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Harambe: Bloomberg: Gold Tops $1,900 for First Time Since 2011, Heads Toward Record

(7/24/20)

Spot gold topped US$1,900 an ounce for the first time since 2011 and edged closer to an all-time high with flaring geopolitical tensions and concern over global growth driving demand for haven assets.

Increasing signs that the prolonged pandemic is stalling an economic recovery and the recent spat between China and the US are underpinning bullion’s appeal. The metal is also getting support from a confluence of low or negative real rates and a slipping US dollar amid massive liquidity injections from governments and central banks worldwide.

The weaker US dollar and plunging yields on government bonds lower the opportunity cost of owning gold.

Gold is heading for a seventh weekly gain, the longest stretch since 2011, while silver is poised for its biggest weekly advance in about four decades. Gold may reach the all-time high by early next week, according to a trader at RJO Futures in Chicago.

“The pace of this thing is unbelievable,” Bob Haberkorn, a senior market strategist at RJO, said by phone. “People just want to buy, buy, buy, they just want to be in – they don’t want to miss it. People are preparing for more money printing, lower dollar in the future and hedging. And there’s no yield on Treasuries right now, so gold is a safe spot given the circumstances of the central banks and the coronavirus.”

Spot gold rose 0.7 per cent to US$1,900.19 an ounce by 1.46pm in New York. Prices are nearing the record US$1,921.17 reached in September 2011. Comex gold futures for August delivery rose 0.4 per cent to settle at US$1897.50. Spot silver also advanced, bringing gains this week to more than 17 per cent, the most since 1980.

Gold’s rally may extend into 2021 “on dollar wobbles amid rising geopolitical risks in a lower-for-longer interest-rate environment,” Eily Ong, an analyst at Bloomberg Intelligence, wrote in a note. UBS Group AG raised its near-term forecast for bullion to $2,000 by the end of September.

“When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold and you see the gold price will rise as uncertainty in the markets are rising,” Mark Mobius, co-founder at Mobius Capital Partners, said in a Bloomberg TV interview. “I would be buying now and continue to buy.”

Precious metals funds saw investment inflows of US$3.8 billion in the week to July 22, the second-largest weekly amount ever, Bank of America Corp strategists said, citing EPFR Global data.

FRESH HIGHS

While spot gold prices are about US$20 away from the all-time high, some futures contracts on the Comex are already trading even higher. December, which overtook August as the contract with the highest open interest according to data released when Friday’s Asian trading session was already underway, touched US$1,927.10 an ounce Thursday. That’s above the record for the most-active contract of US$1,923.70 reached in 2011.

https://www.bloomberg.com/news/articles/2020-07-24/gold-nears-1-900-as-veteran-mobius-says-buy-now-and-keep-buying

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Tishwash:  Iran announces the establishment of a company in Iraq to settle debts worth 5 billion dollars

The Secretary-General of the Iran-Iraq Joint Chamber of Commerce, Hamid Hosseini, announced the establishment of a company in Iraq to settle $ 5 billion in debt to Iran, but not paying cash, because of the sanctions, but in exchange for the purchase of goods and commodities in Iraq.

Hosseini said in an interview with the Iranian “Ferraro” website, Friday, that this amount is Iran’s request with the Iraqi Bank of TBI, adding that according to the agreement between the two countries, Iran will provide the company with a list of goods and materials that it needs to be purchased and sent to Iran.

What kind of debt?

The Iranian official did not clarify the quality of the debt owed by Iraq, despite the temporary US exemption for Iraq that includes the import of electricity from Iran only.

However, Iraq is unable to pay for the gas and electricity imported from Iran to Tehran because of the sanctions, and for this reason, Iraqi banks find it difficult to transfer money to Iran.

Abdel Nasser Hemti, the governor of the Central Bank of Iran, had announced after his visit to Iraq on June 19 that Baghdad had agreed to pay its debts related to importing gas and electricity to Iran through the export of food and medicine.

Earlier, Iranian officials announced that Iraq’s debts to Iran for electricity and gas exports amount to $ 2 billion, and it is not known what debts of the three billionaires expected.

Unclear relationships

The Iranian government says that the total trade between Iran and Iraq amounts to 12 billion dollars annually, but given that Iran has stopped publishing details of its foreign trade since March 2019 due to the sanctions, the details of the current trade between Iran and Iraq are not clear.

Iranian President Hassan Rouhani announced during the visit of Iraqi Prime Minister Mustafa Al-Kazemi to Tehran last Tuesday that trade between the two countries should reach 20 billion dollars annually.

Tehran is trying to use the Iraqi financial channel to meet its foreign purchases and circumvent US sanctions.

And the Iranian Vice President, Ishaq Jahangiri, has admitted that Tehran was unable to transfer any money due to the financial and banking sanctions, saying that “the United States does not allow us to transfer one dollar even from the Iranian money that is located in various countries of the world.”

Choking

Washington has tended to tighten the screws on Tehran, as more fictitious companies, fraud and entities that it has planted in the region over the years, especially in Iraq, are exposed.

Last April, the US Treasury imposed sanctions on 20 Iraqi and Iranian entities providing support for the Quds Force forces, as well as transferring aid to pro-Iranian Iraqi militias such as the Iraqi Hezbollah Brigades and Asaib Ahl al-Haq.   link