(Kitco News) Gold price volatility is here to stay, according to analysts, who forecast even steeper price swings than the $100 daily moves seen this week.
Despite the overall bullish outlook for gold, wild price moves have kept investors busy trying to figure out their strategy while gold bounces between the lows and highs of $1,900 an ounce.
At the time of writing, gold was seeing a nice rally with December Comex gold futures trading at $1,979.80, up 2.44% on the day.
“We’ve had high volatility for the past few weeks and that is not going to change. A lot of things are still coming down the pipe — valuation of the equity market, comments by the Fed Chair on Thursday, elections in November. Volatility will be here at least through December, which will be extremely difficult to trade,” Kitco Metals global trading director Peter Hug said on Friday. “Any news bite that comes out could trigger a volatile move.”
Hug is bullish on gold next week, expecting prices to test the $2,000 an ounce level, an important trigger to watch. If gold can sustain its gains above that critical psychological level, more gains are likely in store. “The next time we get through the $2,000 an ounce level, it will be the next leg up for gold,” Hug noted.
The big question is whether gold’s consolidation has run its course, TD Securities Commodity Strategist Daniel Ghali told Kitco News. “Gold continues to balance on the uptrend that has been prevailing since the pandemic,” Ghali said. “Traders watching the technical pattern. If prices manage to break out of it, [the bullish trend could prevail]”.
On the downside, Ghali is watching $1,910 and on the upside, he is looking at $1,975 an ounce.
How to handle volatility
Very thin trading next week is likely to cause very extreme price swings in the gold space, the analysts warned.
“A lot of traders are away and we are seeing thin markets. A lot of buying is algorithmic driven,” Phoenix Futures and Options LLC president Kevin Grady told Kitco News. “On Thursday, gold rallied $30 and then sold off $70. One hundred dollar swings are not typical for gold. A lot of people are on the sidelines. And next week, it will be even thinner. You are going to see exacerbated price swing as the algorithms take control.”
For investors, Hug recommends keeping emotions out of it and maintaining a gold position as part of a balanced portfolio. “This is not the time to panic,” he said.
For traders, Hug suggests taking a macro perspective on things since it is difficult to put in stops with such high price swings on a daily basis, he noted. “If you are a day trader, it is really difficult to trade the market because it is built up on both sides. Make sure you have the capital available to meet margin calls,” he stated.
Grady said that many investors are starting to choose gold-backed ETFs, like the GLD, versus the futures due to the high levels of volatility.
What does Powell’s message mean for gold?
There was some confusion in the gold market following Federal Reserve Chair Jerome Powell’s keynote address at the virtual Jackson Hole on Thursday.
Powell introduced a new approach to setting monetary policy, which lets inflation and employment run higher. The Fed will now seek inflation, which averages 2% over time, ensuring that interest rates remain low for years to come.
Yet, despite being great news for gold, the precious metal sold off $72 in just one hour during the speech.
“What the market wanted to see from Powell was a more concrete statement on what the Fed’s policy was in terms of inflation. During his speech, Powell first said that the Fed was going to use an average inflation model and let inflation run a little hotter until the economy would regenerate itself. That comment kicked off a rally. Then, five minutes later, Powell said that if inflation does run a little too hot, the central bank will take steps to bring it down,” said Hug. “That took the edge of that first comment.”
However, despite some confusion, the overall macro picture is a very positive one for gold, noted Hug. “The Fed is going to remain extremely accommodative at least through 2021 until the economy starts to regenerate. In that context, gold will be higher,” he said.
If anything, the outlook is even more bullish now, added Grady. “What Powell was saying is that the Fed is prepared to let the economy run hot for a while without raising rates for five years. This is very bullish for gold,” he said.
Data to watch
There are a number of fresh key data sets being released next week. For gold, the most volatile figure will likely be the U.S. employment data, scheduled for Friday.
After Powell’s speech, the focus will shift to the U.S. labor market, said LaSalle Futures Group senior market strategist Charlie Nedoss. “We have seen the U.S. economy create 9 million jobs in the last two months, but we lost 20 million jobs in March,” Nedoss said.
