Gold could hit levels last seen in 2013 if the US dollar extends its slide and equity markets reverse.
Bullion at US$1,400 an ounce is “achievable” in the next two months, Stephen Innes, head of trading for Asia Pacific at brokerage Oanda Corp, said in an interview Thursday.
The Bloomberg Dollar Spot Index plunged to the lowest since 2014 after US Secretary of the Treasury Steven Mnuchin endorsed the currency’s drop at the orld Economic Forum in Davos, Switzerland.
And while global equity markets have repeatedly hit all-time highs over the past few months, gold is also on the march, rising to as much as US$1,366.15 an ounce on Thursday, its best mark since August 2016.
The metal for immediate delivery on Friday climbed 0.2 percent to US$1,361.12 an ounce, up 2.2 percent for the week, while an index of the dollar dropped by 0.5 percent.
Gold has climbed more than 8 percent since the middle of last month as the US dollar slumped and investors sought protection from a potential tumble in share markets and a resurgence of inflation.
Holdings of bullion in exchange-traded funds have grown to the largest since 2013, while money managers have more than doubled their net bullish bets on Comex since the middle of last month.
“We see a host of ongoing financial market drivers keeping the gold market tight,” Australia & New Zealand Banking Group Ltd (ANZ) analysts, including Daniel Hynes, said in a report Thursday. “Further weakness in the dollar and rising risks of a correction in equity markets, in particular, should be supportive.”
The US dollar’s decline has come amid expectations that other central banks, notably the European Central Bank and the Bank of Japan, are moving closer to cutting monetary stimulus.
In Davos, Mnuchin said that “a weaker dollar is good” for US trade, while US Secretary of Commerce Wilbur Ross said the US would fight harder to protect its exporters.
With the US dollar “prone and defenseless,” these comments added “fuel to the fire,” Singapore-based Innes said.
With these signals from the US government and other central banks, “we’re getting into a structurally weak dollar, and on a macro level, we could be moving into a cyclical bear market beyond 2018,” Innes said. “All I can possibly see right now, given this overriding weaker dollar narrative, is for gold to go higher in the short term.”
ANZ sees prices holding at current levels in the first half of this year, before pushing toward US$1,400 by the end of the year.
A cap on the US dollar this year would be useful to US trade and managing the country’s escalating debt burden, said Gavin Wendt, senior resource analyst at MineLife Pty, who also sees gold hitting US$1,400 this year.
Spot silver climbed and platinum rose for a third day, while palladium fell.
Vanadium has soared more than 130 percent in the past year, outperforming better-known battery components like cobalt, lithium and nickel.
Vanadium pentoxide, a powder form of the metal used in batteries and the steel industry, has rallied 27 percent this year to US$12.38 a pound, Metal Bulletin PLC said.
JPMorgan Chase & Co chief executive officer Jamie Dimon on Tuesday quipped that his company is likely to outlast the Chinese Communist Party (CCP), while reiterating the bank’s commitment to the country in wide-ranging comments that also touched on Taiwan, free speech and former US president Donald Trump. “We hope to be there [in China] for a long time,” Dimon told a panel discussion at the Boston College Chief Executives Club. Relaying a “joke” he made during a recent visit to Hong Kong, he said “The communist party is celebrating its 100th year. So is JPMorgan. And I’ll make you a
The Kaohsiung City Government yesterday said it would impose a property hoarding tax as it is seeking to contain speculation in the real-estate market, calling recent price increases “abnormal.” The announcement came in support of the Ministry of Finance’s call for local governments to levy a high tax rate on people with more than one property. Ministry officials on Tuesday discussed strategies to rein in speculation with the nation’s six special municipalities, as well as the Hsinchu city and county governments. About 84,000 out of 1.06 million housing units in Kaohsiung are not residential property, the city government said in a
BOOST EXPECTED: Higher market prices would offset effects of the industry’s transition to more climate-friendly production methods, a company official said China Steel Corp (CSC, 中鋼) expects steel demand to increase on the back of governments around the world subsidizing infrastructure construction amid a stabilizing COVID-19 pandemic, CSC chairman Wong Chao-tung (翁朝棟) told an investors’ meeting yesterday. “After getting through the hard times, I foresee at least one year, very possibly two years, of strong steel market,” Wong said. Calling a dip in steel prices a “short respite for the market,” Wong said that it would likely bounce back early next year on the back of mild winter temperatures around the world allowing construction activity. Despite COVID-19 spikes in some regions and increased
The resilience of the semiconductor supply chain was at the top of the agenda yesterday at the second Economic Prosperity Partnership Dialogue between representatives from Taiwan and the US. Other topics discussed included public health, green energy, the digital economy, 5G network security, and science and technology, the Ministry of Economic Affairs said. Minister of Economic Affairs Wang Mei-hua (王美花) and Minister of Science and Technology Wu Tsung-tsong (吳政忠) represented Taiwan via videoconference from Taipei, while US Undersecretary of State for Economic Growth, Energy and the Environment Jose Fernandez spoke from Washington. The dialogue was conducted under the auspices of the American Institute