-- Published: Friday, 13 April 2018 | Print | Disqus
– Gold & silver eke out small gains; palladium surges 8% and platinum 2%
– Oil (WTI) surges over 8% to over $66.90/bbl; supply disruption risk
– U.S. dollar and Treasuries fall; geopolitical, trade war and fiscal concerns
– Stocks rally and shrug off trade war, macro and geo-political risks
– Bitcoin, major cryptos (Ethereum, Ripple etc) rise sharply
– Russia-US tensions high: Trump warns attack ‘could be very soon or not so soon at all’
In what has been a volatile week with concerns about the U.S. bombing Syria and a wider war in the Middle East involving Russia, oil has surged over 8% and is headed for the biggest weekly advance in more than eight months.
Tensions and a war in the Middle East may lead to supply disruptions Goldman Sachs has warned. This has led to a buy call on commodities by Goldman Sachs Group Inc.
Precious metals saw gains with palladium surging over 8%, platinum by 2%, silver by 1.1% and gold by 0.6%.
The U.S. dollar and U.S. Treasuries have retreated this week possibly on concerns of the impact of yet another war on the balance sheet and deteriorating fiscal position of the U.S.
The nonpartisan Congressional Budget Office (CBO) is now projecting that annual US budget deficits will rise above the trillion dollar mark in 2020. This is two years sooner than what the agency was projecting just 10 months ago.
Despite these risks, world stocks are set to post their biggest weekly gain in over a month. Investors have so far shrugged off the uncertainty over the prospect of global trade wars and over the escalating tension in the entire Middle East.
Global stock markets have had a volatile week, partly due to U.S. President Donald Trump’s volatile and risky “Twitter diplomacy” and his tendency to abruptly change his mind over key policy and geo-political issues.
Bitcoin surged yesterday to its highest level in two weeks and is over 20% higher in the week. The most popular cryptocurrency has risen back above the $7,500 level.
Bitcoin has seen a very sharp fall this year and fell from an all-time high above $19,000 reached at the end of 2017. Other cryptos also saw strong gains. Yesterday, ethereum was up 10.8 per cent, Ripple 12.4 per cent and Bitcoin Cash 8.3 per cent. All are up sharply in the week.
Bitcoin’s gains are in sharp contrast to gold’s lacklustre performance.
Gold’s muted performance this week is surprising given the scale of risk and volatility. Investment demand has risen sharply this week and bullion dealers internationally including GoldCore have seen strong demand or gold coins and bars.
Investment demand for paper gold and gold ETFs has also risen sharply on safe haven demand.
The gold price appears to have been capped this week due to a renewed bout of massive, concentrated selling in the futures market. The equivalent of a few hundred tonnes of ‘electronic gold’ in the form gold futures contracts were dumped onto the gold market which capped gold’s gains.
Given the likelihood of a continuing increase in global investment demand, we expect gold prices to eke out further gains in the coming months. Both the technicals and the fundamentals look increasingly positive with macro and geo-political risk set to remain elevated for the foreseeable future.
News and Commentary
Gold spikes after Trump warns Russia to ‘Get ready’ (Businessinsider.co.za)
Gold flirts with highest close in nearly 2 years as political tensions ramp up (MarketWatch.com)
Syria conflict fears weigh on dollar; Fed minutes support (Reuters.com)
Stocks Drop Amid Middle East Tension, Hawkish Fed (Bloomberg.com)
U.S. Core Inflation Accelerates as Drag From Phone Costs Fades (Bloomberg.com)