Gold price hits new record highs but 2000 proves strong resistanceNews Bites

Gold price hits new record highs, but $2,000 proves strong resistanceNews Bites

Gold is on a cusp of $2,000 an ounce level. Can the yellow metal continue its historic price rally and breach this level, and more importantly, trade above it?

At the time of writing, spot gold was trading at $1,979.10, up 0.11% on the day, after hitting a record high of $1,984.66 earlier in the session. And the December Comex gold futures were at $1,994.60, up 0.44% on the day.

The next move will depend on real Treasury yield, which are heading deeper into negative territory, said Pepperstone head of research Chris Weston.

“My gold sentiment guide has not given any bearish signals just yet and I am happy to hold a bullish bias, believing pullbacks will prove to be shallow and $2k is likely,” he said on Sunday.

U.S. fiscal negotiations will be playing a key role, according to analysts.

“Having passed the expiry of unemployment benefits, we eye this Friday’s ‘soft’ deadline before Congress heads to Summer recess, although there is the option to keep talks going until Monday 10th,” said Weston. “Reports (on Sunday) suggest that House Speaker Pelosi and White negotiators are still someway apart on restoring the $600p/w jobless benefits and that won’t inspire.”

The gold price will be watching the amount of the fiscal stimulus passed, said RJO Futures senior commodities broker Daniel Pavilonis.

“For gold, it will depend on how much stimulus is passed. If they start to wind down the stimulus, then there is a real possibility that gold softens a bit. If they ramp it up and continue to print up money, then gold should move higher,” he said Friday.

A weaker U.S. dollar pushed gold prices to new all-time highs last week and if this trend continues, gold could see more gains going forward.

“Gold prices again tested new highs [Friday] and while real yields remains the key driver, the correlation with the USD has strengthened … the USD testing two-year lows has propelled prices to new highs,” said Standard Chartered precious metals analyst Suki Cooper. “It bodes well for gold, that we expect the USD to weaken and expect real rates to remain negative.”

ING head of commodities strategy Warren Patterson projects weaker U.S. dollar for the rest of the year. “This is one factor which shouldn’t provide too much resistance to potentially higher prices,” he wrote last week.

The drivers are all still there for gold to keep climbing above $2,000 an ounce, Patterson noted, adding that he sees gold ending the year at $2,100 an ounce.

“Clearly the bulk of drivers are telling us that there is further upside to the market, and we believe it is only a matter of time before the market breaks through the US$2,000/oz level,” he said. “We expect prices to face some resistance as it approaches this level like we saw earlier this week.”

Gold investors cannot forget that a price pullback is expected in the short-term, given how quickly prices have moved up. However, the overall trend in gold remains bullish, Cooper stated on Friday.

“Prices are technically overbought; given how quickly prices have rallied, the risk of a temporary pullback has risen. But the balance of risks remains skewed to the upside for gold in light of the macro backdrop remaining exceptionally favourable; any near-term corrections are likely to be viewed as buying opportunities,” she said.

The biggest risks to the gold price rally are a quick and successful roll-out of the COVID-19 vaccine, swift USD recovery, and profit-taking, Patterson said.

Traders should also watch out for a repeat of what happened in March, which could have a major negative impact on gold, Patterson added.

“While a renewed sell-off in risk assets should provide upside to gold, there is the potential that we see a repeat of March, where a selloff in other asset classes, saw investors liquidating gold positions in order to meet margin calls,” he said.

 

By Anna Golubova
For Kitco News

 

It’s a ‘challenging time’ for gold companies that need to grow – B2Gold

It's a 'challenging time' for gold companies that need to grow – B2Gold

B2Gold (TSX:BTO) is a mid-tier gold company with mining operations in diverse locations: Philippines, Mali, Namibia and Nicaragua. The Vancouver-based company forecasts between 1,000,000 and 1,055,000 ounces in 2020.

 

Johnson said the low precious metal prices of the past decade, plus the overhang from the industry's last spending splurge has diminished the gold supply

"There's been a lack of exploration and a lack of development, so I think the supply of gold probably peaked a couple of years ago," said Johnson.

Johnson said he is not a "gold bug", but the extreme financial stress has favored the metal.

"You can't print gold and there's a finite amount of gold in the world," said Johnson.

He said producers are constrained by several factors if they want to add more production now through acquisitions.

