(Kitco News) There is optimism in the gold space after Federal Reserve Chair Jerome Powell’s nomination testimony triggered a price rally, according to Pepperstone.
The key level to watch now is the $1,830 an ounce, with gold bulls now hopeful of what the first quarter could bring for the precious metal.
Gold climbed to new daily highs as Powell testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs. At the time of writing, February Comex gold futures were trading at $1,821.20, up 1.25% on the day.
Even though Powell sounded as hawkish as before, markets got a glimpse of how flexible the Fed is when tightening monetary policy going forward.
“While Powell didn’t really push back on market pricing around expected Fed rate hikes, we’ve certainly seen relief play out across markets,” said Pepperstone’s head of research Chris Weston. “It feels as though he confirmed this idea that when it comes to dealing with price pressures, the Fed have afforded themselves maximum flexibility and optionality to deal with changing dynamics, yet tried to remove a belief that they are stuck on a set path.”
Commodities, especially gold and oil, benefited from Powell’s comments as the U.S. dollar index declined — a major bullish sign for the yellow metal.
“The USD has been universally sold across the board – this has boosted the commodity trade, where notably crude is ripping and now eyeing the Nov highs of $86, and this is feeding full circle into solid moves for the petrocurrencies,” Weston noted. “A decent move lower in U.S. real rates amid USD weakness is typically a green light for gold bulls, and bid up the yellow metal … We eye the $1,830 swing here.”
Wednesday’s inflation data out of the U.S. will play a key role in determining what’s next for the U.S. dollar. Market consensus calls are projecting that the U.S. consumer price index will rise 7% on an annual basis in December.
“The question is, would a stronger downside reaction (in the USD) be seen on a miss to CPI than an upside move (in the USD) on a beat? I suspect the former, and it feels as if the street sees this risk distribution and looking for reasons to get short the USD,” Weston said.
The gold market has had many false starts this winter, but Weston sees some positive signs this time around. “I have been wholly impressed by the yellow to ride out the recent lift in bond yields, and that may be telling a story that the gold bulls may have a better time of it in Q1,” he said.
“This year, we see an economy where the labor market is recovering rapidly and inflation is well above 2%. This tells us is that the economy no longer needs or wants the highly accommodative policies we had in place to deal with the pandemic. But it is a long way to normal,” Powell said.
However, he also warned that a recession is possible if the Fed is forced to tighten too much. “If inflation does become too persistent, that will lead to much tighter monetary policy, and that could lead to a recession,” he said.
When talking about policy normalization, Powell stressed the importance of staying humble. “We are going to end asset purchases in March. We will raise rates. And at some point this year, we will start the balance sheet runoff,” he said. “The committee didn’t make any decision on the timing. We need to be humble about that. There are risks on both sides on growth and potentially inflation as well. Going to have to be attentive to what’s happening in the economy and willing to adapt as we go through the year.”
Powell also noted that reducing the Fed’s balance sheet could be faster and quicker this time around. “We will have the ability to move sooner and a little faster this time around. More clarity is coming soon on that. We will be discussing it at the January meeting.”
VANCOUVER – West Fraser Timber Co. Ltd. says it’s indefinitely curtailing its sawmill in Lake Butler, Fla., by the end of the month.
The Vancouver-based company says the decision is because of high fibre costs and soft lumber markets.
West Fraser says the curtailment will affect about 130 employees, though it will mitigate the impact by providing work opportunities at other locations.
The company says high fibre costs at Lake Butler and the current low-price commodity environment have made it difficult to operate the mill profitably.
It expects to take an impairment charge in the third quarter associated with the curtailment.
At the beginning of this year, West Fraser said it was closing a sawmill in Maxville, Fla., and indefinitely closing another in Huttig, Ark.
This report by The Canadian Press was first published Sept. 19, 2024.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
