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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.

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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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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