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Myra P. Saefong

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Silver tops $24/oz for highest finish since 2013

Gold futures climbed past $1,900 an ounce on Monday to tally their highest settlement and intraday on record, as investors continued to fret over the state of the COVID-19 battered global economy and weakness in the U.S. dollar, amid concerns over the sustainability of recent stock gains.

August gold GC00, -0.28% GCQ20, -0.28% rose $33.50, or 1.8%, to settle at $1,931 an ounce after trading as high as $1,941.90. The settlement topped the previous record of $1,897.50 from Friday and Monday’s close also topped the previous intraday record of $1,923.70 from Sept. 6, 2011, according to Dow Jones Market Data.

Last week, prices rose 4.8%, the biggest weekly percentage climb since the week ended April 9 and some analysts say the never-before-seen level of $2,000 an ounce is within reach. U.S. stocks closed lower on Friday, with the heavy Nasdaq Composite COMP, +1.67% marking its first back-to-back decline since mid-May.

‘With concerns about further pandemic-related lockdowns, the U.S. dollar decline, real rates continuing to plummet, and rising U.S.-China tensions, it is the entire list of fundamental drivers to get us there getting delivered up in one package…’— Stephen Innes, AxiCorp

“With concerns about further pandemic-related lockdowns, the U.S. dollar decline, real rates continuing to plummet, and rising U.S.-China tensions, it is the entire list of fundamental drivers to get us there getting delivered up in one package today,” said Stephen Innes, chief global markets strategist at AxiCorp, of that $2,000 level in a note to clients.

The ICE U.S. Dollar Index DXY, 0.06% slid by nearly 0.9% to 93.64, having lost 3.9% for the month so far. The index trades at the lowest since 2018.

“Given the slumping view toward U.S. economic prospects and ideas that Europe will open a significant macroeconomic edge over the U.S., it is not surprising to see the dollar forge yet another lower low for the move and, in turn, contribute to the upward extension in precious metals prices,” analysts at Zaner Metals wrote in a Monday note.

“Not surprisingly, investors also added to the bullish environment with news that Friday saw 1.76 million ounces purchased by gold [exchange-traded funds], with a more astonishing purchase of 9.1 million ounces of silver by silver ETFs,” they said.

The gold market “continues to get a tremendous amount of bullish press coverage and that is likely to embolden the bull camp further, and is likely to result in an even wider cross section of small investors learning about precious metals ETFs for the first time,” the Zaner Metals analysts said.

In Monday dealings, the gold-backed SPDR Gold Trust GLD, +1.97% traded 1.8% higher.

“Another bullish force is a ratcheting up of expectations for U.S. central bank action, as soft U.S. data and the unending infection threat is starting to sink sentiment, and we suspect the [Federal Reserve] is now very keen to cushion against renewed shutdown fears,” analysts at Zaner Metals said.

The Federal Open Market Committee will make an announcement on monetary policy on Wednesday.

And in China, the U.S. says it has closed its consulate in Chengdu, a move ordered by Beijing after the closure of the Chinese consulate in Houston last week.

Virus outbreaks and the effect on global economies has also seen investors flocking to gold. While investors have been consumed by concerns about outbreaks across the southern U.S. states, Spain emerged as a fresh worry amid a resurgence of the virus, notably in the northeast region of Catalonia. The U.K. government put Spain back on a list of countries it deemed unsafe for travel and ordered travelers to isolate for 14 days upon return from the popular holiday destination.

“There has been a lot of talk about the $2K hurdle, which has been my long-term target too,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a market update. “Obviously, there is no guarantee gold will get there or indeed stop there, but that target is only [around] $55 away from the overnight high.”

Meanwhile, the September silver contract SIU20, -2.94% climbed $1.65, or 7.2%, to settle at $24.501 an ounce—scoring the highest most-active contract settlement since August 2013, according to FactSet data.

September copper HGU20, -0.50% edged up 0.2% to $2.8975 a pound. October platinum PLV20, -0.95% added 1.1% to $966.60 an ounce, while September palladium PAU20, -0.12% ended at $2,369.70 an ounce, up 3.3% for the highest finish since March.

Author: Myra P. Saefong and Barbara Kollmeyer

Source: Market Watch: Gold price marks highest settlement and intraday price on record

Gold futures surpassed $1,600 an ounce on Tuesday and analysts believe the precious metal has the fuel it needs to climb to its highest level in more than seven years.

Gold’s big move on Tuesday “isn’t due to worries over a greater economic fallout from the coronavirus, but rather in anticipation of the flood of central bank stimulus that is all but guaranteed by the effects to date,” said Brien Lundin, editor of Gold Newsletter.

Gold’s rally is due to ‘anticipation of the flood of central bank stimulus that is all but guaranteed by the effects [of COVID-19] to date.’

