Comex High Grade Copper Futures Technical Analysis – August 7, 2013 Forecast

September High Grade Copper futures are expected to open sideways to lower this morning. The current rally appears to have stalled at a retracement zone as investors pared positions ahead of key data from China. Although the market seems to be on an upswing, investors still aren’t sure about demand. Better than expected data on consumer prices, producer prices and retail sales later from China later in the week will be signs the economy is picking up. This could trigger a surge in copper prices.

Also exerting an influence on copper prices is the uncertainty over the Fed’s decision to begin reducing monetary stimulus. Recent sluggish economic data is causing investors to question whether the U.S. is strong enough to warrant a cut in the $85 billion in monthly stimulus. Early forecasts are calling for a September cut of at least $20 billion. The Fed will have the rest of the month to look at economic data before making its decision at its September 17 – 18 monetary policy meeting.

Daily September High Grade Copper
Daily September High Grade Copper

Technically, the series of higher tops and higher bottoms means September High Grade Copper futures are in an uptrend on the daily chart. Yesterday, however, the market ran into 50% resistance at 3.1990 before backing down into the close. A major downtrending angle at 3.1925 also provided resistance.

Although the uptrend is not being threatened, the market could test uptrending Gann angle support at 3.1565. A sustained move through this angle could trigger an even further decline to another angle at 3.1565.

Today, the market starts out with a slight bias to the upside. Although there aren’t any major U.S. economic reports, investors will be focused on U.S. interest rates and the U.S. Dollar. Higher rates could boost the dollar, putting pressure on copper prices. If the Greenback continues to fall then look for copper prices to get a boost.

 

Gold Weighed Down By Fed Speak

Gold Weigh Down By Fed Speak
Gold Weigh Down By Fed Speak

Gold continued to decline this morning dropping by $5 in the Asian session to trade at 1277.50. The precious metals complex is under pressure on account better than expected indicators out of the US. Though the US employment report showed less than expected jobs, the underlying factors point to continuing recovery. Also, recovering European economy reduces the need for further easing in the region in the near term. Gold slipped on US ISM services data and comments from FOMC’s Fisher that the tapering is near this sentiment has now been echoed by three Fed members as traders seem to be sure that tapering is imminent at the end of the summer.

Gold prices fell below the key $1,300 mark, as investors wrestled with uncertainty about the Federal Reserve’s timeline for reducing monetary stimulus. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 915.04 tons, as on August 7. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on Aug 2.

Recent reports show that China could overtake India as the world’s largest gold consumer as the country’s gold demand is expected to top 1000 tons this year. This increase in Chinese demand is coming at a time when India is putting excessive curbs on demand and supply of the yellow metal, in order to curb demand. An increase in Chinese demand is expected to be backed by rise in investment and jewelry demand. Last year, China’s demand for gold fabrication that goes into making of jewelry and other articles had touched 590.5 tons.

The dollar index, which tracks the US currency’s movement against six rivals, fell to 81.609 from 81.868 on Monday. The US dollar fell broadly against major currencies, as Federal Reserve officials hit the speaking circuit, adding to confusion about when the central bank could begin to slow its asset purchases. Charles Evans, president of the Chicago Fed Bank, said Tuesday the central bank is “quite likely” to begin stepping back its bond buys this year, adding that economic fundamentals are “actually really better.”

Traders can expect precious metals to trade lower on the back of weak global market sentiments. Additionally, declining trend in SPDR gold holdings will also exert downside pressure on prices. Further, strength in the DX will act as a negative factor.

Silver fell yesterday and again this morning to trade at 19.395 and continues on a negative bias as precious metals remain weak. Industrial metals prices rose yesterday, helped by a weak dollar and ahead of trade and industrial output data from China this week that should shed light on the outlook for demand from the top metals consumer. Copper rose near its two-week high in early trade session, as investors bet on stronger demand following more upbeat readings on global economic activity. Copper is trading at 3.157 easing this morning after yesterday’s gains. Copper prices closed slightly higher on the London Metal Exchange Tuesday, after a raft of positive economic data spurred investors to cut bets that prices would fall. 

Comex High Grade Copper Futures Analysis – August 6, 2013

September High Grade Copper futures had a volatile session on Tuesday. Initially the market rallied on the weaker U.S. Dollar, but investors decided to take profits on the move as they squared positions ahead of industrial data from China. This report is expected to reveal the current supply and demand outlook for the metal since China accounts for about 40% of the world’s copper demand.

The dollar is reacting to the possibility the sluggish U.S. economy will mean the Fed will refrain from tapering its monetary stimulus until later in the year. Reducing the stimulus will mean higher interest rates and greater interest in the dollar. A higher dollar could pressure copper prices since it will lead to lower demand from foreign buyers.

Daily September High Grade Copper
Daily September High Grade Copper

Traders are watching China because recent economic data has suggested the economy is slowing. Although the industrial report may indicate some slowing, the figures are not expected to show the economy is on the brink of recession.

