Gold Getting Ready For A Fall

Gold Getting Ready For A Fall
Gold Getting Ready For A Fall

International investors are the most upbeat about the global economy than at any time in almost five years, buoyed by the U.S.-led revival of industrial nations, according to the Bloomberg Global Poll.  Removing global concerns from gold traders is like pulling the rug out from under their feet. Gold has no hope at this point as it edges down. Gold is trading flat this morning at 1242.00 as traders take one last look and hope before the Federal Reserve meeting next week. Traders are trying to determine what stance the FOMC will take as Mr. Bernanke leads his last meeting. The odds now are favoring a reduction in monetary purchases by up to 25 billion dollars. Last month the Fed’s began to taper ahead of market expectations and reduced their purchases by just 10 billion dollars. With unemployment falling to 6.7% and inflation well within expected limits, the Fed’s will most likely favor a larger tapering package which will increase the value of the US dollar while killing gold.  Silver added 22 points to trade at 19.892 after tumbling this week as industrial metals fell on the back of the strong US dollar. The US dollar has been trading new recent highs. The DX is at 81.27 up by 6 points this morning.

gold usd

On Tuesday due to the absence of any economic data, the events and triggers we had expected for gold prices to remain mostly in a sideways trend failed to show while we had expected prices to trade marginally down. The same took place in Monday’s trading session. February futures gold prices traded down by around 0.81%. Today is going to be another steady trade day as there are no major events/triggers expected. In fact, the whole week has been very sideways and the market has been free from any major triggers. The IMF increased the global economy growth rate from 3.60% to 3.7%, which may have an impact on gold prices as global investors now anticipate a further cut down in the stimulus program.

Industrial metals edged higher on Tuesday as investors digested further evidence of tight nearby supply, although concerns about Chinese demand and worries that rising stocks of concentrate will soon be processed into metal kept gains in check. Copper is trading at 3.345 down by 2 points this morning as the US dollar continues to weigh on prices. Surplus stocks of copper will tighten significantly this year and next as new mine output fails to translate into refined metal, helping buffer prices from the impact of slow economic growth and uncertain Chinese demand, a Reuters poll shows. China’s refined copper imports in 2013 dropped 5.8 percent from record levels seen a year ago, although arrivals are expected to rise in 2014 as importers ramp up bookings for term shipments.

In other metals platinum is trading at 1457.70 up by $6.35 while palladium edged down by 80 cents to trade at 747.20.

Iran Sanctions Easing As Oil Production Begins To Increase

oil weekly bnsnlaCrude oil recovered on Monday to trade at 94.60 but gave back most of the gains this morning in the Asian session after the US dollar gained momentum. Crude is trading at 94.19 at this writing. Nymex crude oil prices gained around 0.4 percent yesterday on the back of declining trend in crude oil inventories. Further, upbeat market sentiments in later part of the trade coupled with weakness in the DX acted as a favorable factor for the prices. Also, less volatility was observed as US banks were closed yesterday on eve of Martin Luther King Day.

However, sharp upside in the prices was prevented due to decline in China’s economic and industrial growth in yesterday’s trade which led to expectations of fall in demand for the fuel. Additionally, statement from Iran which is fifth largest member of Organization of Petroleum Exporting Countries that it will voluntarily suspend its enrichment of uranium at 20 percent capped sharp gains in the prices. The United States has followed through on promised sanctions relief for Iran covering oil exports, trade in precious metals and automotive services as part of a nuclear agreement that began taking effect on Monday, U.S. officials said. Tehran has said it will take six months after sanctions are lifted to return to full crude oil output capacity of 4 million bpd, a level last seen in 2011.

oils articleExpectations of more supply from Libya could also keep Brent prices under pressure this week. The Libyan government said it plans to remove protesters, who have seized eastern ports used for oil exports, within the next few days. The three ports, which together accounted for 600,000 barrels per day of exports, have been occupied by heavily armed rebels since the summer.

Brent crude dipped below $106 per barrel on Monday, weighed by data showing China’s oil demand growth slowed further in 2013 and by news Iran had started implementing a nuclear deal with world powers, which could eventually allow more oil exports. Brent is flat this morning trading at 106.35. Implied oil demand in China, the world’s second-biggest oil consumer, rose just 1.6 percent last year, or 150,000 bpd on the year, according to Reuter’s calculations based on preliminary government data and unrevised 2012 figures. That compared with a forecast by the International Energy Agency of 3.8 percent growth in China’s 2013 implied oil demand – a measure based on a combination of crude oil throughput and net imports of refined products that does not adjust for stocks changes.

gas oil article is trading at 2.6329 up close to 44 points this morning recovering from drops this past week. Hedge funds reduced bullish bets on gasoline by the most since June as stockpiles surged to an 11-month high before a cold blast that probably will curb demand in the U.S. Midwest and Northeast. Money managers cut net-long positions, or wagers on rising prices by 22 percent in the week ended Jan. 14 to the lowest level since Nov. 19, U.S. Commodity Futures Trading Commission data show. Short positions more than doubled. Gasoline tumbled to a two-month low last week after a government report showed supplies climbed to 233.1 million barrels, the highest since Feb. 8.

Natural gas is trading at 4.301 recovering from the sell off over the past days after traders booked profits and watched changes in the weather forecast. Colder temperatures are driving heating bills higher in the first part of winter. Fortunately, natural gas prices aren’t piling on. Temperatures from Dec. 1 through Jan. 16 were 13 percent colder than normal and 33 percent colder than last year.

Important market-moving events for the upcoming week

Important market-moving events for the upcoming week

Last week, the overall US Dollar Index posted a weekly gain of 0.8% as economic indicators like regional manufacturing indices, retail sales and housing data, continued negating signs of serious economic slowdown in the US economy, as was portrayed by disappointing December jobs report.

The upcoming week’s US economic calendar is relatively quieter with only Existing Home Sales data featuring amongst the important release for the week. In November, existing home sales data showed some moderation, falling to an annualized rate of 4.9 million units. For the final month of 2013, existing home sales, scheduled for release on Thursday, bears the expectation of a moderate bounce back to an annual pace of 4.99 million-units, reassuring continuation of the overall recovery in the US housing market.

Apart from US housing data, some important economic releases from other parts of the globe will also be in focus of the market participants. Here is a brief outlook on some important market-moving events for the upcoming week. 

For comprehensive list of economic events, check-out the FOREX CALENDAR

With minutes from the Bank of England’s latest policy meeting, scheduled for release on Wednesday, investors will keep a close watch on this week’s UK labor market reports, also scheduled for release on Wednesday, in order to evaluate the possibilities of the BoE raising its key benchmark interest rate as soon as 2015 or possibly even earlier than that. With the latest release of the annual consumer price inflation (CPI) approaching central bank’s 2% target zone, a disappointing employment report could significantly deteriorate the recent strength of the nation’s currency. Furthermore, even as the unemployment rate drops close to 7% threshold, it seems unlikely to trigger any big rally for GBP.

