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Extreme gold price swings to hit markets next week as metal tackles $2000 — analysts – Kitco NEWS

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(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.

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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.

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Calgary breaks all-time record in housing starts but increasing demand keeps inventory low – CBC.ca

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Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

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Calgary also had the highest housing starts by population.

“Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market,” said Adebola Omosola, a housing economics specialist with CMHC.

“The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term.”

Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn’t let up any time soon. 

Industry can cope with demand, expert says

According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

The agency’s report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

However, there’s optimism the construction industry can match the increasing need.

Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn.
Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

“I’ve heard that kind of conversation at the end of 2022 and I heard it in 2023,” Hahn said.

“Yet here we are early in 2024, and January and February were record numbers again.”

Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

Increase in row house and apartment construction

Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

“Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions,” Hahn said.

“I have little doubt that the industry will do their very best to keep pace at those levels.”

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Ottawa real estate: House starts down, apartments up in 2023 – CTV News Ottawa

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Rental housing dominated construction in Ottawa last year, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

Residential construction declined significantly in 2023, with housing starts dropping to 9,245 units, a 19.5 per cent decline from the record high observed in 2022. But while single-detached and row housing starts fell compared to 2022, new construction for rental units and condominiums rose.

“There’s been a shift toward rental construction over the past two years. Rental housing starts made up nearly one third of total starts in 2023, close to double the average of the previous five years,” the report stated.

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Apartment starts reached their highest level since the 1970s.

“The trend toward rental and condominium apartment construction follows increased demand in these market segments due to population growth, households looking for affordable options, and some seniors downsizing to smaller units,” the CMHC said.

Demand from international migration and students, the high cost of home ownership, and people moving to Ottawa from other parts of Ontario were the main drivers for rental housing starts in 2023. The CMHC says rental and condominium apartment starts made up 63 per cent of total starts in 2023, compared to the average of 37 per cent for the period 2018-2022.

There was a modest increase in rental housing starts in 2023 over the record-high seen the year prior and a jump in new condominiums. The report shows 5,846 new apartments were built in Ottawa last year, up 2.1 per cent compared to 2022.

Housing starts in Ottawa by year. (CMHC)

Big demand for condos

The CMHC said condo starts reached a new high in 2023, increasing 3 per cent from 2022 numbers.

“As of the end of 2023, there were only 13 completed and unsold condominium units, highlighting continued demand for new units,” the CMHC said.

Condominum starts increased in areas such as Chinatown, Hintonburg, Vanier and Alta Vista, as well as some suburban areas like Kanata, Stittsville, and western Orléans. Condo apartment construction declined in denser parts of the city like downtown, Lowertown and Centretown, the report says.

Taller buildings are also becoming more common, as the cranes dotting the skyline can attest. The CMHC notes that buildings with more than 20 storeys accounted for nearly 10 per cent of apartment structure starts in 2022 and 2023, compared to an average of 2 per cent over the 2017-2021 period. The number of units per building also rose 7 per cent compared to 2022.

Apartment building heights in Ottawa by year. (CMHC)

Single-detached home construction down significantly

The number of new single-detached homes built in Ottawa last year was the lowest level seen in the city since the mid 1990s, CMHC said.

“The Ottawa area experienced a slowdown in residential construction in 2023, driven by a significant decline in single-detached and row housing starts,” the CMHC said.

Single-detached housing starts were down 45 per cent compared to 2022. Row house starts dropped by 38 per cent compared to 2022, marking a third year of declines in a row.

“Demand for single-detached and row houses also declined in 2023. Higher mortgage rates and home prices have led to a shift in demand toward more affordable rental and condominium units,” the report said.

There were 1,535 single-detached housing starts in Ottawa last year, 208 new semi-detached homes and 1,678 new row houses.

The majority of single-detached and row housing starts were built in suburban communities such as Barrhaven, Stittsville, Kanata, Orléans and rural parts of the city.

“Increased construction costs resulting from higher financing rates and inflation that occurred in 2022 and 2023 contributed to the decline in construction in the region,” the CMHC said. 

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Trump’s media company ticker leads to fleeting windfall for some investors

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A man looks at a screen that displays trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, U.S., March 26.Brendan McDermid/Reuters

Possible confusion over the new stock symbol for former President Donald Trump’s Truth Social (DJT-Q) saw some investor brokerage balances briefly jump by hundreds of thousands of dollars on Tuesday, the first day Trump’s “DJT” ticker traded.

Several people complained on social media about briefly seeing the value of their DJT stock holdings on Charles Schwab platforms inflated to figures more in line with what they would be worth if the shares traded at the level of the Dow Jones Transportation Average.

Some users said they faced a similar issue in pre-market hours on Morgan Stanley’s E*Trade trading platform.

Shares of Trump Media & Technology Group opened Tuesday at $70.90, while the Dow Jones Transportation Average started the session at 15,937.73 points.

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For one trader, the Schwab brokerage balance jumped by more than $1 million due to the error, according to a screen grab shared on social media platform X. Reuters was unable to contact the trader or independently verify the brokerage balance.

“It sure was nice seeing millions in the account, even if it wasn’t real,” another person, going by the username @DanielBenjamin8, who faced the issue in his E*Trade account, posted on X.

Two X users and one on Reddit surmised that the inflated balances were due to the ticker symbol for the company being nearly identical to the index.

A spokeswoman for Charles Schwab said that certain users on some of Schwab’s trading platforms saw their brokerage balances briefly inflated due to a technical issue.

The issue has been resolved and investors are able to trade equities and options on Schwab platforms, she said. Schwab declined to describe the exact cause of the issue.

E*Trade did not immediately respond to a request for comment outside of regular business hours.

Trump Media & Technology Group and S&P Dow Jones Indices, which maintains the Dow Jones Transportation Average Index, did not immediately comment on the issue.

While social media users said the issue appeared to have been resolved, many rued not being able to cash out their supposed gains from the error.

“I better go tell my boss that I’m actually not retiring,” the trader whose account balance had briefly jump by more than $1 million, wrote on X.

Trump Media & Technology Group shares surged more than 36% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

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