Technical analysis of the daily copper chart suggests the market is range bound between a pair of 50% retracement levels at 3.2045 and 3.1353. There is a slight bias to the upside because of the higher-bottom, higher-top chart pattern, but momentum appears to have slowed as traders await the data from China.

A breakout over 3.2340 will resume the uptrend, but the market may run into resistance at 3.2459. The main trend will remain up on the daily chart until the swing bottom at 3.0365 is taken out with conviction. 

Gold Falls Below $1300 In Asian Session

Gold Falls Below $1300 In Asian Session
Gold Falls Below $1300 In Asian Session

As reported yesterday, gold looked to be heading back to its down trend below the all-important 1300 price level. The shiny commodity did as expected and did it in style dropping to 1291.75 in the Asian session down 0.80%.  The dollar index is trading marginally down by 0.10%, limiting the fall in gold prices. The metal rose early in Asian trading on a weaker dollar but failed to find support amid lackluster demand in China, the second biggest gold buyer. Losses were exacerbated by technical selling once the price fell below $1,300. 

The Dallas Federal Reserve president Fisher said that the Fed will consider tapering the quantitative easing very soon as the US economy is improving. This may have pressurized gold prices in the morning. From the economic data point of view, German factory orders might improve and support gains in the euro, limiting the fall in gold prices. However, in the US session, the dollar is expected to remain positive on the back of a positive trade balance, which would pressurize gold prices later today.

Gold and silver futures closed slightly lower, as investors continued to react to last week’s economic data and expectations for an eventual slowing of the Federal Reserve’s monthly asset purchases.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 917.14 tons, as on August 6. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on August 2. Weak physical buying in China and India was also seen pressuring the commodity prices to certain extent in the global market to certain extent. 

The base metals complex traded on a negative note in the yesterday’s trading session as a result of weak global market sentiments in later part of the trade. Further, favorable economic data from US led to expectations of pullback in stimulus measures which acted as a negative factor. However, sharp downside in prices was cushioned on the back of decline in LME inventories coupled with rise in non-manufacturing data from US. Copper is trading at 3.164 this morning down by 3 pips but remaining in a tight range. While silver prices at the international market are trading at $19.618, down by 0.52% since the morning.

Silver prices are taking cues from the statement by Dallas Fed chairman, in which he stated that THE Central Bank may soon taper the monetary stimulus program. The strengthening of the dollar index against the majors may keep silver prices weak. From the eurozone, German factory orders might increase and may limit the fall in silver prices on the back of the appreciation in the euro. However, gains in silver prices would be limited during the US session on the back of the appreciation in the dollar.

 

Comex High Grade Copper Futures Analysis – August 5, 2013

September High Grade Copper futures closed lower on Thursday as traders took profits following a solid three day rally from 3.0365 to 3.2060. The daily chart indicates the market may be set up for a break into a retracement zone at 3.1212 to 3.1012. Since the main trend is up, buyers may step in at this zone.

Besides the retracement zone, uptrending Gann angle support moves up to 3.1165. On the upside, resistance is at 3.1940.

Daily September High Grade Copper
Daily September High Grade Copper

Fundamental factors also played a role in today’s weak close. Firstly, many investors are heading to the sidelines ahead of China’s Trade Balance repot on Wednesday. The recent better-than-expected purchasing managers’ index may have been a sign the Chinese economy turned. This week’s report may confirm this assessment. Some traders may be waiting for confirmation before stepping back into the market.

Today’s stronger-than-expected U.S. ISM Services PMI report may have also influenced investors. Since the Fed is gauging the strength of the economy while it decides whether to begin tapering its monetary stimulus, many investors may have decided to pare positions after Monday’s strong economic report. This could have been another reason behind today’s weakness.

Monday’s inside move indicates investor indecision and uncertainty. The current chart pattern suggests the possibility of a two-sided trade over the near-term. The market will either go after the recent tops at 3.2060 and 3.2340, or head into a retracement zone at 3.1212 to 3.1012. 

Copper Shorts Up Gold Longs Down

Copper Shorts Up Gold Longs Down
Copper Shorts Up Gold Longs Down

Gold is trading at 1316.95 as Asian investors push up the commodity in early trade to gain $6.45 after Friday’s close at 1310. Gold declined to a 2-week low in early trades on Friday, after falling through a key technical level of $1,300 per ounce, as strong US economic data raised fears that the Federal Reserve may start to taper its commodities-supportive stimulus measures. Data from the U.S. Labor Department on Friday showed that the number of jobs outside the farming sector increased by 162,000 last month, the smallest gain in four months and below analysts’ expectations. A top Fed official said on Friday the U.S. economy was improving modestly but needs to gather more steam, while cautioning that the central bank ought to wait for more evidence of an upturn before tapering bond purchases

Gold traders in India stayed on the sidelines, as importers stopped shipments due to uncertainty over the new import policy even as prices fell more than 1.5% to their lowest level in a week.