Meanwhile, key releases from this week’s Euro-zone economic calendar features German ZEW Economic Sentiment and key manufacturing and services PMI figures. Leading to the key PMI releases on Thursday, the German ZEW Economic Sentiment for the month of January is scheduled for release on Tuesday. Following a better-than-expected reading of 62.0 in December, the index is expected show further improvement in the economic outlook for Germany and climb to 63.4 for the month of January. Market participants will be particularly focusing on the release of key manufacturing and services PMI reading, scheduled on  Thursday, from Euro-zone’s two largest economies, France and Germany, along with the broader Euro-zone PMI figures. The PMI numbers are  expected show improvement across the board, generating some optimism for the battered Euro-zone economies. A convincingly stronger PMI readings could possibly compel EURUSD, , which has dropped more than 2% from over a two-year high of 1.3893 touched on Dec. 27, to bump-up in the near-term.

Read more: Technical Overview – EURUSD, GBPUSD

Wednesday’s Bank of Japan interest rate decision and subsequent comments by BoJ Governor Haruhiko Kuroda, during a press conference, on the effectiveness of monetary stimulus, will be closely scrutinized by market player to see if the central bank is willing to expand its economic stimulus measure in the near-future. Though most economists expect a little in terms of any major policy action or fresh monetary easing measures from the central bank’s monetary policy decision announcement on Wednesday. However, any hints pointing towards further easing could force Japanese currency (JPY) to continue drifting lower and lift USDJPY higher to a fresh five-year high.

A disappointing Australian jobs report for December and slowdown of Chinese economic growth in the fourth quarter has fueled speculations of a possible further monetary action by Australian central bank, RBA, on Feb. 4. However, Australian CPI for Oct. to Dec. 2013 quarter, scheduled for release on Wednesday, is expected to rise by 0.5% as compared to a rise of 1.2% in the quarter ending Sept. 2013. Meanwhile, the year-on-year inflation rate is expected to come in at 2.4%, acting as a headwind for RBA to opt for a rate cut and possibly supporting the butchered Australian Dollar (AUD). Also this week’s HSBC flash Chinese manufacturing PMI data for the month of January, scheduled for release on Thursday, will be closely watched to gauge the economic health of the world’s second-largest economy and Australia’s top trading partner for any material impact on AUD. Weaker economic data from China and(or) softer Australian CPI figure might lead to further weakening of AUDUSD.

Also read: Technical Update – AUDUSD, USDJPY

Although, this week’s US economic calendar features very little in terms of important releases; but important economic events and data releases from other major economics could possibly act as catalyst for this week’s movement in the Forex market.

Original Article: Admiral Markets

Precious Metals and Industrial Metals Trading In The Green

Precious Metals and Industrial Metals Trading In The Green
Precious Metals and Industrial Metals Trading In The Green

Gold climbed $3.50 this morning to trade at 1255.40 nearing a recent high, as volume for the day should be light with US traders out of the market for Martin Luther King Day. Silver also saw gains this morning to start off the week at 20.328 up by 24 pips. The US dollar remains flat near a 2014 at 81.33 and is expected to climb this week in anticipation of the Federal Reserve meeting coming on the 29th of the month.  Precious metals rose on Friday as weakness in U.S. equities, strong fund buying and Asian physical demand lifted bullion to its fourth consecutive weekly gain. Holding at SPDR Gold Trust and iShares the largest precious metals EFT’s remained flat, offering little support for the metals.  At the end of last week gold prices gained around 0.5 percent on the back of sharp rise in gold ETF’s which is managed under SPDR Gold Holdings Trust. Gold holdings was seen on a declining trend for most of the week but in the later part of the week a sharp rise of 7.5 tonnes or 1 percent was seen on Friday and stood at 797.05 tonnes. However, sharp upside in the prices was restricted due to strength in the DX coupled with concerns of QE tapering by the Federal Reserve. The US Dollar Index gained by 0.8 percent in the last week on the back of concerns of QE tapering by the Federal Reserve in its meeting on 28th-29th Jan’14. However, sharp upside in the currency was capped due to favorable economic data from the country. Further, rise in risk appetite in market sentiments after World Bank raising the growth forecast for 2014 and 2015 which led to fall in demand for the low yielding currency restricted positive movement in the currency. The currency touched a weekly high of 81.43 and closed at 81.36 on Friday.  

Data from the Commodity Futures Trading Commission also showed on Friday that hedge funds and money managers raised their bullish bets in gold and silver futures and options for a third week amid a decline in stocks. Prices were finding a floor near $1,200 as that was close to the cost of production just a week ago. If gold prices were to fall below the cost of production, producers would be forced to shut loss-making mines, thereby creating a supply constraint that could push prices up. This might happen after the FOMC meeting next week.

gold

Among other precious metals, spot platinum gained after the main trade union for South African platinum miners said the workers will strike this week at the world’s top three producers, hitting over half of global output. Platinum is trading at 1459.15 up by $4.30 while palladium is up $2.50 at 750.80.

Data released this morning from China has also had a positive effect with Chinese GDP printing at 7.7% for 2013, which is above the government forecast of 7.5% along with retail sales printing at forecast.  Copper jumped 7 points after the data release to trade at 3.350. Industrial metals hit their highest in more than a week on Friday due to a supply shortfall in physical markets, but prospects of aggressive action by the U.S. Federal Reserve to curb stimulus capped gains. London copper was in the green this morning as markets responded to fourth quarter economic growth in China, the world’s top metals consumer, and instead focused on tight supply. China’s annual growth eased to 7.7 percent in the fourth quarter as investment and demand flagged, and analysts say growth could cool further in 2014 as Beijing focuses on rebalancing the economy and other major reforms. China is the biggest user of most industrial metals, accounting for around 40 percent of refined copper demand.

copper silver

 

 

Corporate Earnings Tank Dragging Down Equities

Corporate Earnings Tank Dragging Down Equities
Corporate Earnings Tank Dragging Down Equities

Traders shifted sentiment on Thursday after major US corporate earnings reports disappointed investors. Best Buy and Netflix tumbled after data printed on a down note. Bad news from Corporate America weighed on the market Thursday. Stocks closed mostly lower, with the S&P 500 pulling back from the record highs reached Wednesday and the Dow also declining. The NASDAQ closed with a slight gain. The Dow fell 65 points or 0.39%, to end at 16,417. The S&P 500 slipped two points or 0.13%, to finish at 1,846. The Nasdaq Composite added four points or 0.09%, to close at 4,219.

Financials suffered the most after both Goldman Sachs and Citigroup reported that lower bond trading revenue took a bite out of their quarterly profits. Goldman’s earnings fell 21%. Citigroup’s profit missed expectations. Goldman’s stock slid 2% and was the biggest drag on the Dow. Citigroup’s stock dropped 4.4%, weighing on the S&P 500. A day after eking out its first record high of 2014, the stock market lost ground as Best Buy, and railroad operator CSX had disappointing earnings news. Shares of consumer discretionary companies and banks fell the most.

