Dramatic Developments In Egypt Send Brent and Crude Prices Climbing

Dramatic Developments In Egypt Send Brent and Crude Prices Climbing
Dramatic Developments In Egypt Send Brent and Crude Prices Climbing
In a dramatic development, Egyptian vice president, Nobel laureate Mohamed ElBaradei, announced his resignation. In a letter to the interim president, ElBaradei said, “It has become too difficult to continue bearing the responsibility for decisions I do not agree with and whose consequences I fear.” He said his conscience was troubled over the loss of life ‘particularly as I believe it could have been avoided’. “Unfortunately those who gain from what happened today are those who call for violence and terror, the extremist groups,” concluded ElBaradei.

The violence in Egypt sent crude oil climbing to 107.16 this morning as markets stress over possible supply disruptions. It has been a dramatic turn of events for the Muslim Brotherhood, who just over a year ago celebrated Morsi’s win as Egypt’s first elected president. But his turbulent year in power, marred by political turmoil, deadly clashes and a crippling economic crisis, turned many against the Islamist movement.

Crude oil prices had declined earlier in the day ahead of inventory data from the EIA. The API showed a slower than expected decline in inventory earlier in the week. Brent crude oil prices slipped toward $109 a barrel on Wednesday as investors booked profits from a recent rally but concerns over Middle East supply disruptions and a reduction in US oil stockpiles supported prices. Brent was down 34 cents at $109.3. US oil briefly turned positive in choppy trade after the US stockpiles data was released but later fell by a dollar to hover below $106 a barrel. Oil prices also shrugged off earlier data suggesting the eurozone’s longest ever recession was over, with analysts saying that still-sluggish growth figures and cuts in throughput at European refineries pointed to weak demand. The Energy Information Administration (EIA) reported that US crude oil stocks at the Cushing, Oklahoma delivery hub were down 1.36 million barrels to 38.52 million.

Libya’s deputy oil minister said on Wednesday that production had fallen to 600,000 barrels a day due to field problems while Ras Lanuf terminal remained shut.  Maintenance at Iraq’s southern oil export hub is also set to slash supplies by 500,000 barrels per day in September. Analysts are agreed that sustained supply disruptions would support Brent but many say major price increases would require more widespread cuts and higher demand. Crude has to balance between disruptions in Libya and Iraq and the problem of global demand from the rise of the dollar. Traders fear the bloody unrest in Egypt could hit crude shipments through the Suez Canal and Sumed Pipeline, which provide a link between Europe and Asia and allows ships safer and faster travel between the regions without having to sail around Africa. While Egypt is not a major oil producer, the Suez Canal carries about 2.5 million barrels daily, roughly equal to 8 per cent of the output of cartel OPEC.

Bloomberg reported that natural gas futures declined in New York for the second time in three days on speculation that mild weather will expand a U.S. stockpile surplus. Gas dropped 0.8 percent as government data scheduled for release Aug. 15 may show that inventories rose 71 billion cubic feet last week, based on the median of 10 analyst estimates compiled by Bloomberg. The five-year average gain for the period is 42 billion. The weather may be normal or cooler than average in most of the eastern U.S. through Aug. 21, according to Commodity Weather Group LLC. Natural gas is trading at 3.335 down 10 pips ahead of today’s inventory report.

 

Lackluster US PPI Numbers Drives Up Gold Prices

Lackluster US PPI Numbers Drives Up Gold Prices
Lackluster US PPI Numbers Drives Up Gold Prices
Gold gained a bit of momentum after traders were disappointed over US data on Wednesday. Gold is trading at 1339.20 continuing its rally in the Asian session adding $5.80.

The US producer price index (PPI) for July was unchanged for the month. The PPI measures the price of goods at the farm or factory gate before transport and other costs are added. The flat PPI result caused the US dollar to fall, pushed the gold price up, and boosted commodity currencies. Such small price increases give the Federal Reserve latitude to prop up the economy with near-zero interest rates and bond purchases. Indeed, the central bank’s latest statement highlighted that inflation persistently below its 2 per cent target could pose a risk for the economy. Fed officials, who focus on other measures of inflation, are still counting on inflation to move closer to their objective by next year. 

Gold edged up after dropping 1 percent the previous session, but a steady dollar and stronger U.S. Treasury yields, coupled with worries the U.S. Federal Reserve may start tapering its monetary stimulus soon capped further upside. A pullback in the Fed’s $85 billion monthly bond purchases would support a higher interest rate environment that diminishes gold’s attractiveness. Uncertainty over the timing of the roll back has already pushed the metal down 21 percent this year, after 12 consecutive years of gains.

Markets are seeing summer trading and may remain in the $1,300-$1,350 range for few weeks yet.
Gold rose 0.3% on Wednesday and it fell 1.1 percent on Tuesday, ending a four-day winning streak after strong U.S. economic data and further import curbs by key buyer India.

