Gold rides to a record, with prospects for $2,000 an ounce stronger than ever

Business a.m. - - COMMODITIE­S & AGRICULTUR­E -

GOLD FU­TURES POSTED A RECORD set­tle­ment on Fri­day, along with their strong­est weekly per­for­mance since early April, with calls for the never-be­fore-seen level of $2,000 an ounce for the precious metal com­ing in louder than ever, re­ports Mar­ketWatch

“Gold and sil­ver bulls will face a real chal­lenge over the next two weeks,” said Chin­tan Kar­nani, chief mar­ket an­a­lyst at In­signia Con­sul­tants, in a Fri­day note. But if ten­sions be­tween China and the U.S. es­ca­late, and the U.S. sees a sharp daily in­creases in COVID-19 cases, “then gold and sil­ver will only rise.”

He be­lieves that price cor­rec­tions, if any, will be “mild.” The $2,000 mark for gold will be “very eas­ily bro­ken.”

Au­gust gold rose $7.50, or 0.4%, to set­tle at $1,897.50 an ounce on Comex Fri­day, af­ter trad­ing as high as $1,904.60. For the week, prices rose 4.8%, the big­gest weekly per­cent­age climb since the week ended April 9.

The con­tract topped the mostac­tive con­tract set­tle­ment record of $1,891.90 from Au­gust 22, 2011, based on records go­ing back to Novem­ber 1984, ac­cord­ing to Dow Jones Mar­ket Data. The record most-ac­tive in­tra­day level still stands at $1,923.70 an ounce from Sept. 6, 2011.

The front-month July gold con­tract, which trades on sig­nif­i­cantly lower vol­ume, notched a record for a sec­ond ses­sion in a row. It set­tled at $1,897.30 Fri­day, up $8.20, or 0.4%, for the ses­sion. That’s a record for the front-month con­tracts, based on data go­ing back to 1975.

“There are lots of push-and-pull fac­tors in the back­drop” of gold’s rally, said Barani Kr­ish­nan, se­nior commoditie­s an­a­lyst at In­vest­ing. com. “You have stim­u­lus ex­pec­ta­tions world­wide af­ter the [Euro­pean Union] $750 bil­lion coro­n­avirus re­lief plan, even as Congress goes back and forth on its own CARES 4.0 pack­age for Covid-19 that should bring another $1 tril­lion into the mix.”

The U.S. dol­lar also con­tin­ues to “break down, push­ing precious met­als higher, though sim­mer­ing U.S.-Chi­nese ten­sions are sup­port­ing the green­back from a com­plete melt­down,” he said in emailed com­men­tary.

Sil­ver prices, mean­while, also re­cently ral­lied to their high­est set­tle­ment since 2013, with the Septem­ber sil­ver con­tract on Wednesday set­tling at $23.144 an ounce. It ended Fri­day at $22.85, up 15.6% for the week.

“Or­di­nar­ily this is the quiet time for gold—sum­mer dol­drums,” said Ross Nor­man, chief ex­ec­u­tive of­fi­cer of precious met­als news and in­for­ma­tion provider Met­als Daily. “Well, not this year.”

In a fore­cast is­sued to the London Bul­lion Mar­ket As­so­ci­a­tion in De­cem­ber 2019, he had fore­cast that gold prices would achieve an all-time high this year. Given that, he said there’s “no sur­prise it has achieved it.” The move has “just been quicker than we had ex­pected.”

“In re­al­ity, vir­tu­ally every­thing is go­ing gold’s way—record debt, epic in­crease in money sup­ply, sil­ver catch­ing up, neg­a­tive real yields, and even a dol­lar cor­rec­tion,” Nor­man told Mar­ketWatch.

Ge­orge Gero, man­ag­ing di­rec­tor at RBC Wealth Man­age­ment, told Mar­ketWatch that gold’s up­ward mo­men­tum is “caused by per­fect storm of pan­demic head­lines, be­nign dol­lars and in­ter­est rates, as global eco­nomic stim­u­lus grows.”

“This may last longer than usual cy­cles” as the pan­demic casts a shadow on Europe, South Amer­ica, the Far East, as well as the U.S., he said.

Con­tribut­ing to gold’s haven ap­peal are es­ca­lat­ing ten­sions be­tween China and the U.S., the up­com­ing U.S. elec­tion, wor­ries about an in­crease in debts from con­tin­u­ing stim­u­lus, and un­rest ev­ery­where, said Gero.