Best Buy posted the biggest loss in the S&P 500 index after the electronics retailer reported a decline in sales during the holiday season. Best Buy’s shares plunged 29 percent, to $26.83. Investors had high hopes that Best Buy, which has faced intense competition from companies such as Amazon.com, would get itself back on track. Best Buy’s stock soared 236 percent last year. However, the company said yesterday that the aggressive price-matching policy it offered during the holidays backfired, and sales slipped 0.8 percent compared with a year earlier.

140116164126-best-buy-stock-620xa

In economic news, jobless claims decreased last week by 2,000 to 326,000, the least since the end of November, from a revised 328,000 in the prior period, a Labour Department report showed. Another report showed the cost of living in the US climbed in December by the most in six months, led by gains in fuel and rents.

European stocks have pulled back, failing to gain traction from a surprise drop in United States unemployment claims, while Citigroup earnings disappointed. All three major markets had rallied on Wednesday, with sentiment boosted after the World Bank declared that the global economy was at a turning point. “There’s been little sense of a strong direction one way or the other today as European markets mark time at or around their multi-year highs,” Michael Hewson, Chief Market Analyst at CMC Markets UK, said.

Asian markets were down this morning following the decline on Wall Street due to a poor start to the company earnings season. Japan’s Nikkei 225 dipped 0.1 percent to 15,736.02. China’s Shanghai Composite index sank 0.6 percent to 2,012.33 while Hong Kong’s Hang Seng was up 0.8 percent at 23,179.82 after slipping in early trading.

 

Daily commentary – European and US stock markets – 16 January 2014


Daily commentary – European and US stock markets – 16 January 2014
Daily commentary – European and US stock markets – 16 January 2014
European markets

This morning European markets opened a bit hesitant after enjoying four days of gains, waiting for more direction by data due for release today. At the time of writing, Germany’s DAX30 was wavering between green and red after reaching its all-time high on Wednesday; France’s CAC40 was down by 0.16% to 4,324.17, while the UK’s FTSE100 was up 0.11% to 6,827.57.

dax30

 

German-based agricultural chemical and salt company K+S AG was the top gainer in the DAX30, advancing by 2.15% to € 25.895 opposite Deutsche Lufthansa AG, the largest airline in Europe, which was sliding the most within the index this morning, falling by 0.92% to €18.44. The CAC40 best performer was LegrandAS, the world leader in products and systems for electrical installations and information networks, which was gaining 3.09% to €40.2300, while the UK’s largest listed water company, United Utilities Group PLC., was in the poll position in the FTSE100, rising by 3.95% to £685.000.

US markets

 US stock markets returned to their more “joyful” performance from previous sessions after ending a second consecutive day with strong increases in value with the S&P500 erasing all losses accumulated so far in 2014 and reaching a new record-high. Investors’ optimism was triggered by a lifted forecast by the World Bank regarding the global economy.

The report revealed that the institution has increased its forecast for a global economic growth this year, with a focus on the emerging markets. The initially stated 3% growth in July was revised to 3.2%, while the forecast for the richest countries was lifted from 2% to 2.2%. The main reason for the correction lays in the improved economic state in the Eurozone as well as the strong stock market performance in the US.

The S&P500 added 0.5% to reach the record 1,848.38 points, outperforming its previous record from 31 December, which was just 0.02 points lower, with seven of the ten industry groups reporting increases. The top gainers were the telephone, technology, and finance companies, which climbed by more than 1.1%.

s&p500

The Dow rose by 108.09 points, or 0.7%, to close at 16, 481.94 points, with Microsoft Corp. and Verizon Communications Inc. being the big winners within the index, adding 2.7% and 2.5%, respectively, to their values.

The technological Nasdaq Composite rose by 29.2 points, or 0.7%, to 4,212.21.

Among other top performers was Bank of America Corp., whose shares gained 2.3% to $17.15, reaching their highest level since May 2010, after it posted financial results that exceeded analysts’ expectations. Apple Inc. also joined the winners club, edging up by 2% to $557.36, after China Mobile, which is the largest phone company by number of customers, said that pre-orders for the iPhone have reached about 1 million.

 

Today has already shaped up as a busy day, with Australia’s employment data out (revealing worse-than-expected results) and Germany’s Consumer Price Index for December (MoM and YoY) showing no surprises to analysts’ expectations. The rest of the day will see both the Eurozone and US Consumer Price Indexes for December (MoM and YoY) along with the US Initial Jobless Claims.

Outside the economic calendar, it is the US earnings season again, with its imminent impact on the markets. Among the companies set to release their financial results today are American Express Co, Citigroup Inc., Goldman Sachs Group Inc., and Intel Corp.

 

 

Source: dfmarkets.co.uk

 

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Up Beat US Data And Positive Fed Beige Book Pushes Up Copper and Leaves Gold Hanging

Up Beat US Data And Positive Fed Beige Book Pushes Up Copper and Leaves Gold Hanging
Up Beat US Data And Positive Fed Beige Book Pushes Up Copper and Leaves Gold Hanging

Precious metals remain in their trading range bouncing between the top and the bottom of that range. Yesterday gold prices were pushed lower to trade at 1239.00 but recovered a few dollars in the Asian session this morning to trade at 1241.50. The short term range is between 1237-1245 and the near term range is between 1235-1250 leaving gold pretty well rangebound ahead of the FOMC meeting at the end of the month. Silver continues to bounce up and down but seems to be holding the $20 price level. This morning the white metal is trading at 20.180 up by 46 points but has seen huge bounces during its daily trading but ends where it begins. Platinum eased by 15 points to trade at 1429.30 holding on to its longer term gains, while palladium climbed to 743.50 up by 90 cents. Precious metals fell for a second session on Wednesday as the dollar rallied after data showed U.S. producer prices rose sharply in December even though there were few signs of sustained price pressures.

The US Dollar Index gained by around 0.5 percent yesterday on the back of expectations of QE tapering by the Federal Reserve in its meeting on 28-29th January after favorable economic data. However, sharp upside in the currency was capped on the back of rise in risk appetite in market sentiments which led to decline in demand for the low yielding currency. Further, World Bank raising the global growth forecast and keeping the estimates unchanged at 2.8 percent in 2014 for US restricted positive movement in the currency. US Producer Price Index (PPI) gained 0.4 percent in December as against a fall of 0.1 percent in November. Empire State Manufacturing Index jumped to 12.5-mark in January from 1 level in December

Gold prices are expected to move down further as lack of demand in the market and positive data coming from US and other economies is denting the safe haven demand for gold. Gold prices moved down on Wednesday as positive Global outlook reduced the safe haven buying of Gold. IMF expects global growth to pick up this year, though deflation is a rising risk. India has asked jewelers to provide information on purchases of gold bars or jewelry worth more than 500,000 rupees ($8,100) by the end of this month to check and stop the rising smuggling of Gold. Stronger dollar index after positive PPI data from US also pushed the gold prices down. In a move towards making the gold futures contract more transparent and convenient for the Indian market participants, the NCDEX (National Commodity Derivatives Exchange) has taken the first step forward by introducing the Gold-Hedge contract. The contract is directly linked to international gold prices and excludes other charges like customs duty, premiums. 

