Daily commentary – European and US stock markets: 5 December 2013

DF-Markets_stock_marketEuropean markets

This morning European stock markets opened with a little change from their previous sessions of losses. Investors will be following very closely the two main events on the European economic scene today: the monetary policy decisions from both the European Central Bank and the Bank of England as market makers will be looking for more direction. The UK’s FTSE100 was down 0.07% to 6,505.32, France’s CAC40 was falling by 0.04% to 4,146.70, while Germany’s DAX30 was the only one on positive territory, rising by 0.05% to 9,146.48 at the time of writing.

DAX30

German chemical and pharmaceutical company Merck KGaA was the top earner in the DAX30; gaining 2.96% to €128.550, while multinational software company SAP AG was the worst performer within the index, falling by 0.80% to €59.490 at the time of writing. French multinational telecommunications company Orange SA was again performing well, being the top earner in the CAC40 with an increase by 2.13% to € 9.4980 this morning. The FTSE’s “brightest star” today is UK-based diversified metals and mining company Vedanta Resources Plc., whose shares were up 2.48% to 867.000 p at the time of writing.

 

US markets

US stock markets headed down again, reporting yet another unconvincing performance in the last few sessions. The fall was also triggered by a release of mixed US macroeconomic data which left investors with controversial feelings about the future of the Fed’s quantitative easing programme.

The release of the so-called Fed’s “Beige Book”, which is the central bank’s assessment of the current economic state, caused one of the biggest impacts in the US market movement.

The report revealed a predominantly positive outlook of the US economy, with most attention paid to the country’s GDP, which, according to central bankers, will keep its current pace, with expectations for the next year being for a 2.4% growth.

However, the ISM (Institute for Supply Management) published a slowing growth in the Non-Manufacturing PMI in November, which dampened the market mood a bit. The index which reflects the behaviour of companies in the service sector fell to 53.9 points in November, from 55.4 points in October.

The S&P500 ended the session with a decline, albeit minimal, of 2.34 points, or 0.1%, to close at 1,792.81 points, marking its fourth consecutive session on a negative territory.

S&P500

The Dow also closed the session with a fall, after wiping 24.85 points, or 0.2%, off its value, ending the session at 15,889.77 points, also extending to a fourth day of losses.

The Nasdaq was the only benchmark to differ as it closed on positive territory, adding the modest 0.80 points, or less than 0.1%, to close at 4,038.12.

Investors are paying very close attention to Apple’s performance in recent days, as the tech giant’s shares rose by more than $15, or 3%, to close at $566.32 in the last two sessions, reaching their highest price in one year.

 

Today is already shaping up as a busy day as the economic calendar has a lot on its plate. Main events, apart from the Bank of England and the European Central Bank interest rate decisions, include the UK’s Asset Purchase Facility, the preliminary release of the US GDP for Q3, along with the country’s Initial Jobless Claims, Factory Orders for October, and Personal Consumption Expenditures Prices for Q3.

 

Source: dfmarkets.co.uk

 

Disclaimer: The Content of these charts and analyses does not constitute any form of advice or recommendation by Delta Financial Markets to buy, sell (or refraining from making) any trade or investment. You may wish to seek independent advice before entering into transactions.

Delta Financial Markets shall not be held liable by you or any others for any decision made or action taken by you or others based upon reliance on or use of information or materials obtained or accessed through use of these technical analyses and charts. DF Markets assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon the information on this page. DF Markets shall not be liable for any special, indirect, incidental, or consequential damages.

 

 

Crude Oil Skyrockets Adding Over $3 in 24 Hours

Crude Oil Skyrockets Adding Over $3 in 24 Hours
Crude Oil Skyrockets Adding Over $3 in 24 Hours
Crude oil is trading at 97.22 skyrocketing as expectations that US inventories have dropped. This morning in the Asian session crude oil added $1.18 pushing well above its recent trading range and also above the expected trading range. Brent oil responded the same adding 28 cents to trade at 112.87 with the spread narrowing $15.00. Brent crude climbed towards $113 a barrel this morning, while the U.S. benchmark rose more than $1 to a five-week high after news of the scheduled start of a key pipeline helping to relieve a supply bottleneck at the country’s main oil storage hub. U.S. oil built on a more than $2 jump in the previous session, after TransCanada said it would begin operations at its Keystone XL pipeline on Jan. 3. The launch will allow rising inventories at the Cushing, Oklahoma oil hub to move to the U.S. Gulf Coast, where a large share of the country’s refining capacity is concentrated.

U.S. crude, also known as West Texas Intermediate or WTI, has lost value relative to Brent due to infrastructure constraints amid rising shale oil production, causing a supply glut in Cushing, where the country’s main oil contract Nymex is priced. Brent’s premium to U.S. crude narrowed by almost a $1 to $15.63 from Tuesday’s close of $16.58. Supply concerns in the Middle East and Africa combined with a glut in the U.S. had in recent months prompted investors to make bullish bets on the spread, which stood at more than $19 last week, up from $2.64 on Sep. 18.