Brien Lundin, Gold Newsletter

On Tuesday, the April gold futures contract GCJ20, +0.23% rallied by $17.20, or 1.1%, to settle at $1,603.60 an ounce after touching an intraday high of $1,608.20. The settlement was the highest for a most-active contract since late March 2013, according to FactSet data. Prices also posted for their biggest one-day dollar and percentage gain since Jan. 3 of this year.

The sharp rise for gold comes as the World Health Organization reported on Tuesday 73,332 confirmed cases of COVID-19, the new coronavirus that was first identified late last year in Wuhan, China. There have been at least 1,873 deaths from the virus, WHO said.

China has taken steps to boost its economy, and the People’s Bank of China reduced its one-year lending rate on Monday.

“The interest rate cut in China and other stimulus measures were expected, but equity markets have become a safe haven in US,” said Jeff Wright, executive vice president of GoldMining Inc. “Risk and exposure to global economy is bad reason to use equities for safety.”

Given that, Wright said he believes “folks are waking up to reality that coronavirus will impact US GDP and global consumption, so gold is moving up as a true safe haven” as the U.S. might need the Federal Open Market Committee to provide support as well.

He expects gold prices to trade even higher, but they may hold ground in the $1,550 to $1,650 range “for awhile,” he said.

“Further bad news from the spread of the virus will help boost gold, but I think investors should remember that the U.S. markets were already searching for some excuse to demand ‘more cowbell’” from the U.S. Federal Reserve, said Lundin, referring to a pop-culture catchphrase that suggests the need for more action. “This epidemic is providing the perfect justification,” he said.

“From a technical standpoint, an inverted head-and-shoulders pattern in gold is pointing toward a target of $1,665, which I think is easily achievable from a fundamental standpoint as well,” he added.

A gold futures settlement at that level would be the highest since Feb. 8, 2013, according to FactSet data.

Author: Myra P. Saefong

Source: Market Watch: Why gold prices topped $1,600 and may soon hit a more than 7-year high

Bullion could trend higher towards $1,600, analysts

Gold futures marked a 10th straight climb on Tuesday, the longest streak of gains in two years, with prices at their highest finish since 2013.

Haven demand for the metal boosted prices as investors weighed the prospects for further escalation in Mideast tensions.

“The latest spike in gold prices is being driven by the sudden escalation in US-Iran tensions, which is hitting world stock markets and leading investors to seek shelter,” said Adrian Ash, director of research at BullionVault.

However, “underlying demand for gold had already turned higher in 2019, most especially among investors in the Eurozone, where negative interest rates are forcing savers and investors to find better homes for their money than bank accounts or debt investments,” he said, as he presented data showing that BullionVault clients grew their holdings by 0.7% in December to a new record of 39.3 metric tons.

On Tuesday, February gold GCG20, -0.03% on Comex added $5.50, or about 0.4%, to settle at $1,574.30 an ounce, after settling up 1.1% on Monday. Prices for the most-active contract marked the highest settlement April 9, 2013 for a second straight session.

Gold stretched its streak of consecutive gains to 10 sessions, representing its longest period of gains since the 11 days of wins booked from December 2017 to January 2018, according to Dow Jones Market Data.

Gold and haven assets have received bids after the killing of a top Iranian military commander, Qassem Soleimani, last week, which has reverberated through financial markets, momentarily upending appetite for assets considered risky and boosting traditional haven assets like gold.

March silver SIH20, -0.18% picked up 21.4 cents, or 1.2%, to settle at $18.393 an ounce, after a 0.2% gain on Monday.

“I do not believe gold’s spike on Monday was a one-time event,” Michael Armbruster, managing partner at Altavest told MarketWatch.

“Gold has already been in rally mode for two weeks prior to the escalation of tensions between the U.S. and Iran,” he said. “The bottom line for gold, despite the stock market’s melt-up (or because of it!), is that gold’s rally suggests that investors are looking to diversify away from risk assets.”

“Bullish factors include: the U.S. federal budget deficit is out of control, the [Federal Reserve’s] rapid balance sheet expansion and central banks are buying gold,” he added. “We think a rally to the $1,650 to $1,750 range is likely in the months ahead.”

Still, precious metals were facing some headwinds from strength in the U.S. dollar, which can influence trade in dollar-pegged commodities.

The U.S. ICE Dollar Index DXY, +0.17%, a measure of the buck against a half-dozen currencies, was up 0.4% at 97.016, erasing its decline in the previous session.

Investors also said technical factors could determine the next phase for gold, which already has enjoyed a strong move, even before the Middle East tensions flared up.

“Although prices have strong bullish momentum, further upside will depend on how prices react around $1555,” said FXTM analysts.

“The precious metal should trend higher towards $1600 as long as $1555 proves to be reliable support. Alternatively, a breakdown below this level may open the door towards $1535,” the researchers wrote.