Outflows from the top eight gold ETFs tracked by Reuters have totaled 19mn ounces so far this year, or about $25bn at current prices. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 918.64 tons while silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on August 2. Hedge funds and money managers trimmed their gold net longs and raised their bullish position in silver futures and options, a report by the Commodity Futures Trading Commission showed on Friday. As long as the ETF buyers and the hedge fund investors stay sidelined, the commodity prices will remain with a negative bias. Gold is expected to continue to decline under the 1300 level this week. As the day progresses, gold could extend its climb on the anticipation of strong economic data in Europe. Europe and Germany will release PMI numbers which are expected to improve could support euro and pressurize dollar. From the US, ISM non-manufacturing number is likely to improve and could support the dollar. Trades may see gold up in the early part of the European session and decline after US data releases.

Industrial metals prices reached its highest price in more than a week on Friday as the dollar fell and after data showed slightly stronger than expected factory activity in big metals consumer China. Silver gained 31 pips this morning to trade at 19.943 while copper eased after a strong close on Friday. Copper is trading at 3.160 down by 8 pips in the Asian session. Hedge funds and money managers nearly doubled their net shorts in copper futures and options in the week to July 30, while they trimmed net longs in gold, a report by the Commodity Futures Trading Commission showed on Friday. Copper reached its highest price in more than a week on Friday as the dollar fell and after data showed slightly stronger than expected factory activity in big metals consumer China. The gains were capped by caution on the U.S. growth outlook after mixed jobs figures. The jobs data led to a broad fall in the dollar against the euro and the yen. A weaker dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.

Strong US Data Weighs On Gold

Strong US Data Weighs On Gold
Strong US Data Weighs On Gold
Gold eased in the Asian session to trade at $1305.65 as it continues its slow downtrend. Gold is expected to break below 1300 if the results of the nonfarm payroll release today are above expectations. Gold fell a sixth day in the longest run of losses since May, heading for the first weekly decline in a month, as  U.S. economic data backed the case for less stimulus. Gold prices were higher Thursday mid-day as the first day of the month brings some larger, institutional investors back to the market and traders continue to adjust their expectations in the wake of the Federal Reserve’s policy statement. Gold for December delivery, the most actively traded contract, was recently up $6.40, or 0.5%, at $1,319.40 a troy ounce on the Comex division of the New York Mercantile Exchange but eased before the close to $1308.80 after the release of US data.

Yesterday data showed that US Unemployment Claims declined by 19,000 to 326,000 for the week ending on 26th July as against a rise of 345,000 in prior weeks. Manufacturing Purchasing Managers’ Index (PMI) rose by 0.5 point 53.7-mark in July from 53.2-level in June. The Institute for Supply Management (ISM) Manufacturing PMI increased by 4.5 points to 55.4 mark in July as compared to 50.9-level a month ago.  Strong US data helped push the US dollar to trade above a weekly high. The DX peaked close to 82.5.

SPDR gold holdings dropped by 0.7 percent in yesterday’s trade and stood tons lowest level since February 2009 exerted downside pressure on prices.  However, upbeat global markets cushioned sharp fall in the prices. The yellow metal touched an intra-day low of $1307.09 and closed at $1308.80 in the yesterday’s trading session.

Industrial metals prices rose to their highest level in a week yesterday following upbeat Chinese and European manufacturing data, and with a dovish Federal Reserve statement sparking hope of a delay in paring U.S. stimulus measures. Copper is trading at $3.15 down by 8 pips while silver eased below $20 to trade at $19.57.

On Thursday copper prices rallied to their highest level in nearly a week on Thursday after an unexpected increase in Chinese manufacturing activity and stronger euro-zone factory data bolstered the market’s demand outlook. Copper for September delivery, the most-actively traded contract, was recently up 6.75 cents, or 2.2%, at $3.1860 a pound on the Comex division of the New York Mercantile Exchange.

Comex High Grade Copper Futures Analysis – August 2, 2013

After an early set-back on Friday, September High Grade Copper posted a higher close. The catalyst behind the rally was the weaker-than-expected U.S. Non-Farm Payrolls report. The report suggested a sluggish economy. This likely means the Fed will continue with its aggressive $85 billion per month monetary stimulus program.

With the Fed likely to continue to supply stimulus, interest rates fell, making the U.S. Dollar a less-than-attractive investment. Since copper is priced in dollars, a drop in the Greenback may lead to increased foreign demand. Speculators bought copper in anticipation of this increased demand.

Daily September High Grade Copper
Daily September High Grade Copper

Technically, the main trend is up on the daily chart. Last week’s new higher bottom suggests strong buying interest. Once the market chews through a cluster of Gann angles and a major 50% level at 3.2045, the trend could accelerate through the last main top at 3.2340, eventually reaching the Fibonacci level at 3.2549.

A drop in the dollar may have ignited this last rally, but it is going to take an improving economy in China to fuel the next rally. With China accounting for about 40% of the world’s demand for copper, next week’s trade balance report could set the tone for the month. The way the market has been trading, it seems as if investors are looking for a bullish report. 

Comex High Grade Copper Futures Technical Analysis – August 1, 2013 Forecast

After reaching a new higher low at 3.3065, September High Grade Copper futures posted a strong Gann on Wednesday. The price action suggests sentiment may be shifting to the upside as investors take advantage of a weaker dollar and an improving economy in China.

