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  • MTS Gold Morning News 20190911

    11 Sep 2019 | Gold News

· Gold prices fell to their lowest in nearly a month on Tuesday, as rising bond yields and the dollar dented the allure of safe haven assets.

· Spot gold was down 0.58% at $1,489.97 per ounce, having earlier hit its lowest level since Aug. 13, at $1,486. U.S. gold futures slipped 0.90% to $1,497.6 per ounce.

· U.S. Treasury yields climbed to multi-week peaks, tracking German bonds, as hopes of easing U.S.-China trade tensions and expectations of fiscal stimulus measures by global central banks buoyed risk sentiment.

· Bullion prices have shed more than 4%, or over $60, in less than a week, mainly hurt by a broad uptick in equity markets.

· “We’re seeing safe haven liquidation in the market, there is no reason for safe haven at the moment. Although equities are pulling back today, they are showing some residual strength,” said Phillip Streible, senior commodities strategist at RJO Futures.

Considering the large number of net long positions in gold, “all those people who jumped into this party late are starting to liquidate their positions right now. We’re (also) seeing yields are up a bit,” Streible added.

· Speculators increased their bullish positions in COMEX gold and silver contracts in the week to Sept. 3, the U.S. Commodity Futures Trading Commission said on Friday.

· “We’ve had quite a broad improvement in risk appetite - the U.S. stock markets are now little shy of record highs - that is taking some of the edge off gold,” OANDA senior market analyst Craig Erlam said, adding a stronger dollar was also pressuring the metal.

“However, gold prices have primarily been supported by the central bank stimulus and the expectation is that we are going to see plenty more (interest rate cuts). So, from that perspective, we’re still seeing gold at these higher levels,” Erlam added.

· The U.S. Federal Reserve is widely expected to cut interest rates by a quarter percentage point at its mid-September meeting, while the European Central Bank is likely to reduce deposit rates for the first time since 2016 later this week.

· Investors are now awaiting Thursday’s European Central Bank meeting, which is widely expected to deliver a cut to interest rates. The U.S. Federal Reserve too is expected to cut rates next week as policymakers race to battle risks of a global downturn.

However, analysts said gold’s overall positive trajectory was still intact.

· “We now expect gold prices to trade stronger for longer, possibly breaching $2,000/oz and posting new cyclical highs at some point in the next year or two,” Citi bank analysts wrote in a note.

· On the technical front, spot gold is expected to fall to $1,453, as it has cleared a support at $1,497 per ounce, said Reuters technical analyst Wang Tao.

· Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.8% to 882.42 tonnes on Monday.

· Among other precious metals, platinum dropped 1% to $936.70 per ounce, after nearing the $1,000 mark last week.

“Platinum has rallied the past two weeks as investors looked for ‘cheaper’ haven assets. While consolidation is likely in the near term, we remain bullish platinum over the next 12 months,” Citi said.

· Silver eased 0.2% to $17.93 per ounce, while palladium rose 0.7% to $1,555.

Reference: CNBC, Reuters

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