Among other metals, March copper added 0.1% to $2.7935 a pound. April platinum rose 0.6% to $971.60 an ounce, while March palladium rose by 1.2% to $2,014.30 an ounce, reaching a fresh record.

“There just is very little supply response possible to fill in the deficit” for palladium supplies, R. Michael Jones, chief executive officer of Platinum Group Metals Ltd. PLG, -3.21% told MarketWatch in recent comments. Norilsk Nickel in Russia, which produces around 40% of the world’s palladium supply, “has promised growth in supply, but this is several years out,” he said.

The pattern for palladium may repeat in other metals, as we’ve “seen a dearth of capital for mining in the past 6 years,” he said. Claims of China slowing down have been “over done and caused investors to move away from commodities. Eventually, the supply cupboard gets low and lead times to find and develop mines are about 10 years.”

Author: Myra P. Saefong

Source: Market Watch: Gold scores strongest streak of gains in 2 years

Analyst warn of a near-term market top in prices

Gold futures on Monday marked their highest settlement since April of 2013, as the killing last week of a top Iranian military commander, Qassem Soleimani, reverberated through financial markets, momentarily upending appetite for assets considered risky and boosting traditional haven assets like gold.

February gold GCG20, -0.02% on Comex added $16.40, a gain of 1.1%, to settle at $1,568.80 an ounce, after it briefly touched $1,590.90 in intraday action. The most active contract saw its highest settlement since April 9, 2013, according to FactSet data. Gold also rose for a ninth consecutive session, its longest period of straight gains since an 11-day streak that ran from December 2018 to January 2019.

March silver SIH20, -0.05% edged up by 2.8 cents, or 0.2%, to finish at $18.179 an ounce, pulling back from a high of $18.55, which was the highest intraday level since late September.

Last week, the most-active gold contract gained 2.3%, its second week of gains, while silver prices added 1.1%, also landing it higher for two consecutive weeks.

“History shows that a big spike up in prices amid higher volatility tends to produce near-term market tops sooner rather than later, after that initial spike up,” said Jim Wyckoff, senior analyst at Kitco.com. “That means in the coming days the gold market could put in a ‘near-term’ top that will last for a moderate period of time.”

“However, for the longer-term investors in gold, it’s important to note that the recent strong price gains are a bullish upside technical ‘breakout’ from recent trading levels, to suggest still more price gains are very likely in the coming weeks and months, or longer,” he said in daily commentary.

On Sunday, the Iraqi parliament passed a nonbinding resolution to expel American troops in the wake of the U.S. drone strike that killed Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps, on Iraqi soil.

That act has intensified tensions in the Middle East, boosting the appeal of assets considered safe during global political conflicts.

Trump has threatened harsh sanctions against Iraq if it expels U.S. troops, and doubled down on earlier comments threatening to target Iranian cultural sites if Iran strikes back. Iran has said it would no longer honor the 2015 nuclear deal with a group of world powers, which the U.S. backed out of in 2018.

Oil prices climbed and the Dow Jones Industrial Average DJIA, +0.24% and S&P 500 index SPX, +0.35% opened broadly lower but turned mixed in Monday dealings.

Meanwhile, the benchmark 10-year Treasury yield TMUBMUSD10Y, -0.39% was up at 1.7917%, after tapping a four-week low on Friday after the Iranian military leader’s killing.

Bullion’s price has benefited from heightened political tensions but also has enjoyed softness in the dollar, which has occurred as investors shift to Swiss franc USDCHF, +0.2892% and Japanese yen USDJPY, +0.06% amid the potential for political turmoil.

The U.S. ICE Dollar Index DXY, +0.20%, a measure of the buck against a half-dozen currencies, was down 0.2% at 96.661 and has posted weekly declines in the last two weeks.

A weaker buck can make gold more attractive to buyers using other currencies, and lower bond yields can also help boost the comparative appeal of gold against government debt.

“Gold continues its breakout higher as it is now at the highest level since April 2013,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Monday research report.

“I remain bullish but caution not to buy it on geopolitical concerns because as stated they are usually temporary. Buy it instead because the dollar continues to weaken and real yields continue to fall,” he said.

Among other metals, March copper HGH20, +0.14% added 0.1% to $2.79 a pound. April PLJ20, -0.02% shed 2.4% to $966.20 an ounce, but March palladium PAH20, +0.62% added 1.7% to $1,989.60 an ounce. Palladium futures notched a record high, as they’ve done each day so far this year and many times throughout 2019.

The platinum group markets are “not concerned that recent geopolitical events could derail the global economy and therefore demand for auto catalysts,” analysts at Zaner Metals, wrote in daily note. “Instead, it is apparent that platinum and palladium are being considered as safe haven instruments, with classic physical market fundamentals being pushed to the sidelines.”

Author: Myra P. Saefong

Source: Market Watch: Gold closes at nearly 7-year high

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