Technically, traders will be going for a second consecutive higher high to create a new higher bottom at 3.3065. This would be the second higher bottom and serve as a strong sign the buying is greater than the selling at current price levels.

Daily September High Grade Copper
Daily September High Grade Copper

Based on the short-term range of 3.2340 to 3.0365, the first upside target is a retracement zone at 3.1353 to 3.1586. Overcoming this zone will put the market in a strong position to rally further. The main upside target and resistance zone remains 3.1990 to 3.2494. The last rally to 3.2340 stopped inside this zone.

Traders should look for an upside bias from the start because of the bullish chart pattern. The catalyst behind the rally will be better-than-expected manufacturing data from China, the U.S. and the Euro Zone. 

Data Pushing And Pulling At Crude Oil

Conflict-Iran-pushed-crude-oil-prices-strengthened BNSCrude oil edged higher on this morning, extending the prior session’s nearly 2 percent jump, after the Federal Reserve gave no indication of when it will curb economic stimulus, assuring commodity markets of continued liquidity flow for now. According to Reuters, China’s factory activity shrank for a third straight month in July to its lowest level in nearly a year as new orders fell, a private survey showed on Thursday, signaling the persistent pressure on the economy has extended into the third quarter. The HSBC Purchasing Managers’ Index (PMI), compiled by Markit Economics Research, fell to 47.7 in July from June’s 48.2. It was the weakest reading since August 2012, and matched a preliminary figure published last week. A reading below 50 indicates a contraction of activity while one above shows expansion.

“With weak demand from both domestic and external markets, the cooling manufacturing sector continued to weigh on employment,” said Hongbin Qu, China chief economist at HSBC.

While keeping the door shut for big stimulus, the government has unveiled a series of polices to boost spending in social housing, urban infrastructure, high-speed rail and energy-saving industries, while offering tax breaks for small firms.

China is one of the world’s largest consumers of crude oil and energy products and the worrisome data is limiting the commodity this morning. Crude oil is trading at 105.61 trading in the green after US data supported the rise. Nymex crude oil prices increased around 1.9 percent in the yesterday’s trade taking cues from more than expected rise in the US GDP data which lead to expectations of rise in demand for the fuel weakness in the DX supported an upside in prices. However, sharp upside in prices was capped on the back of unexpected rise in US crude oil inventories. Crude oil prices touched an intra-high of $105.43 and closed at $105.1 in yesterday’s session.

The US Energy Department (EIA) reported that, US crude oil inventories rose unexpectedly by 431,000 barrels to 364.60 million barrels for the week ending on 26th July 2013. Gasoline stocks gained by 770,000 barrels to 223.50 million barrels and whereas distillate stockpiles slipped 466,000 barrels to 125.84 million barrels for the last week. OPEC crude output hit a four month low in July as unrest and conflict in Libya and Iraq disrupted supplies, a Reuters survey found on Wednesday, a further unplanned cutback bringing supply closer to the organization’s target.

Natural gas is trading at 3.442 flat this morning ahead of the EIA inventory report due in the afternoon session. Natural gas ended slightly higher on Wednesday, but mild weather forecasts for the next two weeks that should slow air conditioning demand helped limit the upside. US Energy Information Administration (EIA) natural gas inventory are expected to increase by 55 billion cubic feet (bcf) for the week ending on 26th July 2013.

 

Gold, Silver & Copper Seem To Be Doing Their Own Thing

Gold, Silver & Copper Seem To Be Doing Their Own Thing
Gold, Silver & Copper Seem To Be Doing Their Own Thing
The Fed will keep buying $85 billion in mortgage and Treasury securities per month in its ongoing effort to bolster an economy still challenged by federal budget-tightening and weak growth overseas. The  (DX) dollar earlier found support from upbeat economic data showing the U.S. economy grew at an annualized clip of 1.7 percent in the second quarter. Also, the U.S. private sector added 200,000 jobs this month, above forecasts of 180,000.

On Friday, the U.S. Labor Department will release its July nonfarm payrolls report. An upbeat jobs report should buoy the dollar but with the FOMC meeting just days behind the report will not be as crucial to traders for the time being, as it might heighten expectations the Fed will lower the amount of its monthly bond purchases this year. This will have a negative effect on gold.  Gold is trading at 1318.05 gaining almost $6 in the Asian session as traders took advantage of yesterday’s decline to buy up the commodity on the cheap. Gold is expected to ease back down close to the 1300 price level after the ECB meeting later today. Gold prices declined around 0.3 percent in the yesterday’s trading session on the back of mixed global market sentiments. A continuing declining in SPDR gold holdings which stands at 927.35 tons lowest level since February 2009 exerted downside pressure on prices.

Economic data today, might cause some moves in precious and industrial metals, we can expected reports from Europe and Germany in the form of PMI numbers are likely to improve and should limit the losses in the euro. Today, the market would watch for European Central Bank’s and Bank of England’s interest rate decision. This may create volatility in the market. In the North American session, the US will release its ISM manufacturing and price paid numbers, which are expected to improve and should support gains in the dollar and weigh on gold. Gold is expected to remain close to the 1300 price level.