"When you talk about M&A, it's kind of interesting because there aren't many great development projects out there. Investors are nervous about people paying premiums to take over companies, because that didn't go so well in the past. Barrick set an example with the Barrick-Randgold deal where there was no premium in that deal. So I think that it's an interesting and a challenging time for those companies that really need to grow today," said Johnson.

However, some mergers could better for all.

"We're not desperate to go run out and do a deal. We've got great projects, a great pipeline of additional projects. I think you will probably see some more mergers of equals and I think that's good for the industry. I think we need fewer and better run gold mining companies," said Johnson

A future project that should grow B2Gold's production is the Gramalote project in Colombia, a joint venture with AngloGold Ashanti. A feasibility study is planned for the first quarter of 2021. The indicated mineral resource for Gramalote is 2.14 million ounces.

B2Gold announced a fundraising initiative. The company is producing 1000 limited-edition ` Gold Bars to support conversation efforts for the critically-endangered black rhino.

As COVID-19 devastated the tourism industry, wildlife parks across Africa have taken a hit and are in danger of being shut down.

“That’s affected the ability to protect these species. So that’s why the Rhino Bars and the money generated from that is so important to assist today, in protecting the wild and supporting the communities that are doing this work. A lot of budgets would have been cut had it not been what we’re doing,” said Clive Johnson, CEO of B2Gold.

 

By Michael McCrae
For Kitco News

 

Official currencies are no longer a store of value says analysts

Official currencies are no longer a store of value says analysts

Investors should brace for the reality that as currencies race to the bottom, the only way to preserve wealth is to buy gold and silver, said analysts at Degussa in a report Thursday.

“For long-term oriented investors, gold and silver should be considered not only as liquid but also as risk-reducing and return-enhancing components for the asset portfolio; especially so in times of an unfolding big short in official currencies,” the report said.

Gold has rallied to all-time highs, and silver has climbed more than 100% since its March lows; both of these rallies signify that fiat currencies are losing their value, the report said.

“While you may well say that the prices of gold and silver are on the rise, it would actually be more meaningful to state that „the purchasing power of official currencies vis-à-vis gold and silver is on the decline,” the report said.

Degussa said that it is not only precious metals that are rallying; other assets like stocks, bonds, and real estate have also been appreciating. This is further evidence that currencies are just becoming cheaper relative to real assets.

“This means that you can buy fewer and fewer stocks, bonds, and houses with a given official currencies unit. From this perspective, you can rightfully conclude that a true and broad-based debasement is going on as far as the world’s major official currencies are concerned,” the report said.

This debasement of official currencies is not a recent phenomenon and has been going on for decades, Degussa noted.

However, currency debasement has recently picked up speed.

“The monetary debasement has gathered speed due to the consequences of the politically dictated lockdown crisis,” the report said. “Central banks around the world print up ever greater amounts of money to make up for lost incomes and profits, in particular in the United States of America and Europe.”

The trend has built a case for shorting reserve currencies, Degussa said.

The analysts at Degussa noted that a sharp rally in metals prices could be followed by a retracement, but the inevitability of inflation means that investors would still be wise to hold silver and gold in the long-term as an inflation hedge.

 

By David Lin
For Kitco News

An impending equity bear market will ultimately push gold price to 4500 Bloomberg Intelligence

An impending equity bear market will ultimately push gold price to $4,500 – Bloomberg Intelligence

The Federal Reserve has pumped trillions of dollars to stabilize the U.S. economy and financial markets devastated by the COVID-19 pandemic. With that trend expected to continue for the foreseeable future, one market strategist said the best way not to fight the central bank is by investing in precious metals.

In an interview with Kitco News Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said the gold market is looking a little stretched. Prices have pushed to a record high and within striking distance of $2,000. He added that fundamentally, gold is nowhere near overvalued levels as the U.S. central bank continues to pour money into financial markets.

McGlone said that he would recommend investors look to buy gold on dips as the price could continue to hover around $2,000 through the U.S. November elections.

"In the short term, we have gold about 21% above its 52-week mean, that's the most since the peak in 2011," he said. "You don't want to be the first buyer at these levels. Anytime gold gets this high above its 52-week average, you got to expect consolidation."

Although gold investors should be a little more strategic with their buying, McGlone said that they shouldn't lose sight of the bigger picture, which is materially higher gold prices. McGlone reiterated his call that gold will needs to get “stupidly” expensive before this rally ends and that could mean prices above $4,000 an ounce.

