(Kitco News) Gold price is feeling the pain of seven months of consecutive losses — the longest string of declines in more than five decades. And this at a time when the Federal Reserve is about to announce its fourth consecutive 75-basis-point hike.
Spot gold is looking to wrap up October down 1.4% on the month, its seventh monthly decline in a row — something not seen since 1968. Year-to-date, gold is down around 10%. Since the end of March, gold has dropped more than 15%.
After peaking above $2,000 an ounce in March following Russia’s invasion of Ukraine, gold has struggled to maintain any new gains. It has primarily traded in a downtrend, with a strong U.S. dollar and higher Treasury yields weighing on the precious metal.
While many continue to debate a Fed pivot or at least a possibility of a slowdown in the next few months, the U.S. central bank is still on track for another oversized rate hike this Wednesday.
The latest note from Goldman Sachs sees the Fed raising interest rates to 5%, which is higher than the bank’s previous estimate. At the last meeting, the Fed’s forecasts showed rates climbing 4.4% this year and 4.6% next year.
After this week’s meeting, the Fed would have raised rates by 375 basis points this year, taking the federal funds rate to 3.75%-4%.
Goldman estimates rate increases of 75 bps this week, 50 bps in December, and 25 bps in February and March. It also added that “uncomfortably high” inflation, the need for slower economic growth, and worries of premature easing are the main reasons the Fed could keep tightening policy beyond February.
“We will likely have a recession in the U.S. [and] going to have, I think, most likely a recession in Europe,” Solomon said during a panel discussion at the Future Investment Initiative conference in Riyadh. “There is no question that economic conditions, in my opinion, are going to tighten meaningfully from here.”
With the Fed’s announcement in just under 48 hours, the main question is whether the central bank will be slowing down after the November meeting. A shift to a slower rate hike pace would be positive for gold, which is why some analysts are getting more bullish on the precious metal.
“The Fed is going to back away from raising so aggressively. There could be talk of a step down at the next meeting,” RJO Futures senior commodities broker Daniel Pavilonis told Kitco News. “Gold hasn’t faired too well priced in dollars. If we see the dollar come off, gold can do very well.”
Since the Fed has been very swift with its rate hikes, it could be ready to “let the pieces fall and see where they land,” Pavilonis added.
However, many analysts remain cautious, noting that markets overestimate a Fed pivot. “[The] press conference will be closely watched, but we expect Chair Powell to maintain the hawkish tone that has been consistently held since Jackson Hole in late August. We do not think he will give the markets what they are looking for, which is some hint of a pivot. After the decision, Fed officials will go forth to spread the message,” said BBH Global Currency Strategy head Win Thin.
The bar for a Fed pivot is quite high, added ING’s global head of markets Chris Turner. “We feel it is too early to call time on the dollar’s rally. After all, the market, in effect, already prices the pivot (pricing a 75bp hike this week and a 50bp hike in December) and we suspect the chances of another 75bp hike in December are under-priced.”
For the rest of the year, Cooper said she is looking for continued gold-backed ETF outflows for the rest of the year, which would weigh on prices. Next year, Standard Chartered is looking for a small net inflow. “Turning point comes when the Fed pivots. The dollar strength is likely to persist in the next few months,” she said during a webinar last week.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