The U.S. economic performance remains too mixed for Fed policymakers to lay out a detailed path for reducing and eventually halting their asset-purchasing next month, Atlanta Fed President Dennis Lockhart said on Tuesday which just confused traders all the more as they were thinking that the Fed would adopt a clear path come their September meeting.  The next Fed meeting is scheduled for Sept. 17-18. Until then, markets will scrutinize economic data to gauge the strength of economic recovery. The main event on Wednesday was speech by St. Louis Fed President James Bullard on the U.S. economy and monetary policy and he also said that data is not straight forward at this time and would need more data or direction before making a decision. The US will see a lot of data today, ranging from the weekly unemployment claims, to industrial manufacturing and CPI numbers.

Silver is the surprising metal, breaking above $22 to trade at 22.048 after industrial metals climbed along with precious metals. Silver has climbed almost $4 over the past weeks. Copper is trading in the red this morning giving back some of yesterday’s gains but remains well in the 3.32 range.

Oil Gains On Libya Supply Worries

Oil Gains On Libya Supply Worries
Oil Gains On Libya Supply Worries

Ahead of the weekly inventory due later in the US session oil is trading at 106.42 down by 41 cents in morning trade. U.S. crude oil futures settled up 0.68% at $106.83 per barrel yesterday with front-month Brent futures up by 0.78% to settle at $109.82 a barrel. Crude prices rose on Tuesday as positive retail sales data signaled improved consumer spending and supported crude prices. Gasoline inventories rose by 1.7 million barrels while crude inventories shrank by 0.99M barrels according to the API report. Libya could default on its crude deliveries next month due to the ongoing supply disruptions which also supported crude prices. Traders can expect crude prices to go up as expectations of lower inventories and supply concerns from Libya can continue to support prices. But expect oil to tumble as soon as these short term factors disappear or a higher than expected inventory number is released.  Brent crude oil rose towards $110 per barrel, after oil exports from Libya fell to their lowest for 2-years. The fall heightened supply worries ahead of scheduled cuts in output from fellow OPEC member Iraq. Libya’s deputy oil minister said exports could resume as early as Thursday after workers and local authorities reached an agreement to end the strike

The dollar rallied to a one-week high against both the euro and yen on Tuesday after a key gauge of U.S. consumer spending rose at its fastest pace in seven months, strengthening expectations for the Federal Reserve to wind down its stimulus. Retail sales outside of cars, gasoline and building materials rose 0.5 percent last month, the Commerce Department said on Tuesday. The gain in July was the biggest since December and suggests the U.S. economy could be regaining steam after tax hikes and federal budget cuts dragged on growth in the first half of the year.  As investors fretted that the US Federal Reserve could start curbing its commodity-friendly stimulus as early as September concern over supply underpinned prices.

Traders can expect to see a lot of volatility over the next few weeks, because investors are paring back and holding out in anticipation not just of US economic data this week, but also of the Fed meeting on September 17. US retail sales rose in July, pointing to acceleration in consumer spending that could bolster the case at the Fed for winding down its major economic stimulus programme.

Natural gas prices ended lower on Tuesday as the warmer weather forecast for the coming week moderated and hurt the cooling demand for gas. Prices are expected to remain in range as investors would await the inventories report. Front-month gas futures on the New York Mercantile Exchange ended down 2.5 cents at $3.285 per million British thermal units after trading between $3.262 and $3.334. Natural gas futures closed slightly lower after a seesaw session, in expectations of another bearish weekly inventory report on Thursday and a slightly milder turn in the weather forecast pressuring the complex.

US and Asian markets mixed while European stocks are up on upbeat ZEW Survey

US markets

Global markets were mixed on Monday, with some of them picking up and reversing losses on Tuesday amid traditionally less active trading in August, coming-to-an-end earnings season and weaker-than-expected Japanese GDP.

On the US stock market front, all major indices but the Nasdaq100 ended the session on negative territory with the S&P500 reporting a fifth decline in six sessions. The lack of U.S. data and the disappointing results from Japan led many investors to refrain from trading on Monday and turn their attention to today’s more ‘’blossoming’’ US economic calendar.

Last week saw the S&P500 losing 1.1% and registering its biggest decline in 7 weeks. For the same period, the Dow depreciated by 1.5%, ending a series of 6 consecutive weeks of increases. The reported losses over the past week are mainly due to the increasing speculations about the Fed reducing its stimulus programme.

 

The S&P500 was down 0.12% to 1,689.47, extending losses against its record high, reached on 2 August, to 1.2%. During the session, 7 of its 10 industry groups reported declines, with the utility and industry sectors being the weakest performers, falling by 0.5%.

So far, 450 companies in the S&P500 have published their quarterly results, 72% of them have exceeded analysts’ forecasts, with earnings by corporations having increased by 2.8%. 

