(Kitco News) – The gold market has bounced off its low but is still struggling to find solid bullish momentum after U.S. inflation rose 9.1% in June.
Some gold investors have been frustrated with gold’s recent price action as the precious metal is traditionally seen as an inflation hedge. As markets digest the latest Consumer Price Index report, gold is starting to see some solid gains. August gold futures last traded at $1,738.30 an ounce, up 0.72% on the day.
However, some analysts note that gold’s relatively disappointing price action makes sense within a broader market scope.
Despite gold’s rally, analysts note that the precious metal is generally struggling as an inflation hedge because markets don’t see inflation as a long-term threat as the Federal Reserve aggressively raises interest rates. Following the June Consumer Price Index report, markets are now pricing in a more than 50% chance that the U.S. central bank will move by a full 1.00%. For comparison, markets were only pricing in less than 8% chance Tuesday.
“While in theory gold prices should benefit from higher inflation numbers, the reality is that these higher inflation figures suggest that the Fed is likely to become even more aggressive in rasing rates to quell strong inflation. This is resulting in a stronger U.S. dollar versus other major currencies as well as placing a lid on future inflation expectations,” said commodity analysts at CPM Group in a note to clients.
Although inflation is rising, the Federal Reserve’s resolve to bring it down is pushing real yields higher, causing breakeven rates to fall. Breakeven rates, the difference between nominal and real yields, have fallen across the curve at the fastest pace in two years.
In a recent interview with Kitco News, Ole Hansen, head of commodity strategy at Saxo Bank, said noted the discrepancy between inflation and the one-year/one-year breakeven rate of below 4%. At the same time, the five-year/five-year breakeven rate is hovering around 2.6%.
“We got a 5% discrepancy between where inflation is expected to be in the years’time and where it is right now. Are we going to see inflation drop 5%? I sincerely doubt it. But for now, the market is betting on the Fed’s ability to hike rates and for growth to come down, taking inflation with it,” he said.
Katherine Judge, senior economist at CIBC, said that she expects inflation pressures to continue to ease as the Federal Reserve aggressively tightens interest rates.
“Our forecast to get the ceiling for the fed funds rate up to 3.25% this year, combined with higher prices dampening consumer demand in discretionary areas of the economy, should produce enough of a growth slowdown to quell inflation in 2023 and to prevent a de-anchoring of inflation expectations,” she said.
Colin Cieszynski, chief market strategist at SIA Wealth Management, said that the broad-based drop in commodities, with copper falling to multi-year lows, signals that recession fears are replacing inflation fears.
“The underlying inflation pressure from commodity prices has started to ease,” he said. “people are expecting a, a demand to come down as a global recession hits. That is why commodities are coming down,” he said.
However, the question remains if a recession will cause enough demand destruction to impact the significant global supply issues. He added that this will determine just how persistent inflation will be through 2023.
Analysts have noted that the global economy faces fundamental supply issues. Tuesday Organization of the Petroleum Exporting Countries said that it sees oil demand growing to 102.99 million barrels per day, up from 100.29 million barrels per day forecasted for this year. The forecast suggests oil supplies could remain constrained next year as growth in non-OPEC output, which has been hit by Russian losses, lags the rise in demand.
Oil isn’t the only market facing growing demand and weak supply. Copper prices have dropped sharply in recent weeks, but warehouse levels are at historic lows.
According to inventory data, LME warehouses held just 696,109 tonnes of registered copper at the end of June. Analysts have said that this is the lowest level seen this century.
“The big question out there is what will it take to get prices down? How deep of a recession are central banks going to have to force to get inflation under control?” said Cieszynski.
Although gold is oversold, Cieszynski said he couldn’t rule out price testing support at $1,680 an ounce in the near term.
However, he added that gold continues to show some relative strength compared to other assets, particularly in the face of massive momentum in the U.S. dollar.
“Overall, gold has held up well when we compare it with what other currencies have done,” he said.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