Industrial metals on the LME traded higher yesterday taking cues from positive global growth forecast for 2014 by the World Bank that fuelled hopes of optimistic demand outlook for the base metals. Also, positive manufacturing data from the US coupled with upbeat global market sentiments acted as a supportive factor for the base metals. Additionally, decline in inventories added an upside in the prices. Further, strength in the DX could not pull the prices lower. Copper is trading at 3.359 climbing 4 points this morning after a steadily climb on Wednesday. Copper traded on a positive note by 0.8 percent on the back of expectations of rise in demand taking cues from positive growth along with decline in inventories by 0.5 percent to 336,250 tons acted as supportive factors.

Metal Traders Worry About Chinese Demands

Metal Traders Worry About Chinese Demands
Metal Traders Worry About Chinese Demands

Precious metals fell nearly 1 percent on Tuesday, snapping a three-day winning streak, as a rally in U.S. equities that was sparked by encouraging December retail sales data dampened buying sentiment among bullion investors. Gold remains in a close $10 price range staying pretty much within side the range moving between 1245-1255 with no direction. Gold this morning is holding slightly lower at 1239.50 as Asian traders sell off the commodity and the greenback climbs. The US dollar has risen to trade at 80.96 adding 22 points after retail sales in the US reported well above expectations. Traders worried on Friday after the nonfarm payroll report that the US recovery was off tract but the new all important data shows that the drop in jobs creation was a more one off especially when combined with the previous months increase and the upward revision. Gold will likely remain weak ahead of the January 29th Federal Reserve meeting. Gold is expected to ease to its post nonfarm range around the 1230 level. Silver shed 16 cents, or 0.8%, to $20.13 an ounce yesterday and continues to tumble this morning falling to $20.11.

A day earlier, gold futures settled lower as investors opted to buy up stocks. A rise in retail sales and some comments from Fed officials pointed to the prospects of further tapering of the central bank’s bond-buying program. Gold prices moved lower as positive US Data raised dollar prices higher. The Federal Reserve should bring its bond-buying program to a swift close, two of the Fed hawkish policymakers said. SPDR holdings moved down nearly 3.5 tons on Tuesday. The U.S. Federal Reserve on Tuesday took a first formal step toward restricting the role of Wall Street banks in trading physical commodities. The Fed board voted to publish its concerns and potential remedies following months of growing public and political pressure to check banks’ decade-long expansion into the commodities supply chain. Any more good news from the economic front could weigh on prices, and there’s plenty of potential for that to happen on Wednesday. First, the December producer price index and the January Empire State index are both due for release today. The Beige Book will be published close to the end of the session and is considered the guide for the Federal Reserve.

Industrial metals dipped on Tuesday due to a firming dollar and caution over growth prospects for the world’s top copper consumer China, but a shortfall of metal in the physical markets and upbeat U.S. data helped limit losses. Copper prices moved lower on stronger dollar due to positive US data and fear of Fed continue to taper its stimulus further has pressured the copper prices. Traders can expect Copper prices to remain down for the day over stronger dollar internationally and lack of demand in the market. Copper is trading at 3.309 well below its trading range for 2014. 

gold and copper article

Stock Markets Around The Globe Giving Up Gains

Stock Markets Around The Globe Giving Up Gains
Stock Markets Around The Globe Giving Up Gains

Wall Street took its first major tumble of 2014 with the Dow falling 200 points and the S&P and NASDAQ marching close behind. European equities had been trading in the green, until the North American open and then they followed cues from US traders. London’s FTSE ended Monday up 0.26 per cent at 6,757.15 points, while Frankfurt’s DAX 30 rose 0.39 per cent to 9,510.17 points and the CAC 40 in Paris added 0.30 per cent to 4,263.27 points, all had been trading higher but gave up gains. Traders are a bit uneasy about the upcoming earnings season which gets into full swing today with the major banks reports. By the end of the day the Dow Jones was down 181.52 points, or 1.10 per cent, at 16,255.53. The S&P 500 gave up 23.57 points, or 1.28 per cent and the NASDAQ fell close behind down 62.24 points, or 1.49 per cent, to 4,112.43.

Traders continue to review Friday’s jobs report, which showed a big slowdown in job creation in the final month of 2013. Despite the lackluster jobs news, stocks managed to end higher Friday as investors generally believe the economy will continue to improve in 2014.

The slowdown in hiring raised questions about the Federal Reserve’s plan to cut back on, or taper, its bond buying program. The Fed has announced plans to trim its purchases by $10 billion to $75 billion beginning this month. As it was offset by a significant drop in unemployment to 6.7% along with an upward revision to November’s jobs by 38k

Stocks were lower from the open but increased their declines after Atlanta Fed President Dennis Lockhart said he would support further tapering this year, assuming the economy continues to improve. However, Lockhart is not a voting member of the Fed’s policy committee and his comments were similar to previous statements. But markets are looking at Fed speak ahead of the blackout coming before the January 29th meeting of the FOMC at which time they will make their first decision in 2014 and the last under Ben Bernanke. JPMorgan and Wells Fargo are scheduled to report later today, while other big banks including Bank of America, Citigroup, Goldman Sachs and Morgan Stanley, are also on tap to report their results. The financial sector is expected to post the biggest profit growth in the quarter, according to FactSet. Some investors’ worry that banks’ revenue could be hurt by a slowdown in trading activity, particularly in the bond market.

This morning Asian markets are trading on a down note following cues from Wall Street. In the Pacific region the Australian stock market has widened morning losses, falling more than 1.3 per cent in afternoon trade following weak Wall Street leads as investors worry about the pace of stimulus tapering in the United States. Hong Kong stocks started lower Tuesday, tracking overnight weakness in U.S. equities, with property and financial shares posting broad declines. The Hang Seng was down lost 0.8%.On the Chinese mainland, the Shanghai Composite edged lower by 0.3%.

Japanese stocks slid this morning after being closed on Monday for a regional holiday. The Nikkei Stock Average fell 2.7% lower to 15,501.50, and the broader Topix slumped 2.3%, with stocks also hit as the U.S. dollar fell to around the 103-level against the yen, weaker than its level compared with the end of last week.