The Dow, on the other hand, lost 0.04%, closing at 15,419.68, while the Nasdaq100 turned to be the top earner among the US indices, albeit adding a modest 0.24% to its value and ending the session at 3,125.92 points.

 

US and Asian markets mixed while European stocks are up on upbeat ZEW Survey
US and Asian markets mixed while European stocks are up on upbeat ZEW Survey

 

Among companies on the losing side was JPMorgan & Co, whose shares declined by 0.8% to $54.09, marking a seventh consecutive drop. Tesla Motors Inc also registered a loss by 3.7% to $147.38, after Lazard Markets LLC downgraded its assessment of the company.

Meanwhile, Apple Inc was one of the winners, gaining 2.8% to $467.36 and breaking its 4-day losing streak. Investors were also encouraged by strong expectations that the company will launch a new iPhone on 10th September.

 

Asian markets

Stock markets in Asia traded mostly higher on Monday, with Hong Kong’s Hang Seng climbing by 2.1%, while China’s Shanghai Composite was up by 2.4%. Japan’s Nikkei225, however, ended the session with decline of 0.7%, hampered by weaker GDP data. A report showed that Japan’s economy has grown by 2.6% in Q2, opposite forecasts for a 3.6% growth. Today the index reversed its yesterday’s losses and increased by 2.6% to 13,867.00.

 US and Asian markets mixed while European stocks are up on upbeat ZEW Survey1

 

European markets

European markets opened higher on Tuesday, extending their gains for a fourth consecutive session. At the time of writing, Germany’s DAX 30 was 0.9% higher to 8,430.51, France’s CAC40 was up by 0.31% to 4,084.48, while the UK’s FTSE100 climbed by 0.6% to 6,612.65.

 US and Asian markets mixed while European stocks are up on upbeat ZEW Survey2

 

Looking further in the day, the German and Eurozone ZEW index is already causing a high volatility on the European market as results turned out to exceed significantly economists’ forecasts. The US session, on the other hand, is to produce the country’s Retail Sales for July, with investors also anticipating the reports on Import and Exports Prices and Business Inventories.

 

Source: dfmarkets.co.uk

 

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Gold Likely To Crash As ETF’s Pull Out

Gold Likely To Crash As ETF's Pull Out
Gold Likely To Crash As ETF's Pull Out
Gold is trading at 1333.70 flat in the Asian session as traders sell off to book profits after gold rallied. Gold prices in the futures markets are likely to be range-bound with a bias towards the downside in line with the global market. As it has been happening this year, the yellow metal once again is facing selling pressure. Investors are opting to sell at every rise and Monday’s over one per cent rise in the precious metal has given them an opportunity to cash in their investments. Data showed a climb in ETF purchases for the first time since June trader’s responded push up gold prices to recent highs. The market seems bent on hammering gold and that is one of the reasons why even data showing lower than expected growth are unable to drive it higher. The rise in gold holdings in exchange-traded funds did not happen on Monday as they were unchanged at 911.13 tonnes on SPDR Trust, world’s largest for gold.

Gold is taking a breather today after four days of gains but is holding near three-week highs on hopes that physical buyers and investors will return to the market.  The recent rally was sparked by the release of strong Chinese factory data on Friday which pushed up metals prices. The metal has gained over 4 per cent in the last four sessions through Monday, also profiting from US dollar weakness and a surprise rise in holdings of gold exchange-traded funds (ETFs). Gold rose nearly 2 per cent in the previous session on strong Chinese gold consumption and an inflow to SPDR Gold Trust, the world’s biggest gold ETF. The top eight gold ETFs have recorded outflows of about $US26 billion so far this year, hurting gold prices. A reversal in the trend will aid a price recovery.

China’s consumption of gold in the first six months of the year surged by more than half as sliding prices of the metal lured buyers, data showed, reinforcing expectations that the nation will overtake India as the world’s top gold consumer this year. Gold prices have lost about a fifth of their value this year after 12 years of gains, releasing pent-up demand across the world and particularly in India and China.

China consumed 706.36 tonnes of gold in the first half of 2013, up 54 per cent from the year-ago period, the China Gold Association said in a statement on its website.

Silver eased by close to 10 cents this morning after skyrocketing above the 21 price level on industrial demand and a rise in precious metals over the last few sessions. Silver is trading at 21.243 remaining strong against the gaining US dollar, which is trading at 81.44 this morning. Copper slipped while aluminum extended gains on Monday as signs of a pickup in top metals consumer China and expectations of encouraging eurozone data came up against a rise in the dollar. The U.S. commodities market regulator has subpoenaed a number of major metals warehousing firms, including Switzerland based commodities giant Glencore, seeking documents and communications from the last three years as an inquiry into complaints about inflated metals prices gathers steam. The metals warehousing scandal is weighing heavily on major US investment banks which control the prices and costs.

