporting gold.
Why Is Bank of America Bullish on Gold?
BoAML is overweight on precious metals
BoAML (Bank of America Merrill Lynch) is overweight on precious metals in 2019. It believes that gold could be the big winner of the trade war between China and the US, as there’s no end in sight to the tensions. BoAML analysts expect gold (GLD) to push through $1,400 per ounce by this year on geopolitical tensions and trade uncertainty.
BoAML analysts also believe that trade tensions will get worse before they get any better. At the start of June, they downgraded the 2019 US GDP growth forecast to 2.4% from 2.5% and the 2020 US GDP growth forecast to 1.5% from 1.8%. The analysts wrote, “Beyond a certain point, tariffs do reduce welfare in the large, open economy imposing them.” They added, “The year-on-year U.S. tariff increases are unprecedented and likely highly deflationary, creating major risks to the macro economy.”
Fed to provide support
Analysts also expect the Fed to provide support to the economy by cutting rates. They expect rate cuts to total 75 basis points by early 2020. Gold, as a safe-haven metal and a non-income-bearing security, stands to benefit from these expected changes.
In addition to the Fed, central banks worldwide, including the European Central Bank and the Bank of Japan, are making dovish statements regarding the state of the global economy. Lower interest rates increase gold’s attractiveness despite the market’s higher highs. The S&P 500 (SPY) closed June 20 at an all-time high of 2,954, while the Dow Jones Industrial Average (DIA) hit a record high on June 21 before slipping at the end of the day.
Despite the stock markets’ reaching highs, gold prices are gaining traction. In the last month alone, the SPDR Gold Shares ETF (GLD) has gained 9.7%, while SPY and DIA have gained 2.6% and 3.2%, respectively. Safe-haven assets’ outperforming risk assets as the market peaks implies bullishness on gold.