"Basically, after 2008, gold dropped around $700 and then it rallied around three times to the peak in 2011," he said. "So just a simple rhyme of history means we get to near $4,500 and it's about time. You just have to look at debt to GDP, look at central bank balance sheets, and they're just on an upward trajectory."

As to what gets gold to those levels, McGlone said that investors should continue to watch equity markets. With bonds providing investors with no yield, a bear market in equities would drive gold's safe-haven appeal, he said.

"Now the rock is beating stocks. There's a sense in the market that the bull market in stocks is over… and gold should take off," he said. "That, to me, is the next big trade."

Although the Federal Reserve's unprecedented monetary policy measures are artificially driving stocks higher, McGlone said this factor is seeing diminishing returns. He added that it's only a matter of time before the effects of the Fed's money printing wears off.

"The S&P 500 is almost up 200%, 300% over the last ten years. It just can't continue to do that. Not without strong, solid economic growth earnings," he said. "Yes, we're getting a bid from monetary, fiscal stimulus, but that is dicey and that's not going to last."

 

By Neils Christensen
For Kitco News

Does current gold price make sense? McKinsey warns these sectors destroyed permanently

Does current gold price make sense? McKinsey warns these sectors destroyed permanently

As gold prices breached new all-time highs, confidence in the yellow metal signals to investors a desire to break away from the U.S. dollar, said Ken Hoffman, senior expert at McKinsey.

“The world is trying to get away from the dollar. You’ve seen a number of Chinese sources talk about the ‘de-dollarization’ and as the world tries to look for another currency besides the U.S. dollar, gold makes a lot of sense,” Hoffman told Kitco News.

The outlook for the global recovery following the COVID-19 pandemic looks promising for some sectors, but grim for others.

In a recent report published by McKinsey, the healthcare, information services, and technical service sectors will be the fastest to recover, while the arts and entertainment, hospitality, and educational services sectors will take the longest, with a recovery to pre-COVID levels taking place only by 2024-2025.

Mining, quarrying, and oil and gas extraction will also take a few years to recover fully.

Hoffman said that this is due to the oil companies that have been grouped into this category.

“Energy is a big part of that bucket, and energy has been impacted tremendously, particularly in travel…vehicle travel, air travel, ship travel, etc. That is the one area that we think is going to have a long-time recovery. Coal, in particular, may never see a recovery to pre-COVID levels,” he said.

Metals miners are seeing a mixed picture when it comes to a recovery, Hoffman noted.

“From a supply side, it’s been very spotty which industries have been hit by COVID and which have not. In particular, you’re seeing in South America a number of various sort of hits. Most notably is iron ore in Brazil, and copper Chile, has been quite hit as well,” he said.

 

By David Lin

For Kitco News

Gold price path to 2000 -‘There is no quick solution to US-China tensions’ analysts

Gold price path to $2,000 – 'There is no quick solution to U.S.-China tensions' — analysts

Gold is on a mission: to reach its all-time high of $1,920. And aside from looking like a very probable outcome for next week, analysts say that there is little to stop the precious metal from rising further and getting close to $2,000 an ounce.

Rising tensions between the U.S. and China, weaker U.S. dollar, falling yields, additional fiscal stimulus and still climbing COVID-19 cases have all been some of the significant drivers behind gold's massive move up this week.

At the time of writing, August Comex gold futures were trading at $1,899.80, up 0.52% on the day. In just five trading days, gold gained more than $80 and saw its seventh weekly gain in a row.

In terms of what's next for gold, the majority of analysts Kitco News spoke to on Friday said that the trend upwards remains intact and more price gains are likely. The main reason behind such bullish outlook is that gold's supportive elects are here to stay … for now.

"I don't see a quick solution to escalating tensions between the U.S. and China, I don't see a quick solution to the pandemic problem, and I don't see a quick solution to the global worries that come from increased stimulus and increased debt," RBC Wealth Management managing director George Gero told Kitco News. "The trend is my friend, according to traders in gold. They will remain buyers on dips."

Hitting higher levels is the outlook for both gold and silver, Gero noted.

U.S.-China tensions: 'U.S. dollar on its knees'

The U.S.-China tensions saw another escalation Friday when China retaliated for Houston's consulate closure by ordering the U.S. to close its consulate in the city of Chengdu.

"The U.S. move seriously breached international law, the basic norms of international relations, and the terms of the China-U.S. Consular Convention. It gravely harmed China-U.S. relations," China's foreign ministry said in a statement.