Gold and Silver Rally

Gold and Silver Rally
Gold and Silver Rally
Gold is trading at 1328.60 gaining $16.40 in the Asian session. Gold climbed for the third straight session on Friday, eking out a small gain for the week and pulling further away from a 3-week trough as a softer US dollar beat fears of a tapering in stimulus measures next month. Over the past week numerous Fed members publicly said they supported “tapering” beginning in September. U.S. stocks fell, giving the S&P’s 500 its biggest weekly loss since June, as investors pulled money from exchange-traded funds and weighed growing signs the Fed Reserve will cut stimulus this year. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 911.13 tons, as on August 9. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on August 2. Gold climbed to the highest level this month after holdings in the biggest bullion-backed exchange-traded product expanded for the first time since June.

The US dollar rose from a recent 7-week low against a basket of currencies on Friday and continued to climb this morning hitting 81.27, as investors bought at cheaper levels, with speculation as to when the Federal Reserve might begin cutting back its monthly bond buying program dominated the market talk. Momentum in the gold price continues to build with the yellow metal climbing 1.1% in the spot market to US$1330 an ounce.  The price of an ounce is now 5.3% higher than a month ago, but down 17.8% from a year ago.

Boosting the price of metals is demand out of China, with speculation that this will continue to grow, but there are also factors weighing on the metal such as when the U.S. Federal Reserve will begin trimming its monthly bond purchases. Hedge funds have reduced their bullish positions, with data from the U.S. Commodity Futures Trading Commission showing that money managers have cut their net-long position by 27% to 48,103 futures and options by August 6.

Industrial metals prices rose to its highest in two months on Friday after upbeat Chinese factory data added to signs of steadying growth in the world’s top consumer of metals. Hedge funds and money managers cut their net short positions in copper futures and options and their net long positions in gold and silver in the week to Aug. 6, a report by the Commodity Futures Trading Commission showed on Friday. Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.6 percent from last Friday. Copper climbed to trade above the 3.30 level but eased this morning to trade at 3.299 while silver was able to take advantage of strength in both precious metal and industrial metals to climb to the $21 range. Silver is holding its momentum this morning adding 64 cents to trade at 21.048

Strong Data From China Kicks Off Gold Rally

Strong Data From China Kicks Off Gold Rally
Strong Data From China Kicks Off Gold Rally
Gold turned skyward towards the end of the trading jumping 1.9% to 1309.90 an ounce on the New York Mercantile Exchange. Gold is trading at 1311.40 in the Asian session. Helping the yellow metal was positive sentiment came from China trade data for July, which topped expectations, suggesting that the economy might be stabilizing. Also driving gold’s rise was an anticipated uptick in demand from retail Chinese customers as the economic giant – and world’s foremost customer for bullion now that former Number 1 India is subject to rules designed to curb consumption of the precious metal – reports robust export figures and other signals of economic growth.

China’s exports rose 5.1% in July from a year earlier. The median estimate was for a 2% increase in a Bloomberg News survey, after June’s 3.1% drop. Imports gained 10.9%, leaving a trade surplus of $17.8 billion. Exports to the US and the European Union, China’s biggest markets, increased for the first time in five months. Though judging on one month’s data is a bit premature, still the fact that the China’s official manufacturing and service industry indexes rose in July is an encouraging signs, thus growth target of 7.50% looks achievable.

China’s inflation quickened to 2.8% last month from 2.7%in June, while growth in industrial output may remain unchanged at 8.9% from a month earlier, according to Bloomberg. Sentiment turned better after gold advanced in overseas markets before the US jobless claims report, traders said. Gold in Singapore, which normally set price trend on the domestic front, rose by 0.8 per cent to 1,297.69 yesterday morning. Gold rallied $24.60, or 1.9%, an ounce on the New York Mercantile Exchange, joined by a more than 3% jump in copper futures after China reported a surge in overall imports and exports in July. China, the world’s largest copper consumer, said imports for copper rose 12% from a year ago, and increased 8.1% from June. September copper responded with a jump of 10 cents, or 3.1%, to $3.27 a pound in Nymex trade according to Marketwatch.com.  Copper is trading at 3.248. Silver followed precious metal and industrial metals upward to trade at 20.145.

Reports on Chinese industrial output, retail sales and fixed-asset investment were due out later Friday. The metal lost 22 percent this year on speculation the Fed will wind down its quantitative-easing program. Charles Evans, Sandra Pianalto and Richard Fisher, regional Fed presidents in Chicago, Cleveland and Dallas, said this week the central bank may be closer to tapering bond buying as the jobs market recovers. Jobless (INJCJC) claims fell in the four weeks ended Aug. 3 to the lowest since November 2007, the government said yesterday according to an article in Reuters.