The base metals complex traded on a positive note in the trade as a result of more than forecasted rise in the US GDP data. Further, weakness in the DX after statement from Federal Reserve to continue with its bond buying program acted as a positive factor However, sharp upside in prices was capped as a result of mixed global market sentiments along with mixed LME inventories scenario. Silver is trading at 19.578 in the red this morning as conflicting data from China weighs on the commodity. Copper is moving opposite silver gaining a few points this morning to trade at 3.128. Copper prices traded on a positive note yesterday around 2.4 percent on the back of more than estimated rise in the US GDP growth.

Today we can expect the base metals group to trade on note on the back of rise in China’s manufacturing data along with more than estimates rise in the economic growth of US statement from US Federal Reserve regarding continuation of its bond buying program will support an upside in prices sharp upside in prices will be capped on account of market sentiments along with strength in the DX markets. Eurozone PMI data could have sharp effects on industrial metals later today.

Comex High Grade Copper Futures Analysis – July 31, 2013

After closing on its low on Tuesday, September High Grade Copper futures were poised to open lower and challenge the contract low at 2.9855, but sellers failed to show up ahead of an early U.S. Gross Domestic Product report, the latest Fed statement and the release of China Manufacturing PMI later in the evening. These events were enough to encourage short-sellers to bail out of their positions and square their accounts.

Early Wednesday, it was reported that the U.S. recorded better-than-expected GDP data. Although the dollar rose, it was not enough to trigger another round of selling in the copper market. Later in the session, the Fed surprised traders by offering nothing new in its monetary policy statement. Traders had been looking for some clarity from the central bank regarding its plan to begin tapering its massive monetary stimulus, but all they got was the reiteration of the previous statement.

Daily September High Grade Copper
Daily September High Grade Copper

In other words, no tapering would take place until the economy improved enough to warrant such a change. This confused a number of traders who had been looking for clues the Fed was getting ready as early as September to begin reducing stimulus by as much as $20 billion per month. This news triggered a volatile down move in the U.S. Dollar while fueling a strong surge in September Copper.

The strong close put copper in a position to rally further, but this next move was going to be determined by China’s official manufacturing data. Traders are looking for this index to post a reading of 49.8 which would be confirmation of a weakening economy. If the number comes out weaker than expected, copper prices could plunge again, but this would then cause a battle between those who believe copper will rise because of the weaker dollar and those who think Chinese demand is controlling the price action.

A stronger-than-expected figure could send copper prices skyrocketing especially when combined with the bullish news from the Fed. Any rally could be short-lived however, since Friday’s U.S. Non-Farm Payrolls report could put pressure on prices once again if it is strong enough to make the Fed begin tapering.

Technically, the main trend is still up on the daily chart since investors were able to successfully defend the last swing bottom at 3.0250. A move through this price would’ve changed the main trend to down.

Currently, the market is finding support on a slow-moving, uptrending Gann angle at 3.0480. This angle is moving up at a rate of .0025 per day and comes in at 3.0505 on Thursday. From the 3.2340 top, downtrending resistance dropped in at 3.1340 on Wednesday. This angle moving down at a rate of .005 per day comes in at 3.1140 on Thursday. A move through this angle will be a sign of strength.

Another potential upside target is the retracement zone at 3.1350 to 3.175. Buyers are going to have to take out this area with conviction to signal it is ready to resume the uptrend through 3.2340. 

Metals Scandal And Chinese Weakness Could Keep Traders Away From Markets

Metals Scandal And Chinese Weakness Could Keep Traders Away From Markets
Metals Scandal And Chinese Weakness Could Keep Traders Away From Markets
Industrial metals prices slid to their weakest in nearly three weeks yesterday as expectations of weak manufacturing data from top consumer China dimmed prospects for growth in metals demand. As the banking scandal grows, traders seem to be backing away from the metals markets. Wall Street banks face the prospect of increased scrutiny of their commodity businesses as U.S. regulators and lawmakers on Tuesday pressed for a closer look at their roles in owning warehouses and in trading everything from oil to metals. Pressure on U.S. futures regulators to launch an official probe of the aluminum market mounted on Tuesday, when the head of the Senate Agriculture Committee asked the Commodity Futures Trading Commission to review alleged manipulation. Just yesterday financial services giant JPMorgan Chase & Co. agreed to pay $410 million in penalties and disgorgement to settle allegations that it manipulated electricity markets in California and the Midwest from September 2010 through November 2012, the U.S. Federal Energy Regulatory Commission or FERC said Tuesday.

JPMorgan said last Friday that it was exploring strategic alternatives for its physical commodities business, amid increased political and regulatory scrutiny of these businesses. The company said it has concluded an internal review and will explore options, including a sale, spin off or strategic partnership of the business.

JPMorgan’s physical commodities business includes the Henry Bath metals warehousing subsidiary, stakes in power plants, and traders in commodities such as gas, power, precious metals and coal. The bank forayed into the business in 2008 through its acquisition of Bear Stearns during the financial crisis. The company further expanded into the business by acquiring RBS Sempra Commodities in 2010.