 

An Unexpected Jobs Report Leaves Gold Traders Confused

An Unexpected Jobs Report Leaves Gold Traders Confused
An Unexpected Jobs Report Leaves Gold Traders Confused

Precious metal traders seemed to go into shock on Friday at the surprise nonfarm payroll report. As data was released traders pushed gold skyward in their immediate response as figures showed that the US only added 74k jobs against expectations of 190k. A startling surprise after a very strong ADP payroll report on Wednesday. Traders were expecting to see the print beat the forecast.  Gold traded as high as 1250 but eased as the traders looked at the rest of the data release. Unemployment tumbled from 7% to 6.7% which is the driving factor behind the Federal Reserve forward guidance, meaning that the Fed’s will most likely keep reducing stimulus. The last piece of information was the upward revision of the November jobs release by 38k jobs. This shows that employers added Christmas help and hired for new positions earlier than expected. The previous months report showed a huge jump in new jobs and with the added upward revision, the two month average was well within expectations and remains a good sign of a strong recovery.  This morning traders in Asia have pushed gold up $2.20 to trade at 1249.10 as they take advantage of the weak US dollar to grab up the shiny metal. Silver is moving the opposite of gold this morning and is down 45 points at 10.178. The US Dollar Index fell by around 0.2 percent in the last week taking cues from favorable trade balance and unemployment data from the country. However, sharp downside was capped on the back of rise in risk aversion in market sentiments which led to increase in demand for the low yielding currency. Also, hints of further QE taper by the Federal Reserve after minutes of the FOMC meeting were released acted as a supportive factor for the currency.

SPDR Gold Trust holding remain flat with no changes in the world’s largest gold-backed ETF and silver holding of iShares the largest silver EFT also remain unchanged. Silver prices traded on a flat note in the prior week and gained marginally due to upside in the gold prices along with weaker DX. While on the other hand, downside in the base metals complex along with decline in silver holdings exerted downside pressure on the prices. Russia’s gold output increased by 12 percent in the first eleven months of 2013, as compared to the same period of the preceding year, and reached to 227,783 tons, Chairman of the Russian Union of Gold Producers Sergei Kashuba says, quoting preliminary data.

Base metals on the LME traded on a mixed note last week taking cues from unfavorable inflation data from China. Also, favorable economic data from the US in early part of the trade strengthened the case for further QE tapering, thereby curbing demand for the base metals. Also, mixed global market sentiments acted as negative factor. Further, favorable economic data from the Eurozone coupled acted as positive factors. A drop in LME inventories along with weak non-farm employment data easing QE tapering concerns was supportive for the prices. Industrial metals rose on Friday, lifted by a weaker dollar after worse-than-expected U.S. labor market data reinforced the view that the U.S. Federal Reserve is likely to be cautious in scaling back its bond-buying stimulus program. Copper is trading at 3.353 up by 6 points this morning on the decline of the US dollar which is trading at 80.58 down by 16 points and off its high of last week just under the 82 price level.

Chinese Trade and Inflation Worry Metals Traders

Chinese Trade and Inflation Worry Metals Traders
Chinese Trade and Inflation Worry Metals Traders

Gold traders are sitting tight waiting for today’s nonfarm payroll release. Gold gained $3.20 in Friday morning’s trade to settle at 1232.60. Precious metals rose on Thursday after two days of losses as traders added positions ahead of Friday’s key U.S. nonfarm payrolls report, which will be closely watched for clues on whether the Federal Reserve will keep trimming its bond-buying stimulus.

Gold prices moved up yesterday after moving in a range, gold ended up its session by moving in a range as mixed data coming from US and China kept the prices of Gold in range. Markets fear that a strong U.S. jobs report later today could prompt the Federal Reserve to further reduce its bond-buying stimulus. Bank of America Merrill Lynch lowered its 2014 average gold price forecast to $1,150, citing an uncertain macro-economic environment and lack of investment demand. Commodity exchange traded products suffered their worst year on record in 2013 as investors dumped gold holdings and joined the equity rally. Gold prices are expected to move lower after showing some upside however, positive US Non-Farm Payroll can push the prices down.  

Silver and other precious metals are taking their cues from gold with silver trading at 19.648 down by 35 points after a mixed trade balance report from China this morning. Chinese exports declined while Chinese imports climbed. Platinum is trading at 1421.90 up by $2.95 while palladium added 60 cents to reach 737.50. Copper might decline amidst concerns that the Chinese economy may continue slow down. China`s PPI which extended its decline for twenty two consecutive months is adding to the evidence that manufacturing sector is extending its weakness.

Copper is trading at 3.30 recovering 3 pips this morning after Thursday’s fall. Copper witnessed a huge fall in its prices in the yesterday`s trading session at the LME platform down by 1.8% .Copper Stockpiles monitored by exchanges in London, New York and Shanghai are at the lowest since November 2012, with LME inventories dropping for a 46th consecutive trading session day is not providing any respite to copper prices as the red metal has been declining on concerns of slowdown in Chinese economy.

Copper might decline amidst concerns that the Chinese economy may slow down As mentioned earlier China`s PPI which extended its decline for twenty two consecutive months is adding to the evidence that the economy weakened. Copper prices remained down for the day as poor Chinese CPI data pushed lower the demand sentiment for copper. China’s Trade Balance moved down to 25.6B vs 33.8B prev, concern over Chinese economy losing its steam is raising. Chinese imports of copper and iron ore likely fell in December from the month before due to a cash crunch and as growth momentum slowed.

 

Daily commentary – European and US stock markets – 8 January 2014

Daily commentary – European and US stock markets – 8 January 2014
Daily commentary – European and US stock markets – 8 January 2014
European markets

After yesterday’s strong performance supported by an upbeat German unemployment figure, European markets opened mixed today, waiting in a ‘’stand-by position’’ for important economic data due to be released both from the Eurozone and the US in the next few days. Germany’s DAX30 was down by 0.17% to 9,490.34, France’s CAC40 fell by 0.22% to 4,252.69, while the UK’s FTSE100 was eased 0.39% to 6,729.03 at the time of writing. CAC’s top gainer this morning was multinational banking and financial services provider Societe Generale SA, which advanced by 2.06% while pharmaceutical company Sanofi was losing the most, slipping by 1.06%. German-based agricultural, chemical, and salt company K+S AG was the best performer in the DAX30, being up 3.73% to €22.79, whereas general insurance company RSA Insurance Group PLC was the gains leader in the FTSE100 at the time of writing, climbing by 3.32% to 100.800 GBp.

FTSE100

 

US markets

Wall Street reported its first session for 2014 on the green side, with the S&P500 also putting an end to its three-day losing streak. This was mostly due to the combined effect of a sharp decline in the US trade deficit and upbeat data from Germany, which fuelled optimism for a faster recovery of the leading economies.

 

The US Commerce Department’s report released yesterday showed that the country’s trade deficit for November fell much more than expected, reaching its lowest level since 2009.  The gap in the trade balance shrank by 12.9% to $34.3 billion, opposite analysts’ forecasts for a figure of about $40 billion. The main factor for the impressive trade balance change was the serious decline in oil imports in the US, which reached a 3-year low.

The S&P500 gained 11.11 points, or 0.6%, to close at 1,837.88 and end its decline from the previous three sessions, when the index lost more than 1%. According to analysts, the losses at the start of the year were largely due to investors collecting their profits from a strong 2013 which saw the S&P500 gaining nearly 30%. All ten industries within the benchmark reported increases, with the healthcare sector being in the lead.

