A positive job market report and anticipated interest rate hikes sent gold prices lower this week.
"Gold prices declined Friday, contributing to a loss for the week, as a relatively solid job-market snapshot for June backed expectations for higher U.S. interest rates this year. The U.S. nonfarm payrolls data 'brought negative news for gold traders as the number from the outset looks acceptable,' said Naeem Aslam, chief market analyst at ThinkMarkets UK. 'There isn't really anything in this number which is going to put the breaks' on the Federal Reserve's plans for more interest-rate hikes this year…." ("Gold set for 5th-weekly loss as solid jobs report keeps rate-hike chance alive," MarketWatch, 7/7/17.)
Gold ended the week down $29.00, closing at $1,213.20. Silver prices closed at $15.67, down $1.04.
Bank Of America Forecasts $1400 Gold By End Of Year
Bank of America/Merrill Lynch analysts believe gold will rise to $1400 by the end of this year.
"While gold tries to recover after falling to nearly a four-month low overnight, one bank remains optimistic that yellow metal can still shine in the second half of the year. In their latest market report, analysts at Bank of America Merrill Lynch said that they remain constructive that gold could end the year around $1,400 an ounce.
"'Our view is driven by concerns over global growth, which could lead to an increase of cross asset volatility. In addition, our economists believe that continued Fed rate hikes in an environment of falling inflation may be increasingly difficult to justify,' the analysts said… 'We believe markets are somewhat too complacent and investors should build positions in volatility-exposed instruments. Broadly, we believe that there are various alternatives to protect portfolios against increasing policy risk and a rapid reversal in investor positioning. Investors could opt to increase their gold allocations….'"
("What Four-Month Low? BAML Still Sees Gold At $1,400 In Second Half," Kitco, 7/5/17.)
Market Volatility Could Send Gold Prices Up 50% - Paul
Former Congressman Ron Paul told CNBC that a "painful correction" is coming which could send gold prices above $1800 per ounce.
"A painful correction is coming and there's little that can be done to prevent it, according to former Republican congressman and libertarian firebrand Ron Paul. Speaking to CNBC last week, the former GOP presidential contender argued the economy is not as strong as Wall Street consensus believes, and the situation could turn ugly as soon as October.
"'If our markets are down 25 percent and gold is up 50 percent it wouldn't be a total shock to me,' said Paul recently on 'Futures Now.' That scenario would drag the S&P 500 Index as low as 1,819, and gold as high as $1,867 an ounce from current levels … 'People have been convinced that everything is wonderful right now and that stocks are going to go up forever… I don't happen to buy this. The old rules always exist, and there's too much debt and too much mal-investment. The adjustment will have to come,' he added." ("Ron Paul: Not a 'total shock' if stocks plummet 25% and gold soars 50% by October," CNBC, 7/2/17.)
US Heading Towards War With North Korea - Rickards
With North Korea's successful test of an ICBM missile, Jim Rickards penned a commentary warning that the U.S. and North Korea are headed towards war.
"On Tuesday North Korea tested an intercontinental ballistic missile (ICBM). Some analysts believe the missile had a range of at least 3,400 miles. That would bring the U.S. states of Alaska and Hawaii and possibly the major city of Seattle within range. North Korea claims the missile could carry a large nuclear warhead...
We're heading toward a war with North Korea. It's fairly obvious at this point, unless either North Korea agrees to cease its nuclear program or the U.S. allows the North the ability to directly threaten the continental U.S. Neither possibility is likely…
"Right now there's no doubt that the greatest threat to world peace in general, and the U.S. in particular, is coming from North Korea. 'U.S. ambassador to the United Nations Nikki Haley told a meeting of the U.N. Security Council that North Korea's actions were 'quickly closing off the possibility of a diplomatic solution' and that the United States was prepared to defend itself and its allies,' reports Reuters…
"There is no doubt that North Korea and the U.S. are on a collision course and headed for war unless North Korea relents, which seems unlikely, or the U.S. can develop a superior technology to neutralize the North Korean threat…." ("Rickards Explains Why Us And Nk One Step Closer To War," MarketSlant, 7/6/17.)
Hackers Target US Nuclear Facilities - Bloomberg
Bloomberg reported that suspected Russian hackers targeted U.S. nuclear and conventional power plants in an effort to disrupt the nation's power supply.
"Hackers working for a foreign government recently breached at least a dozen U.S. power plants, including the Wolf Creek nuclear facility in Kansas, according to current and former U.S. officials, sparking concerns the attackers were searching for vulnerabilities in the electrical grid. The intruders could be positioning themselves to eventually disrupt the nation's power supply, warned the officials, who noted that a general alert was distributed to utilities a week ago. Adding to those concerns, hackers recently infiltrated an unidentified company that makes control systems for equipment used in the power industry, an attack that officials believe may be related.
"The chief suspect is Russia, according to three people familiar with the continuing effort to eject the hackers from the computer networks... The possibility of a Russia connection is particularly worrisome, former and current officials say, because Russian hackers have previously taken down parts of the electrical grid in Ukraine and appear to be testing increasingly advanced tools to disrupt power supplies…." ("Russians Are Suspects in Nuclear Site Hackings, Sources Say," Bloomberg, 7/6/17.)