The Federal Reserve reportedly said on July 19 that it will review a landmark decade-old decision that allowed banks to trade in physical commodities to complement their financial activity, which enabled banks including JPMorgan and Citigroup Inc. to expand into the business according to an article on NASDAQ.

The dollar is set to close out a monthly loss against most of its major peers as investors await the Federal Reserve’s policy statement today for signals on when it may curb bond buying that tends to debase the currency. The weakness in the US dollar is helping precious metals climb this morning, but this could change quickly as the FOMC decision hits the wires later today. Gold prices traded marginally lower yesterday as traders remained cautious ahead of the FOMC meeting starting Tuesday and a slew of US data prints due later this week. However, a halt in ETF sell-off as reflected in the SPDR Gold Trust holdings remaining unchanged at 927.35 tons for the third consecutive day in a row gave some support and limited the losses. Gold is trading at 1331.45 adding $6.65 as trader’s hedge their bets ahead of Mr. Bernanke’s statement later today. Silver also gained as traders took advantage of the steep declines to buy up the metal on the cheat. Silver remains under the 20 level but is trading at 19.855 up over 17 cents this morning.

 

Comex High Grade Copper Futures Analysis – July 30, 2013

September High Grade Copper prices fell on Tuesday in anticipation of weak economic data from China. Traders also priced in the possibility of a stronger dollar as the Fed began its two-day policy meeting.

Bearish traders sold copper futures ahead of a report which is expected to show weak manufacturing data from the world’s second largest consumer of copper. Investors are looking for China’s manufacturing sector to show the sector contracted for the first time in 10 months.

Traders also pressured copper prices in anticipation of a Fed statement calling for the start of a reduction of its huge monetary stimulus program. Currently, the central bank is buying $85 billion in government bonds and mortgages per month. Traders are beginning to price in the possibility of a $20 billion cut starting in September.

Daily September High Grade Copper
Daily September High Grade Copper

A reduction in stimulus should underpin U.S. interest rates, making the dollar a more attractive investment. Since copper is dollar-denominated, foreign demand is likely to fall. Coupled with a drop in demand from China, prices may drop even further over the near-term.

Technically, the market closed on an uptrending Gann angle at 3.0455, putting it in a position to take out the July 9 bottom at 3.0250. A move through this level could encourage even more selling and an eventual test of the contract low at 2.9855.

Holding 3.0455 could mean that sellers are booking profits ahead of the Chinese manufacturing data. This could also mean that bearish news is already priced in, triggering the start of a short-term retracement rally. Once this rally helps relieve the current oversold conditions, short-sellers are likely to regain control. 

FOMC Meeting Has Precious Metal Traders On The Edge Of Their Keyboards

FOMC Meeting Has Precious Metal Traders On The Edge Of Their Keyboards
FOMC Meeting Has Precious Metal Traders On The Edge Of Their Keyboards
Global investors are sitting at the edge of the computer keyboards cued to the upcoming FOMC meeting. There will be little market action ahead of the meeting as traders have taken their positions although markets seem divided between tapering and no tapering. Gold is trading flat this morning holding at 1328.45. Gold prices ended slightly higher on Monday ahead of the August contract expiry as investors rolled over their short positions. However, caution ahead of the Fed policy meeting which starts today, limited the upside in prices. Gold premiums in India have jumped to $25-30 an ounce due to higher demand ahead of the upcoming festive season and supply constraints due to import restrictions. Gold prices internationally are expected to remain in range as investors would remain cautious ahead of the Fed’s policy meeting.

The US dollar gained a bit this morning adding 14 pips but remains below the 82 level as traders seem to be thinking that the Fed will continue its $85 billion monthly asset purchases. Any shift towards tapering, or reducing their stimulus will be positive for the US dollar and send it climbing. Just a week ago, the dollar was trading in the 84-85 level as traders thought that Mr. Bernanke was indicating that the Fed was ready to begin tapering. A report in Bloomberg that said the Fed would reduce their asset purchases to $68 billion sent the US dollar climbing. At this point no one is sure what the FOMC will do but recent data releases support the idea that the economy remains spotty and needs continued assistance. The IMF warned the Fed over the weekend that tapering now could upset the global recovery and growth forecasts around the world.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 927.35 tons, as on July 25, which shows that the majority of investors do not believe gold will rise indicating that the Fed will either taper or announce plans to taper soon.

Copper prices pared its early losses after US pending home sales came better than expected but fell in June from a near six-year high in May. Rio Tinto has put on hold its underground expansion plan at its Oyu Tolgoi copper mine in Mongolia worth $5 billion. Most of Chinese provinces missed the first half expansion plans, raising fears of China missing its annual growth target of 7.5%. Copper prices are likely to go down as investors would eye US consumer confidence and German consumer climate data amid demand concerns from China and the ongoing Fed monetary policy meeting. Silver could not sustain the $20 price level and has eased to 19.82 as industrial metals remain weak after lackluster data in the US and worries over China’s economic situation. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,419.04 tons, as on July 26.