 

US and Chinese Trade Balance Data Move Oil Prices

US and Chinese Trade Balance Data Moves Oil Prices
US and Chinese Trade Balance Data Moves Oil Prices

The improving trade situation spurred a number of economists to raise their estimates for second-quarter growth from the government’s initial 1.7% estimate last week. Earlier this week, the US trade balance reported better than expected, narrowing to a record low. The most recent report in part reflects a strengthening domestic energy industry. Imports of fuel oil and other petroleum products fell, while exports of both rose. When calculated in 2009 dollars, the trade deficit in petroleum products fell by almost $2.2 billion from May to $10.23 billion; the trade deficit in non-petroleum products fell by $5.93 billion to $37.38 billion. Crude oil is trading at 104.82 recovering 45 cents this morning on strong Chinese trade data. The U.S. imports far more from China than it exports. In June, however, imports from China edged down while exports moved up. Nevertheless, a number of U.S. companies say they already are seeing some softening in demand, as Beijing attempts to rebalance its economy away from exports and toward more domestic consumption. This morning Marketwatch said that China reported much better than expected trade results for July on Thursday, marking a sharp recovery from the previous month. Reported Chinese trade data showed exports rising 5.1%, swinging from June’s 3.1% fall. Imports, which had dropped 0.7% in June, showed a 10.9% leap for July. The results far exceeded expectations from a Reuter’s survey of economists for a 3% gain in exports and a projected 2.8% increase from a Dow Jones Newswires poll. Reuters had tipped a 2.1% rise for imports, while Dow Jones reported an estimated gain of 1.3%. The resulting trade surplus narrowed to $17.8 billion, down from June’s $27.13 billion and behind a forecast of $27.2 billion from the Dow Jones Newswires poll. While some economists are skeptical of most Chinese data, the trader numbers often draw especially strong doubt from foreign analysts.

Oil dropped Wednesday as the EIA figure wasn’t that far off from expectations there been much bigger surprises in recent weeks from the regular EIA reports. The EIA also said crude stocks are near the upper limit of the average range for this time of year. It added that distillate inventories increased by 500,000 barrels last week, while gasoline stocks edged up by 100,000 barrels. Analysts expected supplies for each to decline by 1 million barrels. Crude prices have fallen 2.4% so far this week. This comes after prices touched their highest levels since March 2012 last week.

Natural gas ended lower for a fifth straight day on Wednesday, with the front contract posting a 5-1/2-month low on prospects for a bearish weekly inventory report later today and forecasts for fairly mild weather that should curb demand. Natural gas is trading at 3.233.  The Obama administration on yesterday approved natural gas exports from a third U.S. facility, the second permit issued in about three months, triggering debate over whether the review of a long backlog of export applications is picking up steam. U.S. natural gas inventories on average are expected to have gained 77 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed on yesterday ahead of today’s official release.

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. 

Asian Equities Mixed Ahead of the RBA and the BoJ

Asian Stocks BNSKicking off Monday morning, the first Monday in August, The Asian markets are trading mixed with the Hang Seng up by 0.07% while the Nikkei 225 was down by 0.97% and Chinese market is up by 0.05%. Hong Kong equities rose, after China’s services data released on the weekend accelerated for the first time since March is given a sign the economy is stabilizing. At the end of the week Wall Street recovered from early losses on Friday to close in the green, with investors seemingly shrugging off weaker-than-expected jobs growth in July, a month that also saw the unemployment rate fall to a four and a half year low. The Dow Jones had added 30 points, while the NASDAQ gained 14 points to 3690.  The Labor Department reported Friday that total nonfarm payroll employment increased by a weaker-than-expected 162,000 in July, and the unemployment rate edged down to 7.4%, from 7.6 % in June.

Europe’s benchmark closed at a fresh two-month high on Friday, helped higher by the region’s insurance firms, while major national stock markets wobbled on a mixed bag of U.S. labor data. Mostly on Friday, investors were breathing a sigh of relief after a hectic week with 3 major central bank meetings and the nonfarm payroll report all in just a short time span. Speculators were just fatigued.

Traders will not much of a rest this week with both the RBA and the BoJ on the calendar. The RBA is expected to reduce interest rates by 25 basis points. Glenn Stevens, director of the RBA more or less assured investors that this would occur in a speech last week and the AUD has been dropping steadily.  Australian retail sales were little changed in June as consumers spent less on books and sports equipment in an economy grappling with a weaker outlook. Sales were flat from a month earlier at $19.3 billion (USD) from a month earlier, when they gained a revised 0.2 percent. The  Aussie market on Friday hit its highest point in more than two months as good signs from the United States overshadowed weaker local economic forecasts from the federal government. The S&P/ASX200 index posted its tenth consecutive day of gains, taking it above 5,100 points for the first time since May 22. This morning equities edged slightly lower, after opening flat despite United States markets closing at record highs in their previous trading session. At the official market open, the S&P/ASX200 index slipped 0.25 per cent to 5,103.8 points, while the broader All Ordinaries index lost 0.24 per cent to 5,086.3 points.

