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There's 'hefty' geopolitical risk premium in gold price and it's $300, says ANZ
Even though demand for gold is expected to remain strong while the war in Ukraine is ongoing, there is "a hefty risk premium" in the price right now, said Australia and New Zealand Banking Group (ANZ).
Gold is consolidating after seeing its best quarter in about two years. Still, the precious metal will continue to experience high demand while the geopolitical uncertainty dominates the marketplace, said ANZ senior commodity strategist Daniel Hynes.
The reason why is that gold is viewed as an "ultimate currency" — it "holds its value during war unlike currencies, which remain vulnerable to the consequences of war and changes in monetary policies," Hynes said on Monday.
However, investors should be aware that the risk premium in gold has already reached $300.
"The ongoing war in Ukraine is likely to see demand for the safe have asset remain strong. Our gold valuation model of the spread between fair value and spot gold prices has shot from zero to USD300/oz since Russia invaded Ukraine, suggesting a hefty risk premium," Hynes said. Read More
Globalization is dead and that will lead to higher gold prices - abrdn's Minter
Russia's war in Ukraine has fundamentally changed the geopolitical landscape. According to one market analyst, globalization is dead and that will create a positive environment for gold.
In a recent telephone interview with Kitco News, Robert Minter, director of ETF Investment Strategy at abrdn, said even if Russia stops its invasion of Ukraine, it is unlikely that globalization trends will go back to peak levels seen just a few years ago. Domestic supply chains will lead to higher prices for finished goods, keeping inflation pressure elevated for the foreseeable future, he said.
Gold can only go higher as inflation threatens to become a permanent fixture in the global economy, Minter said. The comments come as gold prices struggle in a new consolidation channel with support at $1,900 an ounce and resistance around $1,950 an ounce.
Although globalization peaked several years ago, Minter said that the conflict in Eastern Europe has drawn clear lines between allies and opponents and nations are now working as fast as possible to develop their own domestic supply chains and access to raw materials. Read More
U.S. Mint sees strongest gold bullion demand in 23 years, sells 426k ounces in Q1
Rising inflation and safe-haven demand resulted in extraordinary demand for physical gold in March, capping off the best start to the year in more than two decades.
In its latest sales data, the U.S. mint reported that it sold 155,500 ounces of various denominations of its American Eagle Gold bullion coins, up 73% from last month. The U.S. Mint saw its best March performance since 1999.
March ended a solid quarter for bullion demand. The U.S. mint sold 426,500 ounces of gold between January and March, up 3.5% from the first quarter of 2021. Similar to its monthly says, this was the mint's best quarter in 23 years.
According to analysts, two factors are driving demand for physical precious metals: inflation and Russia's war with Ukraine. Analysts are focusing a lot of attention on Europe's economy as the region faces rising consumer prices and the growing threat that Russia could weaponize its energy commodities as it faces growing sanctions against Western nations. Read More
U.K. plans to issue its own NFT 'by the summer,' announces stablecoins oversight
Britain has plans to mint its own non-fungible token (NFT) "by the summer" after the country's Finance Minister Rishi Sunak asked the Royal Mint to take on the task. This is all part of a new goal to be engaged with the crypto industry.
The news was announced by the Economic Secretary to the Treasury John Glen at the Innovate Finance Global Summit in London. "There will be more details available very soon," Glen said. "If crypto-technologies are going to be a big part of the future, then we -- the U.K. -- want to be in, and in on the ground floor."
The U.K. Royal Mint is owned by Her Majesty's Treasury and is responsible for supplying all the nation's coinage.
The Non-fungible tokens (NTFs) are tradable digital tokens that represent a virtual item. NFT was chosen as the Collins Dictionary's word of the year for 2021 after trading surged 21,000% last year. Read More
Central banks sell 6 tonnes of gold in February
For the second consecutive month, central banks were net sellers of gold in February, according to the latest report from the World Gold Council.
In a report published Tuesday, the WGC said that on balance, six tonnes of gold flowed out of official reserves in February as activity was dominated but just a few central banks.
"Despite a cumulative decline of 18t y-t-d, global gold reserves remain above 35,600t – their highest level since 1990," the analysts said in the report.