Comex High Grade Copper Futures Analysis – July 29, 2013

September High Grade Copper futures are rebounding slightly on Monday, following a sharp sell-off to end the week. Concerns about China’s future growth continues to weigh on the markets since the country accounts for about 40 percent of global demand. If it weren’t for the weaker dollar, copper prices probably would’ve erased all of its gains from the June 25 bottom at 2.9855.

This week’s U.S. economic reports could slow down the rate of decline early this week, however, manufacturing data from China may have an offsetting effect. On Wednesday, the Federal Open Market Committee is scheduled to release its latest policy statement. This statement is expected to clarify the central bank’s latest position on tapering its aggressive monetary stimulus program. Copper may move depending on the strength of the statement especially if it produces a volatile move in the U.S. Dollar.

Daily September High Grade Copper
Daily September High Grade Copper

The same can be said about Friday’s U.S. Non-Farm Payrolls report. If the jobs report is bullish then look for sellers to prevail, perhaps driving prices down to the June bottom at 2.9855.

Technically, September Copper is trading a little better this morning after reaching a retracement zone at 3.1098 to 3.0804. After piercing an uptrending Gann angle at 3.1005, the market looked as if it was poised to accelerate to the downside, but overbought conditions and position-squaring prevailed, putting the market back on the strong side of this angle. Standing in the way of a short-term retracement today is a downtrending Gann angle at 3.1140.

The early trade suggests consolidation is likely as investors square positions ahead of Chinese economic data, a Fed statement and the U.S. jobs data later in the week. 

Gold Traders Wait For The Three Ring Central Banker Circus This Week

Gold Traders Wait For The Three Ring Central Banker Circus This Week
Gold Traders Wait For The Three Ring Central Banker Circus This Week
As traders face a big big big week with the FOMC meeting ending on Wednesday, and the ECB and BoE meetings on Thursday there should be a lot of market action, but then following almost immediately we will have the US nonfarm payroll data, although coming after the FOMC decision, it might be a dull trading day. Traders will need to seek some relief after the volatility we might see this week. Gold is trading at 1326.75 in the Asian session gaining $4.85 as the US dollar continues to weaken. The DX is trading at 81.67 down by 10 pips this morning, and it seems that the odds are that the Fed will continue their asset purchases and the bets are that Mr. Bernanke will give no indication of any tapering. Last week a report in Bloomberg said that the Fed will reduce their asset purchased to 68 billion from the current 85 billion, which sent the markets on a roller coaster ride.

Some positive economic data from the U.S. and the EU pressurize gold price but the data was mixed and all the data is suggesting that major economies are very vulnerable to recessions which will support gold. Resistance of Gold is at $1,350 and $1,400 and the first level of support is at $1,300 which may be tested. Below that support is at $1,200 and the recent multiyear low on June 28 at $1,180. Goldman Sachs is leaving its estimate of $1,413 for gold this year unchanged as they do not see sharp reductions in the U.S. Fed’s stimulus program.

The gold industry and people in India are braced for a fall in supply and higher premiums ahead of festivals. The Indian Central Bank’s steps to restrict imports are expected to cut supplies for domestic consumption which is leading to huge black market activity and importation. There have been numerous reports in recent days of Indians being arrested in airports carrying gold coins and bars.

Recent media reports in China and Russia suggest that China is continuing to consider backing the yuan with gold. Since 2005, we have said that such a move by China was likely as China seeks to become a superpower and lessen and undermine U.S political dominance.

The US markets showed a substantial recovery over the course of the trading session on Friday after coming under pressure in morning trading. The volatility was seen over the course day. The major averages eventually ended the session slightly higher. Meanwhile, the majority of the European markets ended Friday’s session in the negative territory. Although the earnings picture brightened at the end of the trading week the investors were reluctant to take any positions ahead of the upcoming FOMC meeting this week and the U.S. jobs report for July.

Copper fell for a second straight day on Friday, as concerns about growth in top consumer China weighed on the outlook for industrial metals demand, but a weak dollar prevented further losses. Copper futures tumbled the most in 3-weeks, after China ordered companies in 19 industries to cut manufacturing capacity, signaling lower demand for industrial metals. Copper is trading at 3.099 down again this morning. The drop in demand for industrial metals combined with a lackluster demand for precious metals weighing on silver prices which are trading at 19.755 down by 16 pips this morning.

Comex High Grade Copper Futures Analysis – July 26, 2013

September High Grade Copper futures are under pressure this morning on demand concerns from China. It’s been no secret that China’s economy has been sluggish. This has been a contributing factor to the sell-off in the market the entire year, however, the heat was turned up a little last night after China ordered companies in 19 industries to cut excess production capacity. The details of the plan call for surplus capacity must be idled by September and eliminated by year-end.

The overnight news is expected to have a negative impact on copper prices since China accounts for about 40 percent of the world’s demand. The rate of the decline will either accelerate or slow down depending on when the market decides the Fed will begin tapering its monetary stimulus.

