Kaloti Precious Metals-Morning Market Report-Tuesday, February 21, 2017

Market Daily & Weekly

Note: Indications only, open and closing prices are bids; Data source: Bloomberg; Times as per Dubai

Fundamentals and News

Gold Isn't Behaving in Practice the Way It Should in Theory

• The last three U.S. interest-rate increases that should, all other things being equal, be bad for the metal have seen prices jump in the months that followed.

• Gold is up about 7 percent since the Federal Reserve raised rates on Dec. 14. It jumped 13 percent in the two months following the last increase in December 2015 and 6 percent the previous time way back in June 2006.

• Partly, it’s rational expectations, and other things getting in the way. This time one of those things is Donald Trump’s presidency. Uncertainties surrounding hisadministration have dominated markets since the Nov. 8 election.

• Precious metals initially plunged as investors noted Trump’s vow to supercharge the economy with infrastructure spending. That would raise returns on assets such as shares and curb interest in havens like gold.

• Yet, with Trump’s time in office so far focused on other matters, the trend was quickly halted and reversed. The Fed’s rate increase in December once again became a low-water mark for gold, and expectations for further increases by the bank have failed to halt further price gains.

• “The market worries more ahead of the event than after,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. “Once the hike was out of the way, a more balanced picture emerged and that together with a reality check of the potential Trump impact did the rest.”

• Chartist Richard Pritchard has taken line honours at the close the four-week Shares Race, with his decision to back gold paying off handsomely.

• He has won in style, with his original $100,000 worth $115,832, more than $2000 of that added in the last week.

• The Australian sharemarket finished the week with the S&P/ASX 200 at 5800 points, about 200 points higher than last week.

• Our market has been influenced by the policies promised by US President Donald Trump which, together with a weaker US dollar, have been supportive of gold prices.

• This week our market was dominated by local factors.

• The profit-reporting season saw the Commonwealth Bank report yet another record profit, which lifted investor enthusiasm for all of the big banks.

• However, over the course of the four weeks it is the gold miners that have done best

Data Forthcoming Releases

Courtesy: http://kalotipm.com.sg/kaloti-market-report-21st-february-2017