Weak employment numbers could drive gold higher because of expectations that the Fed will pump more liquidity into financial markets, Nedoss added.
The market is projecting for 1.5 million jobs to have been added in August.
“This would leave employment a net 11.4 million lower than in February,” said ING chief international economist James Knightley. “Unfortunately, we are a little more pessimistic … We are looking for a more modest payrolls growth figure of 900,000. This means we also see some upside for the unemployment rate, particularly with uncertainty over the Federal government unemployment benefits boost likely incentivizing some people to start looking for work more actively.”
Other U.S. releases include Tuesday’s ISM manufacturing PMI, Wednesday’s ADP private-sector employment and factory orders, as well as Thursday’s jobless claims and ISM non-manufacturing PMI.
Tesla slashes the price of the Powerpack by 27% on Battery Day – Electrek
Tesla has greatly reduced the price of its Powerpack battery system today ahead of its Battery Day event.
Powerpack hasn’t been talked about much lately.
It has been relegated to the background since Tesla introduced the bigger Megapack for utility-scale projects.
However, Tesla is still making the product and it is still being used for many commercial-scale projects, like Electrify America’s charging stations.
Now we’ve learned that Tesla is slashing the price of the Powerpack.
Earlier this year, Electrek reported that Tesla revealed the price of the battery system through its new commercial solar configurator.
At the time, the Powerpack was being sold for $172,000 before incentives and including a commercial inverter.
Now a tipster pointed out to Electrek that Tesla has updated the pricing today, reducing the Powerpack to $125,000:
It brings the cost of the system down to $539 per kWh, but that’s including the expensive commercial inverter.
The price per kWh goes down significantly when adding more Powerpacks to the same inverter system.
That’s also without incentives.
Tesla’s price guide for commercial solar is only available in California, where they have strong incentives for energy storage for self-generation.
According to Tesla’s configurator, a Powerpack can be added to a 40 kW solar system for just $26,000 after incentives.
The price change happens as Tesla is about to announce new batteries at its Battery Day event later today.
While the timing is interesting, it could be completely coincidental, but I guess we will know in just a few hours.
It is a significant price drop before incentives, but the system was already expensive to start with.
The price difference might also be on the inverter side and not the battery side.
Either way, it is worth noting, especially considering the crazy incentives in California. If I was a business owner in California, I would certainly consider this solution.
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Canada signs deal with VBI Vaccines to develop coronavirus candidate by 2022 – Global News
Canada will contribute around 75% of the U.S.-based company’s development costs and C$55.9 million ($42.2 million) for the project.
VBI Vaccines said last month that together with the National Research Council Canada it was investigating the vaccine candidate, VBI-2900, in preclinical trials.
As per the agreement, signed last week, the company’s Ottawa-based unit is obligated to complete the vaccine development in or before the first quarter of 2022.
Ottawa signs 2 new COVID-19 vaccine deals for Canada
There are currently no approved vaccines for COVID-19, but around 38 vaccines are being tested in humans around the world.
© 2020 Reuters
Wall Street falls, S&P 500 down 1.2% as global markets swoon – CP24 Toronto's Breaking News
Stan Choe, Damian J. Troise And Alex Veiga, The Associated Press
Published Monday, September 21, 2020 3:03PM EDT
Last Updated Monday, September 21, 2020 11:23PM EDT
NEW YORK – Wall Street slumped Monday as markets tumbled worldwide on worries about the pandemic’s economic pain, though the S&P 500 had pared its losses by the end of the day.
The drops began in Asia as soon as trading opened for the week, and they accelerated in Europe on worries about the possibility of tougher restrictions there to stem rising coronavirus counts. In the U.S., stocks and Treasury yields weakened, while prices sank for oil and other commodities that a healthy economy would demand.
The S&P 500 fell 38.41 points, or 1.2%, to 3,281.06. It extends the index’s losing streak to four days, its longest since stocks were selling off in February on recession worries. But a last-hour recovery helped the index more than halve its loss of 2.7% from earlier in the day.