 S&P500

The Dow rose by 105.84 points, or 0.6%, to 16, 530.94. Among the winners within the index were UnitedHealth Group Inc. and Johnson & Johnson, whose shares increased by 3.1% to $76.51 and 2.12% to $ 94.29, respectively, after both companies’ ratings were raised.

 

The technological Nasdaq Composite gained 39.50 points, or 1%, rising to 4,153.18, with the Nasdaq Biotech Index (NBI) advancing by 1.4%.

 

Looking further in the day, the focus will be on Germany’s Factory Orders (MoM and YoY) for November and the Fed’s meeting minutes.

 

Source: dfmarkets.co.uk

 

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Gold Facing A Volatile Few Days WIth Major Eco Events On The Calendar

Gold Facing A Volatile Few Days WIth Major Eco Events On The Calendar
Gold Facing A Volatile Few Days WIth Major Eco Events On The Calendar

Speculators have a busy few days with the FOMC meeting minutes due today along with the ADP payroll report ahead of Friday’s nonfarm payroll report. In the middle traders will see the Bank of England and the European Central Bank meetings on Thursday. Each of these critical events singularly or together have the ability to send precious metals and the greenback soaring or tumbling. Gold is trading this morning at 1226.90 giving up $2.70 following its tumble earlier this week. Gold touched $1250 and then made a U turn and continues to fall. Traders are expecting the FOMC minutes today to show that the members are supportive of additional tapering. US economic data remains positive and could push the Fed at its next meeting to increase its tapering and decrease its asset purchases to $50 billion. Prices were hurt by data showing the US trade deficit fell to a four-year low in November as exports hit a record high and weak oil prices held down the import bill. The numbers, the latest in a string of strengthening economic fundamentals, left economists anticipating a far stronger pace of growth for the fourth quarter than previously expected.

The dollar was mixed in Asia on Wednesday as investors await the release of minutes from the Federal Reserve’s most recent meeting to see if it plans to continue winding down its stimulus program. The Fed will later in the day release the minutes from its December meeting, when it said it would reduce its stimulus program by $10 billion a month to $75 billion from January. Analysts will be looking to see if there are any clues about its plans for the scheme this year following a string of upbeat data on the economy. Traders were buoyed by news Tuesday that the US trade deficit had shrunk in November as exports surged. On Friday the Labor Department will release closely watched nonfarm payrolls figures, which will provide fresh insight into the state of the economy. An upbeat jobs report will boost confidence in a further taper from the Fed when they meet on January 29.

Some also warn that as the Fed starts to trim its bond holdings, it could spook financial markets, threatening the economy’s recovery by causing stock prices to drop and interest rates to rise. Traders seem to be moving from gold to equities as the NASDAQ and the S&P reversed their down streak to gain steadily on Tuesday. Elsewhere in metals trading, platinum lost $3.50, or 0.3%, to $1,412 an ounce while palladium shed $3.45, or 0.5%, to $738.25 an ounce. High-grade copper meanwhile, tacked on a penny to $3.37 a pound. Copper gained 0.3 percent on Tuesday on the back of favorable economic data from the Eurozone. Also, a decline in LME copper inventories for the 44th consecutive session by 0.9 percent to 353,075 tonnes along with upbeat global market sentiments supported gains in the metal. However, strength in the DX capped sharp gains.

Gold Stops Trading For 10 Seconds After “Velocity Logic Event”

Gold Stops Trading For 10 Seconds After "Velocity Logic Event"
Gold Stops Trading For 10 Seconds After “Velocity Logic Event”

Precious metal speculators spent the day on a crazy roller coaster ride after gold tumbled $30 in seconds for no specific reason. The sudden shift set off what is known as a “velocity logic event” which stopped trading for 10 seconds. This is a fairly new action or term adopted by the CME to justify an immediate 10 second halt in trading. There has been a “stop logic” circuit breaker which has the ability to stop trading in the event of unforeseen trading activity or a massive market move that could overpower the computer software.  The new term “velocity logic event” is triggered if the execution price has moved the market up or down outside a predefined points value within a predefined time period, the Velocity Logic functionality is triggered and the instrument is placed in reserved state for a predetermined amount of time.

If you are a gold traders with hundreds of thousands of dollar or millions of dollars on the line these 10 seconds can seem like a lifetime. Yesterday’s event was not explained by the CME as trading resumed and gold eventually returned to its price before the event and closed just about flat for the day. Gold is trading up $1.90 this morning at 1239.90

In the first positive sign for gold Hedge funds and money managers broadly raised their net long positions in gold and silver futures and options in the week to December 31, data from the Commodity Futures Trading Commission showed on Monday but this could be accounts for as traders moved to safety before the holiday or repositioned themselves for the new year.

As expected Janet Yellen, a strong Bernanke supporter and a leading force in the Federal Reserve’s unprecedented and controversial efforts to boost the U.S. economy, was confirmed by the Senate to lead the central bank just as it begins to unwind that stimulus as Mr. Bernanke steps down at the end of the month.

Indian officials are in talks to cut a record high import duty on gold and relax rules on exports. Physical demand for gold in China moved higher as premiums on the Shanghai Gold Exchange climbed about $20.

Silver is trading on the up side recovering 72 points to trade at 20.175. Copper is slightly in the red this morning at 3.356. Copper prices remained flat for the day on Monday as mixed data coming from US and other economies kept the prices in range. CFTC said, hedge funds and money markets increased their bullish bets on Copper. US Dollar remained weaker yesterday helping Copper prices to recover from its initial loss. Traders can expect Copper prices to move higher for the day whereas other base metals can remain in a range as weaker dollar internationally and expectations of Chinese buying can keep the prices intact 

 

Billionaire Soros Warns On Chinese Economy Pushing Crude Oil Lower

Billionaire Soros Warns On Chinese Economy Pushing Crude Oil Lower
Billionaire Soros Warns On Chinese Economy Pushing Crude Oil Lower

In an interview late on Wednesday famous investor and one of the worlds’ richest businessman surprised markets with his views of China’s economic recovery. George Soros warned that “the major uncertainty facing the world today is not the euro but the future direction of China”. Mr Soros said the attempts by the Chinese government to transition away from investment-led growth towards consumption would have “profound consequences for China and the world”. “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”

These comments come after the release of disappointing Chinese manufacturing and non-manufacturing PMI.  Although the prints were near forecast the overall view was that China’s recovery was not as strong as expected and this shift in economic policy would upset the apple cart so to speak. China’s manufacturing output in December eased to a three-month low as foreign sales declined slightly for the first time in four months. The index slipped to 50.5 in December from 50.8 in November.

Oil prices retreat yesterday falling over $2.00 with a lot of the decline attributable to worries about demand from China. The recent retreat in the price also follows reports that an end to protests at a major Libyan oil field could return 300,000 barrels of daily production to the global market. That has raised expectations that supplies will be ample.