The BoJ is a mixed bag and no one is sure exactly what Mr. Kudora is going to do. Prime Minister Shinzo Abe has been urging Japan’s companies to spend their growing piles of money to bolster the country’s economy. Toyota Motor Corp. (7203), with cash swelling to about $37 billion, is beginning to comply.

This morning data showed that China’s economic slowdown may be stabilizing after official manufacturing and services surveys showed faster expansion and gauges of business expectations rose. The non-manufacturing Purchasing Managers’ Index showed the first acceleration since March. China’s service industries showed the first pick-up in growth since March, adding to signs the world’s second-largest economy may be stabilizing after a two-quarter slowdown. The non-manufacturing Purchasing Managers’ Index rose to 54.1 in July from 53.9 in June

 

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.

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.

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.

 

Are UK equity prices looking fully valued?

Equity prices are beginning to look toppy again, the FTSE 100 has been struggling to make much headway above 6600 over the last week or so. Results in the UK have been generally good but a lot of this has been factored into prices– last week ARM holdings had results which the market initially liked but with the shares on a p/e ratio of 70 the share price has since weakened as the share price factors in a lot of good news. Similarly, last week aero-engine maker Rolls Royce announced good results but with the shares having had a spectacular run over the last few years, the share price seems rather high above £12 a share.  Similarly, EasyJet had much better than expected results  and the shares rose sharply  on the back of the excellent results.  With the share price so high after the 140%  rise in the last year, the share price has come into profit-taking over the last few days.  The financials have had a great run in the last few weeks with Lloyds market capitalisation currently £47 billion. The shares are up more than 35% since the start of the year. Results due this week will need to be better than expected for the shares to maintain their current share price but obviously those that bought before 2007 will disagree when the share price was many times above the current level. Similarly Royal Bank of Scotland have had a very strong run since the first week of July rising from 270p to 340p last week– a rise of 25% within a month! Have fundamentals changed that much to justify a rise of more than a quarter in such a short period of time?

 With interest rates so low and other asset classes giving very low yields,  UK equities are still sought but some share prices seem to be running a little ahead of themselves. There are still some FTSE 100 companies that yield above 5% (Astra Zeneca, Aviva and National Grid for example) and those may still be sought for their income generation. The London market has had a tremendous run since the end of the May with the FTSE 100 rising from  6000  to the current 6600 level. Over confidence and over exuberance may spoil the party in the short-term, be careful, share selection is going to prove more difficult in the weeks ahead with some share prices discounting a lot of good news!

Investors Brace for a Busy Week of Important Economic Events

Investors Brace for a Busy Week of Important Economic Events
Investors Brace for a Busy Week of Important Economic Events
Last week, the US Dollar continued its losing streak for third straight week and fell over 1% led by mixed U.S. economic data that narrowed expectations of the Fed tapering its monetary stimulus. Investors are now lined up for what could prove to be one of the most important week for the currency markets. A flurry of critical global macro events, scheduled this week, could prove to be a deciding factor for near-term direction of the US Dollar.
 
This week’s economic releases are likely to be overshadowed by important events from the U.S. that includes Fed Reserve’s monetary policy decision, release of the first estimate of second quarter GDP and closely watched Non-farm Payrolls data.
 
FOMC Decision – A busy week of major central bank monetary policy decisions kicks off with the U.S. Federal Reserve’s interest rate decision on Wednesday. The two-day FOMC meeting, scheduled on July 30-31, will be of particular interest and will be one of the most critical events for the Forex market this week. No major policy changes are expected to be announced by the Fed, however, given the recent mixed economic data, Fed’s economic assessment and will be closely scrutinized to seek further clarity on the timing of tapering Fed’s $85 billion a month bond-buying program. FOMC is scheduled to announce its policy decision on Wednesday.
 
U.S. GDP – The government is scheduled to release the advance estimate of U.S. GDP for the second-quarter of 2013 on Wednesday. In the first quarter of 2013, U.S. GDP registered a mediocre growth of 1.8%. Expectations for second-quarter GDP are even lower with consensus estimating the pace of growth in Q2 2013 to ease to 1.1% annualized rate.
 
U.S. Jobs Report – Market will continue to focus on the monthly jobs report from the U.S. to get further clarity on the labor market condition. The U.S. Fed has already indicated that labor market conditions would play a vital role in its decision to slow the pace of its monthly asset purchase program. The U.S. Labor Department is scheduled to release the monthly jobs for July on Friday. Despite the addition of 195,000 jobs in June, the unemployment rate for the month of June held steady at 7.6%. This time Non-farm payrolls data is expected to show an addition of 180,000 jobs in July, down from 195,000 in June and the unemployment rate is seen dipping to 7.5% from 7.6% in June.
 
Ahead of Wednesday’s key events, important economic data scheduled in the upcoming week’s busy U.S. economic calendar features Pending home sales for the month of June on Monday and Conference Board’s Consumer Confidencefor the month of July on Tuesday. Further, preceding the official monthly jobs report on Friday, private payroll processor ADP is scheduled to release its National Employment Report on Wednesday that shows the number of private-sector jobs created in the month of July. Also, watch-out for ISM Manufacturing PMI, scheduled for release on Thursday, and is expected to show a reading of 52.1 for the month of July.
 