The Dow Jones Industrial Average fell 509.72, or 1.8%, to 27,147.70 after coming back from an earlier 942 point slide. The Nasdaq composite slipped 14.48, or 0.1%, to 10,778.80 after recovering from a 2.5% drop.
Wall Street has been shaky this month, and the S&P 500 has dropped 8.4% since hitting a record Sept. 2 amid a long list of worries for investors. Chief among them is fear that stocks got too expensive when coronavirus counts are still worsening, Congress is unable to deliver more aid for the economy, U.S.-China tensions are rising and a contentious U.S. election is approaching.
Investors should expect the stock market to stay volatile, perhaps through the November elections, as they wait for these questions to shake out, said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management.
Monday’s selling was exacerbated by worries about the possibility of more business restrictions in Europe, particularly as the United States heads into flu season, Draho said, and “some investors may be stepping aside.”
David Joy, chief market strategist at Ameriprise Financial, noted how Monday’s sharpest drops were concentrated in areas of the market most closely tied to the economy’s strength, such as energy companies and raw-material producers.
“It seems to be a broader expression of worry about the economy,” he said.
Bank stocks took sharp losses after a report alleged that several continue to profit from illicit dealings with criminal networks despite U.S. crackdowns on money laundering.
Shares of electric and hydrogen-powered truck startup Nikola plunged 19.3% after its founder resigned as executive chairman and left its board amid allegations of fraud. The company has called the allegations false and misleading.
General Motors, which recently signed a partnership deal where it would take an ownership stake in Nikola, fell 4.8%.
Investors are also worried about the diminishing prospects that Congress may soon deliver more aid to the economy. Many investors call such support crucial after extra weekly unemployment benefits and other stimulus expired. But partisan disagreements have held up any renewal of what’s known as the CARES Act.
“The stimulus money from the CARES Act, the impact of that, is running off and there doesn’t seem to be any urgency in Washington to get another package together,” said Joy of Ameriprise Financial..
Partisan rancour is only continuing to rise, deflating hopes further. The sudden vacancy on the Supreme Court following the death of Justice Ruth Bader Ginsburg is the latest flashpoint dividing the country.
Tensions between the world’s two largest economies are also weighing on markets. President Donald Trump has targeted Chinese tech companies in particular, and the Department of Commerce on Friday announced a list of prohibitions that could eventually cripple U.S. operations of Chinese-owned apps TikTok and WeChat. The government cited national security and data privacy concerns.
That raises the threat of Chinese retaliation against U.S. companies.
A U.S. judge over the weekend ordered a delay to the restrictions on WeChat, a communications app popular with Chinese-speaking Americans, on First Amendment grounds.
Trump also said on Saturday he gave his blessing to a proposed deal between TikTok, Oracle and Walmart to create a new company that would likely be based in Texas.
Layered on top of all those concerns for the market is the continuing coronavirus pandemic and its effect on the global economy.
On Sunday, the British government reported 4,422 new coronavirus infections, its biggest daily rise since early May. An official estimate shows new cases and hospital admissions are doubling every week.
Prime Minister Boris Johnson later this week is expected to announce a slate of short-term restrictions that will act as a “circuit breaker” to slow the spread of the disease. The number of cases has been rising quickly in many European countries and while authorities don’t seem ready to return to the tough restrictions on public life that they imposed in the spring, the new wave of the pandemic threatens the economic outlook.
The FTSE 100 in London dropped 3.4%. Other European markets were similarly weak. The German DAX lost 4.4%, and the French CAC 40 fell 3.7%.
In Asia, Hong Kong’s Hang Seng dropped 2.1%, South Korea’s Kospi fell 1% and stocks in Shanghai lost 0.6%.
The yield on the 10-year Treasury fell to 0.66% from 0.69% late Friday.
September’s losses for markets are reversing months of remarkable gains. Beginning in late March, when the Federal Reserve and Congress pledged massive amounts of support for the economy, the S&P 500 erased its nearly 34% in losses caused by the pandemic. Signs of budding economic improvements accelerated the gains, but growth has slowed recently.
AP Business Writer Joe McDonald contributed.
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