Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
China Holds Loan Prime Rates Steady for 14th Month as Economic Recovery Remains Uneven 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
BOJ Rate Hike Expectations Rise Ahead of September Meeting 
RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
In gold, we raise slightly (+2%) our price forecast for 4Q’17 and see gold averaging $1,260/oz in the last quarter, bringing the full year average to $1,254/oz. We opted to make no changes to our 2018 price forecast for now, which remains at $1,295/oz.
The US Federal Reserve will release minutes of its most recent policy meeting at 19:00 GMT. The U.S. central bank maintained funds rates unchanged in its monetary meeting on November 1st and hinted it still intended to raise rates in December, as officials counted “solid” economic growth and a tightening labor market.
Given the solid economic growth, a possible bottoming out in inflation and the potential further Fed repricing in 1H’18 US real rates should rise in 1Q and 2Q, thus pushing lower gold prices.
Gold prices should stabilize mid-year and move higher into 2H on the assumption that given the aging US cycle the US economy might become increasingly vulnerable to further rate hikes ultimately pressuring real rates lower as the Fed potentially takes a pause. We believe this could become the market’s main focus in 2H when we see gold prices averaging $1,340/oz.
The timing around such a strategy is quite uncertain and we prefer to be tactical in our trade recommendations. We have been short gold since late summer and are rolling this position into 2018.
Comex gold futures were up about $2.00, or around 0.2%, to $1,283.53 a troy ounce by 08:00GMT.
Trade tips: Went short Jan’18 NYMEX platinum at a price of $978.90/oz in mid-September. Squared off half position and booked profit at 924.10/oz for a gain of 3.0%. Uphold the rest of the trade volumes for a trade target is $880/oz with a stop for the remaining 0.5 units at $950/oz.
In order to reshuffle the hedging portfolio, we advocate initiating longs in Dec’18 NYMEX platinum contracts.