This week’s agenda also includes interest rate decisions by the European Central Bank (ECB) and the Bank of England (BoE) on Thursday. Following the FOMC statement on Wednesday are monetary policy decisions from the European Central Bank (ECB) and the Bank of England (BoE), scheduled on Thursday.
 
Based on recent upbeat Euro-zone economic data, ECB is expected hold its key interest rate at a record low of 0.5%. The main focus of the market would be on the ECB President, Mario Draghi’s press conference, schedule later on Thursday after the rate decision announcement. Draghi’s forward guidance and comments on the state of the economy is likely to have significant effect on the Euro. An upbeat economic outlook could boost the Euro considerably. Also read: EURUSD – likely to trade between 1.3320 – 1.3180
 
Also on Thursday, BoE is scheduled to announce its latest monetary policy decision. Recent economic indicators from the U.K., including the second quarter GDP, were positive, building on expectations from the BoE to keep its key interest rates and asset purchase program (currently at 375 billion Pounds) unchanged. Only if the forward guidance turns out to be dovish, the British Pound could witness weakness in the upcoming week. Also read: GBPUSD – 1.5400 remains important level to be conquered
 
Key economic data to watch from the upcoming week’s Euro-zone economic calendar include the release of Spanish Flash GDP and Gfk German Consumer Climate on Tuesday; German retail sales, German unemployment change and Euro-zone unemployment rate on Wednesday.
 
The upcoming week’s U.K. economic calendar features Manufacturing PMI, scheduled for release on Thursday and Construction PMI, scheduled for release on Friday.
 
Other important global economic data to watch for include official Chinese Manufacturing PMI and HSBC Final Manufacturing PMI, both scheduled for release on Thursday.
 
  • Recently, the US Dollar Index (I.USDX) has pulled-back substantially from a three-year high, probably indicating that the market is positioned for a more dovish tone from the FOMC, which would increase the risk of further depreciation for the US Dollar.
  • However, considering lower expectations of U.S. GDP growth for Q2 2013, any positive surprise and/(or) clues of tapering Fed’s monetary stimulus would be supportive for the US Dollar.

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.

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.

Gold Takes A Big Tumble

Gold Takes A Big Tumble
Gold Takes A Big Tumble
The U.S. Department of Justice has started a preliminary probe into the metals warehousing industry following complaints that storage firms owned by Wall Street banks and major traders have inflated prices, sources familiar with the matter said. This scandal could cause some volatility in the metals market and keep commodity traded metals in the headlines over the next days.

In the meantime gold has taken a major tumble. After stronger than expected housing and manufacturing data hit the wires yesterday gold saw the bottom fall out. Gold closed the day at $1320. remaining flat this morning moving between tiny gains and losses.

Gold fell more than two percent yesterday as signs of continued economic recovery both in the United States and Europe prompted funds to exit the bullion market after reaching a one-month high. A combination of a sharp rise in the U.S. dollar, tumbling crude oil futures and a rally in U.S. Treasury yields – seen as U.S. short-term interest rates – hit bullion’s appeal as a hedge, added to gold’s biggest one-day loss in a month. Gold extended losses throughout the session after data showed new U.S. home sales vaulted to a five-year high in June. Other reports showed that private industry in the euro zone expanded for the first time in more than a year in July, a month when U.S. manufacturing output and hiring grew.

Gold declined on profit-booking, suffering their biggest single-session drop in almost 3-weeks. Prices can under pressure by a stronger US dollar and a surge in new US homes sales last month to their highest in more than 3-years. Gold fell more than 1% on Wednesday, as signs of continued economic recovery both in the United States and Europe prompted funds to exit the bullion market after reaching a one-month high earlier in the day. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 929.76 tons, as on July 23.

Preliminary data on Wednesday which showed manufacturing activity in China at an 11-month low in July points to more challenges for the country which has already seen year-on-year economic growth fall in nine of the last 10 quarters. However data that reflected more signs of recovery in the U.S. and Europe helped copper prices end firmer on Wednesday. Copper futures rose on Wednesday, as the dollar retreated and the euro zone unexpectedly bounced back to growth, but signs that China’s economy is stalling capped major gains. Copper futures for Sept. delivery closed down by 0.6% at $3.179 on the COMEX division of the NYMEX.

Silver is trading at 20.068 gaining 48 points buoyed by the metals market as precious metals tumbled to their lowest level in weeks. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,428.02 tons, as on July 24.