The WGC said that Uzbekistan was the largest seller in February. It decreased its gold reserves by 22 tonnes to 339 tonnes – the lowest level of gold holdings since December 2020. However, the WGC said that the precious metal still represents a significant portion of the central bank's reserves.
"Even after the sale in February, gold reserves still account for 59% of total reserves," the analysts said. Read More
Gold loses earlier gains following hawkish Fed comments
Gold prices are lower in midday U.S. trading Tuesday and lost a moderate earlier advance following some hawkish rhetoric coming from a Federal Reserve official. June gold futures were last down $7.40 at $1,926.50 and May Comex silver was last down $0.075 at $24.515 an ounce.
Image Source: Kitco News
Technically, April gold futures bulls have the overall near-term technical advantage amid recent sideways and choppy trading. Bulls' next upside price objective is to produce a close above solid resistance at $1,967.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,888.30. First resistance is seen at $1,950.00 and then at $1,955.00. First support is seen at this week's low of $1,918.20 and then at $1,900.00. Wyckoff's Market Rating: 6.0. Read More
U.S. dollar 'to implode': buy gold, silver, Bitcoin, and Ethereum, says Kiyosaki
A recession is coming, and the U.S. dollar is going "to implode," according to Robert Kiyosaki, the best-selling author of 'Rich Dad Poor Dad.'
In a recent series of tweets, Kiyosaki painted a grim picture of the U.S. economy, projecting a recession and a greenback collapse.
"Recession and crash coming," he tweeted. "REPO MARKET INVERSION. Last time this happened was 2008. Be careful."
Kiyosaki's comment came after the 2-year and the 10-year Treasury yields inverted for the first time since 2019, with many market participants viewing this as a possible recession signal. Read More
Deutsche Bank's recession call: U.S. economy to take 'major hit' as Fed tightens
The U.S. economy will experience a "major hit" in 2023 and 2024 as the Federal Reserve slows growth prospects with its aggressive tightening plan to fight inflation, said Deutsche Bank.
Eight percent inflation will force the Fed into a hawkish stance of higher rates and tighter monetary policy. But the end result looks to be recessionary, Deutsche Bank economists wrote in a note Tuesday.
"The U.S. economy is expected to take a major hit from the extra Fed tightening by late next year and early 2024," the economists said. "We see two negative quarters of growth and a more than 1.5% pt rise in the U.S. unemployment rate, developments that clearly qualify as a recession, albeit a moderate one." Read More
VanEck sees extreme scenario where gold is $31K and Bitcoin is $1.3 million
Russia's war in Ukraine has created what some economists see as irrevocable shifts in the geopolitical landscape; lines are being drawn among allies and opponents that won't easily be undone.
Fund managers at VanEck looked at how this new landscape will impact financial markets and the makeup of reserve currencies as nations look to diversify their holdings. Taking the current trend to an extreme conclusion, Natalia Gurushina, and Eric Fine, the authors of the latest report, see significant upside for Bitcoin and gold.
"The bottom line is that the upside for gold and Bitcoin is potentially dramatic. Specifically, the framework estimates gold prices of around $31,000 per ounce and potential Bitcoin prices of around $1,300,000 per coin," the analyst said in their report. " Precious metals are the original reserve asset, but cryptocurrencies are a possible addition/replacement/portion." Read More
Gold and silver are flat ahead of the European open
Gold and silver trade flat leading into the European open. Gold is at $1920/oz while silver is trading at $24.33/oz. In the rest of the commodities complex, copper is 0.17% lower and spot WTI has moved 1% into the black.
Risk markets struggled overnight as the Nikkei 225 (-1.58%), ASX (-0.50%), and Shanghai Composite (-0.14%) all fell. Futures in Europe are indicating a negative open.
In FX markets the major stayed in tight ranges. EUR/USD looks like it could be headed to the previous wave low on the daily chart and is currently 0.19% lower. In the crypto space, BTC/USD fell 0.18% to trade at $45,427.
News from overnight: Read More
Disclaimer: These articles are provided for informational purposes only. They are not offered or intended to be used as legal, tax, investment, financial, or any other advice.