Gold prices have climbed by around 50% since the sum­mer of 2018, when the metal bot­tomed un­der $1,200 an ounce, said Adrian Ash, di­rec­tor of re­search at Bul­lionVault. That’s the fastest twoyear gain since New Year 2012, he said.

The yel­low metal also has climbed around $400 an ounce from March’s COVID-19 crash, “its steep­est 17-week gain since the very tops of Septem­ber 2011 and be­fore that Jan­uary 1980,” said Ash, adding that trad­ing vol­umes on Bul­lionVault, an on­line plat­form for phys­i­cal precious met­als, reached $28.9 mil­lion, which was the third busiest day ever, af­ter March 17 when the COVID cri­sis re­ally broke, and June 24, 2016, the day of the U.K.’s Brexit ref­er­en­dum re­sult.

“Hot money’s fi­nally joined in,” said Ash.

THE IN­TER­NA­TIONAL FUND FOR AGRICUL TURAL DE­VELOP MENT (IFAD) Nige­ria has dis­closed that it has part­nered with Olam Nige­ria and the Nige­rian Fed­eral gov­ern­ment to set aside a sum of $329 mil­lion or N118.44 bil­lion for Value Chain Devel­op­ment Pro­gramme (VCDP) in Nige­ria.

Na­dine Gbossa, IFAD coun­try rep­re­sen­ta­tive, dis­closed this in a brief­ing on the devel­op­ment in the agri­cul­tural sec­tor to em­power small­holder farm­ers across the coun­try in or­der to im­prove their liveli­hoods as well as en­sure food se­cu­rity in Nige­ria.

Ac­cord­ing to Gbossa, the bud­geted $329 mil­lion will be fi­nanced by the in­volved par­ties, which will see the fed­eral gov­ern­ment col­lab­o­rat­ing with Olam Nige­ria to con­trib­ute $79 mil­lion, while the In­ter­na­tional Fund for Agri­cul­tural Devel­op­ment (IFAD) will fund the project with $250 mil­lion.

Gbossa said, “Be­fore the IFAD, OLAM and VCDP part­ner­ship, many of the small­holder farm­ers were in­volved in sub­sis­tence farm­ing. How­ever, they are now able to mar­ket their pro­duce be­cause a firm like Olam pur­chases over 90 per cent of paddy rice.

“Data show that the small­holder farm­ers have in­creased their in­come by 79 per cent. The num­ber of chil­dren at­tend­ing sec­ondary schools from VCDP house­holds has in­creased by 17 per cent, so it means that more of the farm­ers can send their chil­dren to sec­ondary schools when the norm then was just send­ing them to pri­mary schools.

“FAD is an in­ter­na­tional fi­nan­cial in­sti­tu­tion and a spe­cialised agency of the United Na­tions (UN) that func­tions to ad­dress hunger and poverty in ru­ral ar­eas of de­vel­op­ing coun­tries. The VCDP project is a part­ner­ship be­tween the Fed­eral Gov­ern­ment of Nige­ria, Olam Nige­ria and IFAD, in which the project will see IFAD con­trib­ute $250 mil­lion while Olam and the FG will donate $79 mil­lion,” the IFAD coun­try rep­re­sen­ta­tive said.

Also speak­ing dur­ing the meet­ing, Reji Ge­orge, Olam Nige­ria vice pres­i­dent, farm­ing ini­tia­tives, said, “About 50 per cent of the to­tal ca­pac­ity of Olam’s rice mill in Rukubi,

Nasarawa State, is ob­tained through the di­rect buy-back from these pro­grammes from dif­fer­ent states.”

Ge­orge fur­ther ex­plained: “We ex­pect a higher scope this year be­cause while we had 9,757 farm­ers in 2019, we have dou­bled the num­ber of reg­is­tered farm­ers this year, which is about 18,646 reg­is­tered farm­ers. What is sig­nif­i­cant to us is that this pro­gramme has helped us to meet up with the re­quire­ment rice paddy for the rice mills in Rukubi in Nasarawa State and Amar­ava Mill in Kano State.”

“Cur­rently, we can at­test to the fact that since the agri­cul­tural devel­op­ment launched in 2014, small­holder farm­ers had in­creased their yields to av­er­age of 4 met­ric tonnes (4 MT) per hectare from the ini­tial av­er­age of 2 met­ric tonnes per hectare in 2015

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.