This rise in tensions, along with a weaker U.S. dollar, is creating a very gold-supportive environment for traders.

"The U.S. dollar is pretty much on its knees, political tensions between the U.S. and China are at their highs. And the Middle East is seeing a very bad time right now. Everything is pointing to much higher safe-haven demand," said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

The weaker U.S. dollar is also helping international buyers acquire gold and silver, which in turn, boosts the price, highlighting Gero.

 

 

Anna Golubova

Will King Dollar Be Overthrown?

Will King Dollar Be Overthrown?

The Fed is counterfeiting trillions of dollars. The government has created mass unemployment and is spending way beyond what it takes from us in taxes. While the livelihoods of the American citizens are destroyed, government refuses to shrink. More promises that can't be kept are being made. Gold is starting its engines and heading to record highs. Are the ideas of omnipotent government and central planning finally on their way out?

 

Gold stages the highest weekly closing price on record at 189980 an ounce

Gold stages the highest weekly closing price on record at $1899.80 an ounce

History was made today when gold pricing closed near the highest daily level since August 22, 2011. In fact, as of 5:50 PM EDT gold futures basis the most active August contract is currently settling at approximately $1900.30. On a weekly chart gold closed at a new record price for the highest weekly close.

Considering that this massive rally began in the middle of March in response to a epidemic becoming a global pandemic with gold trading at approximately $1450 per ounce. In this short time span of four months traders have witnessed gold prices rise dramatically from the mid-March lows to close today within pennies of $1900.

The global pandemic has touched every country in the world. According to John Hopkins University the total number of reported cases worldwide is now at 15,628,936, resulting in the loss of 636,262 lives.

According to the CDC, in the U.S. alone 72,219 new cases of the Covid-19 virus were reported from the previous day, taking the total number of infected individuals in the United States beyond 4 million (4,024,492) individuals. Bring the total lives lost in the United States to 143,868 with 1,113 new deaths being reported today.

Our issues with China did not start with the Covid-19 virus which is believed to have begun in a Wuhan province. Prior to the pandemic our two superpowers were fully immersed in a trade war. The rally which began in March of this year came after the trade tensions between the United States and China had already run up the price of gold.

At the end of 2019 gold was trading somewhere around $1300 an ounce after climbing from about $1040 when the multiyear correction concluded at the end of 2015. Roughly 2 years later America and China would begin trade negotiations which resulted in a trade war.

cording to Reuters, it was September 24, 2018 when the 10% tariffs on the $200 billion worth of Chinese imports was actualized and enforced, and on the very first day of 2019 China responded by taxing $60 billion of U.S. goods. Unknowingly this issue would be put on the back burners as the world’s greatest superpowers were unable to move past a phase-1 agreement, which at this point is still unresolved.

The current focus in the United States and globally is on mitigating the damage caused by the coronavirus. This has been a huge component creating bullish market sentiment for gold. The recent tensions between our two superpowers have escalated the conflict and was the final push needed to take gold to $1900.

Whenever this pandemic begins to subside countries globally will have to deal with the economic fallout that most certainly will follow. If the economic fallout is combined with heightened tensions between the United States and China collectively these fundamental issues could take gold to $2000 or higher.

Wishing you as always good trading and good health,

 

 

 

By Gary Wagner
Contributing to kitco.com

Gold prices have risen more then 4 so far this week in global markets their biggest weekly percentage gain in over three months

Gold prices have risen more then 4% so far this week in global markets, their biggest weekly percentage gain in over three months.

After US ordered China to close its its Houston consulate this week, Beijing said the move had "severely harmed" relations and warned it "must" retaliate.

Also, the number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months, data showed on Thursday.

Gold is viewed as a safe-haven during times of political and financial uncertainty. The precious metal has also been supported by a weak dollar.

"Gold and silver may witness choppy trade as market players assess virus risks and geopolitical tensions against expectations of additional stimulus measures however the general bias may be on the upside due to weaker US dollar," Kotak Securities said in a note.

In the US, Senate Republicans are set to unveil their proposal for a fresh round of coronavirus stimulus next week, including more direct payments to Americans. Earlier this week, Europe approved a massive stimulus of over $850 billion.

Coronavirus cases continue to rise, with more than 1.54 crore people across the world have been reported to be infected by the virus while 6.3 lakh people have lost their lives. (With Agency Inputs)

 

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