Recently, Fed Chairman Ben Bernanke said the central bank would remain accommodative and likely act on stimulus before the end-of-the-year. About mid-week, investors began to price in the possibility the tapering would begin as early as September. This helped form a short-term top. The developing story out of China should put pressure on prices today.

Daily September High Grade Copper
Daily September High Grade Copper

Technically, the September High Grade Copper chart indicates there is room to the downside. Based on the main range of 2.9855 to 3.2340, the next major downside target is the retracement zone at 3.1098 to 3.0804.

An uptrending Gann angle from the June 25 bottom at 2.9855 is at 3.0955 today. This angle pierces the retracement zone and is also a potential target.

Traders should look for the news from China to dominate the trade today. This is clearly bearish. Volatility could be created by the movement in the U.S. Dollar as investors make adjustments to the pending tapering move by the Fed. 

Precious Metals and Industrial Metals Rally

Precious Metals and Industrial Metals Rally
Precious Metals and Industrial Metals Rally
Gold headed for the longest weekly rally since March as U.S. economic data backed the case for sustained monetary stimulus. Russia and Kazakhstan added bullion to reserves for a ninth month in June. Gold is trading up close to $9 at $1337.65 this morning. Gold ended higher on Thursday, after being pulled down more than 1% in the previous session, supported by a weaker dollar as investors looked for clues in the day’s data; about when the Federal Reserve will start to taper its monetary stimulus. Gold traders expect higher premiums for the precious metal ahead of festivals, as the central bank’s steps to restrict imports are expected to cut supplies for domestic consumption. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 927.35 tons, as on July 25.

This morning, Asian equities are trading down led by weak Japanese equities backed by stronger yen. The euro is on a stronger note at 1.3282 and the dollar index is extending yesterday’s losses, which may support the rupee to open on a stronger note. As the day progresses, there are no economic releases from Europe. The US will release its Michigan confidence data, which is expected to improve and should limit the gains in the dollar. Germany’s IFO numbers has improved more than expectation while the euro-zone’s M3 money supply declined. This supported gains in the euro which rose 0.58% against the dollar and settled at 1.3282

The US’ initial jobless claim numbers increased more than expected while continuing claims increased at a slower pace. The durable goods orders improved more than expected for the month of June. However, the dollar index fell 0.39% against the majors and settled at 81.97 after the euro strengthened.

US factories received more orders for automobiles and machinery in June, pointing to a pickup in manufacturing that will help propel the world’s largest economy in the second half of 2013. Bookings for goods meant to last at least three years rose 4.2%, three times surveyed by Bloomberg. US Jobless claims rose by 7,000 to 343,000 in the week ended July 20 from a revised 336,000 the prior period. The Bloomberg projected 340,000. Japan consumer prices rose the most since 2008 in June, an early sign that the world’s third-biggest economy may be starting to shake off 15 years of deflation. Consumer prices excluding fresh food increased 0.4% in June from a year earlier.

Silver climbed to 20.24 gaining 86 pips this morning as the industrial metals and the precious metal groups all traded on a positive note except for copper which eased 15 pips after strong gains yesterday. Copper is trading at 3.175. On Thursday copper futures rebounded in US trade session, after a report showed orders for automobiles, machinery and other durable goods in US jumped more than market forecasts. Copper futures for Sept. delivery closed up by 0.2% at $3.1855 on the COMEX division of the NYMEX.

Comex High Grade Copper Futures Analysis – July 25, 2013

September High Grade Copper futures finished higher on Thursday in a lackluster trade. Early in the session, technical factors helped drive the market lower, but short-covering fueled by U.S. economic data triggered an intraday rebound. Volume was low which could be a sign of trader indecision.

Earlier in the week, the market posted a daily closing price reversal top. This chart pattern was confirmed on Thursday, but the follow-through was weak and short-covering ensued. The initial cause of the break was concern over future demand from China and talk of the Fed beginning its tapering of monetary stimulus as early as September. This action would drive interest rates higher and make the dollar a more attractive investment. Since copper is dollar denominated, foreign demand could fall if the dollar is allowed to rally.

Since investors aren’t sure when the Fed will implement its plan to unwind its current stimulus, the market may become range bound over the near-term. Today’s better-than-expected durable goods report failed to excite traders. This may mean investors will hold the market in a range until the release of the latest U.S. jobs data on August 7.

Daily September High Grade Copper
Daily September High Grade Copper

Technically, the nearest resistance is a 50% level at 3.2045. This is followed by the reversal top at 3.2340. The break through the uptrending Gann angle at 3.1955 has put the market in a weak position. This could trigger a further decline into another uptrending Gann angle at 3.0955.

Based on the main range of 2.9855 to 3.2340, the retracement zone at 3.1098 to 3.0804 is the most likely downside target.

Look for a sideways to lower bias to develop as investors wait for more clarity regarding the Fed’s decision to begin cutting stimulus. The direction of the U.S. Dollar should also be watch closely. A weaker dollar will be bullish. A stronger dollar will likely trigger an acceleration to the downside.