Gold Prices Still Responding To Fed Stimulus

Has Gold Lost Its Shine For GoodPrecious metals diverged this morning with gold climbing by $5.25 to trade at 1339.95, and silver has declined by 17 cents to trade at 20.275.  Gold futures declined on profit-booking, marking their first decline in 4-sessions just after the metal’s biggest one-day price gain in more than a year. Prices mostly traded in a range, as investors weighed the US Federal Reserve’s next move on monetary stimulus against the prospects for demand amid higher prices. A report in Bloomberg yesterday, said that they are expecting the Fed to reduce its monthly asset purchases in September to 68 billion from the current 85 billion. Gold has recovered about $150 from a three-year low of $1,180.71 an ounce hit on June 28, after the US Federal Reserve said it would only start phasing out its stimulus once it was sure the economy was strong enough to stand on its own. This allayed fears of imminent cuts to the Federal Reserve’s monthly bond purchases, which is tantamount to printing money and supports gold’s appeal as a hedge against inflation.

The dollar traded lower against the euro and pared gains against the yen in a thin volume trade on Tuesday, as investors adjusted positions with technical levels in the absence of any economic data to drive direction. The combined government debt of 17-euro zone nations rose to 92.2% of gross domestic product, the highest in its history – in the first quarter of 2013, despite stringent austerity measures deployed in the region since the beginning of the financial crisis

The base metals complex traded on a positive note as a result of a rise in risk appetite in the global market sentiments. Further, weakness in the US dollar acted as a positive factor for prices.

However, sharp upside in prices was capped on the back of LME inventories scenario and compounded by the scandal in inventory prices and Goldman. The Federal Reserve faces new pressure to explain why it lets banks trade raw materials and control supplies after congressional witnesses said regulators can’t really grasp what lenders are doing in industrial businesses.

Copper prices traded on a positive note in the yesterday’s trade increased around 0.5 percent on the back of decline in LME copper inventories around 0.4 percent which stood at 632050 tons.  Further, weakness in the DX coupled with upbeat global markets supported an upside in prices.

Traders can expect the base metals group to trade on the back of weak global markets. Further, strength in the DX will act as a negative factor. Additionally, a decline in China’s manufacturing data which is at 11-month low will exert downside pressure in prices. However, a sharp downside in prices will be cushioned or reversal can be seen on account of expectations of favorable manufacturing and services PMI data from the eurozone. Markets are expecting to see a climb towards 50 for eurozone PMI’s a miss could see some volatility in the marketplace.

 

 

 

Gold, Silver & Copper Climb In Early Trading

Gold, Silver & Copper Head For The Climb In Early Trading
Gold, Silver & Copper Head For The Climb In Early Trading

Gold gained over $21.00 this morning in the Asian session to trade at 1314.75 breaking well above the 1300 resistance level. The US dollar eased to trade at 82.56 after hitting recent highs last week before Mr. Bernanke’s testimony. The greenback was trading close the 85 price and has slowly eased as traders digest Mr. Bernanke’s comments. He indicated that the Fed was not close to tapering and that they could add and subtract from monthly asset purchases as the economic situation demanded. He reiterated that there is no time table for tapering. The question is did he convince traders, who seem to not hear his words. News from China and its banking system have also helped drive up prices this morning. China’s central bank gave added powers to banks under its supervision to set interest rates on their own ensured that gold futures climbed and moved past the $1300 mark. The move by China is an attempt to bring its banking system in line with market realities. As banks get more powers to set interest rates, they could frame policies that may incentivize gold buying by Chinese.

Gold futures continued its positive momentum and closed higher by more than 1% for the week and at their highest level in a month. Prices were supported by weakness in US dollar and equities, as investors continued to digest comments from the Federal Reserve’s chief earlier in the week.

Gold holdings of SPDR gold trust declined to 932.46 tons, as on July 19. Gold holdings in the SPDR Gold Trust fell further by 0.7 percent in the last week to 932.46 tons from previous 969.5 tons on 25th June’13. The holdings have fallen to the lowest level since February 2009. This tells the markets that price maybe driven higher by short term fundamentals but that they will be unable to return to a bullish market and should returning to their previous trend.

Taking cues from fall in base metals prices, silver prices fell around 2 percent in prior week. Further, weak economic data from China and expectations of slow growth exerted downside pressure on prices. However, sharp fall in prices was prevented as result of rise in gold prices along with weakness in the greenback. Holdings in the iShares Silver Trust rose around 1 percent to tons for the week ending on 19th July 2013 as compared to 10,185 tons as on 12th July 2013. Silver is trading at 19.875 adding almost 42 cents following the increase in gold prices this morning.  Copper is also jumping on the bandwagon gaining 13 pips to trade at 3.159. Copper traded steadily, but recovered from early losses, supported by a weak dollar and reassurance that the US Federal Reserve would be flexible in scaling back stimulus measures, but capped by concern over demand.

Precious metal prices are expected to trade on a higher note in today’s trade, taking cues from weakness in the US dollar. Further, upbeat global markets sentiments will support an upside in the prices. However, decline in SPDR holdings will cap sharp gains in prices.