Brighter prospects for the US economy have also raised expectations that the Federal Reserve will continue to shrink its stimulus program, and that has helped boost the value of the dollar. A stronger dollar makes commodities such as oil that are priced in dollars more expensive to buyers using other currencies. That lowers demand, and prices. US oil was lower for the third straight day after closing above $100 per barrel last Friday for the first time since October. Oil had risen because an improving US economy lifted implied consumption. Crude oil is trading at 95.25 this morning down another 19 cents while Brent oil is at 107.86 gaining 9 cents. The spread remains fairly tight under $12.00. Traders are waiting for today’s official EIA inventory which was delayed due to the holiday.

The US retail gasoline price rose less than a penny to US$3.33 per gallon, according to AAA. The price has climbed 6 cents per gallon over the past week and is 4 cents higher than a year ago. Natural gas futures for February rose 9.1 cents to close at $4.321 per 1,000 cubic feet as traders wait for today’s natural gas inventory report as hopes that cold weather has increased demand. Heating oil fell 7.8 cents to close at $2.987 a gallon.

 

Greece, China, Australia and Latvia Head Up The 2014 Kick Off

Greece, China, Australia and Latvia Head Up The 2014 Kick Off
Greece, China, Australia and Latvia Head Up The 2014 Kick Off

The big news this morning is Chinese HSBC manufacturing PMI. Markets have been closed since mid-day on December 31st and European markets are schedule to start of the new year in just a few hours. There has only been two pieces of data to hit the wires today. China’s manufacturing the AIG manufacturing index for Australia.  Although there are two interesting bits of news that will likely get some attention in the European session, that is ahead of today european joint and individual PMI and ISM PMI for the US later in the trading day. Yesterday became the first official day for Latvia as part of the eurozone and for its currency to become the euro. Many speculators and global watchers are worried about the huge influx of “dirty” money through the Latvian banks. Latvia is under very strict orders from the EU to rein in its banking procedures and follow the guidelines of the European Union. The changeover will unfortunately legitimize a lot of money otherwise considered “shady”. Latvia adopted the euro on Wednesday, with it will bring with it a banking sector that is swelling with suspicious money from Russia and the East — just as the currency bloc is trying to clamp down on such havens. It was just nine months ago that the eurozone had to rescue Cyprus, a similarly tiny member state that also specialized in attracting huge deposits from Russia. Since then, eurozone leaders have vowed to crack down on financial sanctuaries and improve transparency.

The other surprising news headline over the holiday involved Greece, leaving many traders laughing as the Greek Prime Minister said that Greece would no longer need bailout assistance in 2014. Greece will exit its EU-IMF bailout agreement as scheduled in 2014 and will require no further loans, Prime Minister Antonis Samaras said Monday. How this is possible no one knows, Greece has not shown any financial or economic turnaround. Its unemployment continues to climb and its GDP continue to fall. Greece is expected to finally leave recession in 2014, and investor confidence in the country has grown through the last year. The yield, or interest rate, on its 10-year bonds has fallen to around 8% – compared with 30% at the peak of the crisis – as traders regained faith that the debt would be repaid. Greek government bonds were one of the best-performing assets in 2013, returning 47%. Analysts, however, are skeptical of the claim that Greece will not need further aid next year. It has still not reached agreement with its international lenders over the size of its fiscal shortfall in next year’s budget, with troika officials pushing Athens to make further painful cutbacks. What can you say Greeks are Greek?

This morning’s economic news was focused on Chinese PMI data released over the holiday. China’s factory activity expanded at the slowest pace in three months in December, weighed down by shrinking export orders, a private survey showed on Thursday, consistent with views the economy’s growth rate has moderated into the end of the year. China’s official manufacturing PMI, released on Wednesday, showed growth in factories slowed slightly in December as export orders and output weakened, though the figure remained above the line separating expansion from contraction. Beijing has made it clear that it would accept slower growth as it pushes ahead with structural reforms to steer the world’s second-largest economy towards more sustainable growth after three decades of breakneck expansion.

Chinese PMI data

 

 

 

 

Precious Metals Prepare For 2014

Precious Metals Prepare For 2014
Precious Metals Prepare For 2014

Gold added a few dollars this morning as bargain hunters bought up the commodity. Gold is trading at 1204.00 while silver gained 62 points to trade at 19.475. The precious metal was little changed this morning in thin year-end trade, but looked set to post its biggest annual loss in more than three decades as rallying equities and optimism about a global economic recovery dented its safe-haven appeal.

Worries this year that the US Federal Reserve will begin unwinding its stimulus and then the recent decision to do so has also hurt bullion that is seen as a hedge against inflation. Gold is headed for a near 30% slump in 2013 – ending a 12-year rally prompted by rock bottom interest rates and measures taken by global central banks to prop up the economy. Speculators were expecting the Fed to announcing an early tapering as it did last week after unemployment tumbled faster than expected and US GDP skyrocketed. With global markets moving to higher yield assets and the equities markets posting record highs the demand for gold continues to tumble.

“Gold is going to struggle again next year unless the stock markets see a correction,” said another trader. Several brokerages such as Goldman Sachs, BNP Paribas and Societe General expect gold prices to drop below $1,050 in 2014. “I doubt we’ll see prices going below $1,000 as miners would start shutting mines then and supply issues would boost prices again,” said the second trader. Physical demand, which had climbed to peak levels earlier this year as gold prices fell sharply, has now cooled – lessening its support for prices. Silver is down 36% for the year, its worst annual performance since at least 1982 as reported by Reuters.

“Gold’s under-performance was mainly due to prices falling in dollar terms amid anticipated tapering over last several months. “As always, gold and stock prices follow opposite trends and this year was no different except that both changed direction,” a trader said. Improvement in the world economy has brought the risk appetite back amongst retail investors and this has drenched the liquidity from safe havens such as gold leading to its under-performance, an expert said.

Bullion had a steady to moderately positive trading session on Tuesday as both the commodities managed to finish in the green despite continuously better economic data from the US. By the end of trade, gold for most active February expiry at Comex finished 0.5% higher at $1203 per ounce. Thet lack of any major commodity specific cues, and due to the holiday mood in the US led by Christmas Holiday and ahead of New Year, trading participation has been low. At the Comex platform, it was an early closing session which got reflected into the trading volumes side too. February expiry Comex gold contract saw trading volumes fall by 56%.

Gold Remains Weak As Traders Leave On Holidays

Gold Remains Weak As Traders Leave On Holidays
Gold Remains Weak As Traders Leave On Holidays

Gold added a dollar this morning in the Asian session to trade at 1198.30 after declining on Monday. Gold is expected to trade with a negative bias ahead of the holiday as it has lost all its shine, with inflation remaining low and the US economy and the global economy recovering there is no demand for the shiny metal. Gold prices fell on Monday as traders limited exposure in gold before year-end holidays as the market is headed for its biggest annual loss in three decades and facing further downside forecasts for 2014. Fed’s decision to pare back $10 billion in monthly asset purchases and consequently a stronger dollar continue to weigh on gold prices. Gold prices declined around 0.3 percent yesterday on the back of sharp decline in SPDR gold holdings by more than 1 percent to 805.72 tons, which is at the lowest level since end of Jan’09.

