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Rally for 'wrong' reasons? Gold price eyes high levels as Russia-Ukraine tensions get mixed with Fed policy mistake calls – Kitco NEWS

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3 years ago

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(Kitco News) Gold has benefited from its safe-haven appeal as markets assess the Russia-Ukraine risk. And according to MKS PAMP, this geopolitical conflict could have even a more significant impact because of the current macro environment that has investors pricing in a policy mistake by the Federal Reserve.

“The U.S. has the highest inflation since 1982, coinciding with a Fed that is still technically easing (the market incorrectly assumes tapering is tightening, but the Fed is simply adding less liquidity),” said MKS PAMP’s head of metals strategy Nicky Shiels.

With inflation running at new four-decade highs in the U.S., markets are worried that the Federal Reserve has already made another policy mistake by acting too late.

“Markets are shifting from pricing in a past recent Fed mistake (incorrectly reading inflation & calling it transitory) to a potentially new Fed mistake (early recession on aggressive rate hikes or untamable inflation),” Shiels noted.

And considering the flare-up between Russia and Ukraine, the geopolitical situation is looking extra favorable for gold. This is despite geopolitical fears usually being temporary drivers for the precious metal.

“We’ve always noted that geopolitics provides better opportunities to fade gold prices, vs. chasing the buying, but when these headlines occur at a time of 1) such uncertainty around the Fed & inflation, 2) general market angst, and 3) at an advertised technical inflection point, gold could capitalize and find higher ranges for the ‘wrong’ reasons. Higher floors, dip-buying & choppy markets persist,” Shiels explained.

Gold and the Crimea 2014 flare-up vs. now

MKS PAMP also compared gold’s reaction to Russia’s annexation of Crimea in 2014 to how it behaved this time around.

Gold is a war hedge and compared to the climb back in 2014, there is potential for an even more significant move higher following gains of around $80 on this Russia-Ukraine conflict, MKS noted.

“Gold’s recent run-up has been $80 vs. $140 then (during Crimea’s annexation in 2014), on 2.3mn oz of inflows (vs. 8.3mn oz, then). I.E: the ‘price escalation premium’ of $80 is, so far, 4/7th of what it was in 2014, with inflows much more meager, at only 1/4th the size seen back then,” Shiels calculated. “Overall, it’s still too early for bulls to get the poms poms out; prices are constructive with this recent breakup/out (3rd time), but on a historical basis, gold prices are lagging what they can potentially achieve.”

However, a large part of the move higher in gold during the past week was also due to the growing inflation risk, with more investors opting for the safe-haven metal to protect against rising price costs. This adds strength to the geopolitically triggered move higher in the precious metal.

“Gold is likely to put in a fight (vs. de-escalation headlines) given relatively lighter positioning, strong physical demand (or other ‘protection’ currently keeping dips below $1,850 short-lived),” Shiels added.

At the time of writing, April Comex gold futures were trading at $1,870.60, up 0.78% on the day.

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Carry On Canadian Business. Carry On!

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8 hours ago

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October 22, 2024

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business to start in Canada

Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.

I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.

Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.

Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.

Steven Kaszab
Bradford, Ontario
skaszab@yahoo.ca

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Imperial to cut prices in NWT community after low river prevented resupply by barges

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11 hours ago

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October 22, 2024

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NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.

Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.

The air transportation increase, it further states, will be implemented over a longer period.

It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.

Gasoline and heating fuel prices approached $5 a litre at the start of this month.

Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.

“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.

The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.

“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.

Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.

Additionally, she said the government has donated $150,000 to the Norman Wells food bank.

In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.

It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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U.S. vote has Canadian business leaders worried about protectionist policies: KPMG

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11 hours ago

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October 22, 2024

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TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.

The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs

It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.

The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.

Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.

Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.

This report by The Canadian Press was first published Oct. 22, 2024.

The Canadian Press. All rights reserved.

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