Also, US equities ended at a record high after IMF said it will raise US economic growth forecast for 2014. Investors were feeling increasingly confident after the head of the International Monetary Fund, Christine Lagarde, said her organization was much more upbeat about the U.S. economic recovery.

“We see a lot more certainty for 2014,” Lagarde said in an interview Sunday on NBC. She said the IMF would raise its forecast for the U.S. economy, in part because Congress had passed a budget and the Federal Reserve decided to begin reducing monetary stimulus based on the improving U.S. job market.

Silver prices eased by 48 points to trade at 19.365 remaining in a tight range as traders have no designs on precious metals and industrial metals are trading flat with limited news and data. Base metals on the LME traded on a mixed note Monday taking cues from mixed economic data from the US. Also, mixed trend in LME inventories led to decline in the base metals prices. Further, upbeat global market sentiments along with weakness in the DX cushioned sharp fall in prices.

Copper prices remained in range on Monday trading at 3.316 on Tuesday morning as investors remained cautious of China’s cash market squeeze which showed little sign of easing on Monday, reinforcing the view the central bank has shifted to tighter monetary policy. However, continuous draw down in stockpiles on LME supported the metal. According to ICSG, the global refined copper market fell into a 162,000 tonnes deficit in September after recording a small surplus in August. Base metals are expected to remain in range due to thin trading volumes ahead of Christmas and ongoing liquidity crunch in China. 

Ho Ho Ho The Drop In Gold Prices Spurs Christmas Sales For Jewelry

Ho Ho Ho The Drop In Gold Prices Spurs Christmas Sales For Jewelry
Ho Ho Ho The Drop In Gold Prices Spurs Christmas Sales For Jewelry

Gold eased a bit again this morning as we are down to just a few more trading days of the year. Gold is trading right at the 1200 level down by $2.50 in the Asian session to trade at 1201.20. Gold is expected to close the year below the 1200 price point. Investors now expect a slow phasing out of the Fed’s bond-buying program though realize that tapering does not mean the end of central bank stimulus which has bolstered the rally in equities, with the Dow up 27 percent in 2013 and the S&P 500 gaining 30 percent.

The FOMC will probably cut its bond purchases by US$10 billion in each of its next seven meetings before ending the program in December 2014, according to the median forecast in a Bloomberg survey of 41 economists conducted on December 19. Interest rates are expected to stay near current historic lows through 2015. Although no one can predict what Ms. Yellen will do once she steps in next month, although she is from the Ben Bernanke School of monetary policy, she has her own opinions.

The coming days will offer several clues on the economy including the Chicago Fed national activity index and consumer sentiment, both on Monday, followed by the FHFA house price Index, new home sales, durable goods orders, and the Richmond Fed manufacturing index, due on Tuesday, and weekly jobless claims, on Thursday.

US markets will close early on the 24th, at 1pm in New York, and are closed on the 25th for the Christmas holidays. Trading volumes are expected to be light until the New Year. Jewelers around the world a predicting a record season for gold jewelry sales as demand continues to increase with the current price declines. Major retail jewelers such as Tiffany’s are showing a huge unexpected jump in sales.

Gold futures ended the week above the closely watched $1,200-an-ounce, gaining back some of their 3%-plus drop to three-year lows in the prior session. But it was the only positive day of the week, as another batch of strong economic data weighed further on prices. Gold prices in the futures market are likely to be range-bound as attraction for buyers, especially in Asia, could be dampened by fears of further drop in prices due to US cutting its stimulus program. Odds that gold will fall further have increased. Holdings in gold exchange-traded funds increased for the first time in seven weeks, though. Gold holdings in SPDR Trust, world’s biggest exchange-trade fund, increased to 814.12 tonnes.

Bearish bets on gold increased to 75,199 contracts, while bullish bets fell to 32,524 last week, according to US Commodity Futures Trading Commission. Rising bearish or short positions do pose a risk in that prices could rise if investors try to square them.

Silver continues to take a beating as the demand for precious metals wanes and the US dollar continues to build momentum. Silver gave up 123 points in the Asian session to trade at 19.330 while copper remained flat at 3.302. Palladium and platinum are both trading in the green to begin the week with Palladium at 701.60 recovering above the 700 level and platinum at 1332.00. All metals are expected to remain rangebound ahead of the holidays.

 

 

Gold Investors Run For The Hills

Gold Investors Run For The Hills
Gold Investors Run For The Hills

What can one say about gold as traders and investors run for the hills. Gold is trading this morning at 1195.10 up just about $1.00 but moving between small gains and losses. Gold did as expected after the Federal Reserve announced its plans to taper earlier than originally expected. The small $10 billion tapering was just the kick start for gold’s slide; the killer blow was the FOMC’s statement and upgrade of the current economic recovery. Gold was trading close to 1233 ahead of the Fed’s decision and immediately after actually climbed as traders reacted to the tapering without digesting the rest of the statement. The Fed’s upgraded growth for 2014 and 2015 and said that the economic recovery was moving at a quicker pace than expected. This was compounded when the Fed’s upgraded their projections for unemployment saying that unemployment was falling faster than expected.

The Fed on Wednesday said it would reduce its bond-buying by $10 billion next month to $75 billion, citing a string of upbeat figures pointing to a strong recovery. It added that it would likely take “further measured steps at future meetings” if the economy continues to improve while keeping interest rates a record lows “well past the time” the unemployment rate declines below 6.5 percent — its previous cut-off point before tightening monetary policy. The news sent the greenback surging as the prospect of fewer dollars sloshing around the financial system boosted demand.

In Thursday’s session gold rebounded 0.4 percent to $1,195.05 an ounce after earlier hitting a near six-month low of $1,185.30. The precious metal slumped 2.3 percent, and is down nearly 29 percent this year, heading for its worst annual decline since 1981. Investors have been selling gold futures and gold-backed ETFs this year as stocks have soared to record highs. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 3.90 tonnes to 808.72 tonnes on Thursday, the lowest in nearly five years.  Outflows from the top eight gold ETFs have totaled about 720 tonnes as investors channel more money to equities.  Prices for physical gold, including bars and coins, have fared better thanks to demand from investors in China.

The policy changes also suggest the Fed is becoming increasingly concerned about the threat of deflation. Inflation has been subdued all year and remains well below the Fed’s target level of 2%. Consumer prices, excluding food and energy, rose only 0.2% in November from October, according to government data. Gold is seen as a hedge against inflation since precious metals tend to hold value better than assets such as stocks and bonds. With no sign of inflation on the horizon, investors have little reason to own gold. Silver gained 42 points this morning diverging from the weakness in precious metals to trade at 19.228 as industrial and base metals climbed. A stronger recovery in the US means increased demand for production and manufacturing. Copper climbed to trade at 3.304 while platinum added $3.05 to trade at 1320.25 and palladium rose $2.70 to trade at 699.30.