The U.S. benchmark was also supported by data from the American Petroleum Institute that showed a drop of 12.4 million barrels in domestic inventories and snapped a 10-week streak of builds that had added nearly 36 million barrels. The more closely-watched report from the Energy Information Administration is due this afternoon.

Yesterday, by early afternoon in Europe US crude for January delivery was up US10 cents to U$93.92 a barrel on the New York Mercantile Exchange. The contract added US$1.10 to close at US$93.82 on Monday. Oil prices were buoyed by fresh data pointing to steady manufacturing growth in the US and China.US manufacturing grew in November at the fastest pace in 2 1/2 years as factories ramped up production, stepped up hiring and received orders at a healthy clip. Manufacturing activity has now expanded for six straight months after hitting a rough patch in the spring, suggesting that growth was solid in the October-December quarter.

Chinese manufacturing also continued to grow slightly last month, two surveys showed, in evidence that a recovery in the world’s Number 2 economy was continuing, albeit at a modest pace.

Investors are looking to a meeting of the Organization of Petroleum Exporting Countries (OPEC) in Vienna on Wednesday for an update on production levels. OPEC is expected to keep intact its daily output target of 30 million barrels a day, although the group may come under pressure to reduce production if some supply sources suffering disruptions return to normal.

Heating oil is trading in the green adding 56 points to trade at 3.0713 while natural gas edges closer to the $4 price level trading at 3.989 up by 14 points ahead of tomorrow’s EIA inventory. Cold weather continues across the US as weather forecasts continue to call for colder temperatures than expected pushing residential demand higher than previous expected.

 

Natural Gas Outshines Oil and Coal As The Energy Of The Future

Natural Gas Outshines Oil and Coal As The Energy Of The Future
Natural Gas Outshines Oil and Coal As The Energy Of The Future
is gaining more attention as of late than coal or oil. Global users are quickly shifting to natural gas as global production and demand increase. This morning US natural gas prices climbed just under $4.00 as winter cold weather pushes temperatures lower than expected increasing residential demand. Until recently residential and spare capacity has been the only use for US natural gas, it was not until recently that the DOE began to approve projects designed to export the commodity as production skyrockets using new fracking methods. Driven by surging natural gas consumption in Asia and the United States, global use of this form of fossil fuel rebounded 7.4 percent from its 2009 slump to hit a record 111.9 trillion cubic feet ­ in 2010, according to a new Vital Signs Online report from the Worldwatch Institute. This increase puts natural gas’s share of total energy consumption at 23.8 percent, a reflection of new pipelines and natural gas terminals in many countries. 

The world’s largest incremental increase in natural gas use occurred in the United States, where low prices triggered a 1.3 trillion-cubic-feet increase to 24.1 trillion cubic feet, just over one-fifth of global natural gas consumption. But the Asia Pacific region experienced the strongest growth as a share of 2009 consumption levels, with China, India, South Korea, and Taiwan all experiencing demand growth of over 20 percent. China, which surpassed Japan in 2009 to become Asia’s largest natural gas consumer, by and large led the region’s growth spurt by consuming 3.9 trillion cubic feet, or 3.4 percent of world usage.

Natural gas producers have responded to this revived demand with a 7.3 percent boost in production. The United States maintained its position as the leading source of natural gas, accounting for just under one-fifth of the world’s total production in 2010. In Russia, which holds nearly a quarter of the world’s proved natural gas reserves, production jumped 11.6 percent. In the Middle East, growth in production of natural gas far outstripped that of consumption, rising by a full 13.2 percent. Last year, Qatar and Iran alone accounted for 29.4 percent of global proved reserves.

Crude oil on the other hand is also witnessing a shift in production as the US becomes the world’s largest producer of crude oil using new methods to pull the black gold from the earth. These new methods have made the US energy independent and have created new exports for the US helping increase its GDP and trade balance. While these new production methods are exceeding demand and capabilities, the US is witnessing a glut of oil with EIA inventories at record highs as pipeline construction lags. This has recently pushed crude oil to trade well below its recent average range, trading today at 94.02 well within the estimates given earlier this year by the EIA. The lower the price of oil, the lower inflation and consumer prices which helps business grow and costs decline supporting the global recovery. Brent oil is trading at 111.44 well below its longer term average as prices eased after the historic agreements between Western Allies and Iran.

Gold, Silver & Copper All Trading In The Red

Gold, Silver & Copper All Trading In The Red
Gold, Silver & Copper All Trading In The Red

As speculators look at the end of the year, they will be busy booking as much profits as they can to improve their balance sheets and profit ratios. This means we will seem some volatility with traders jumping from commodities to equities to currencies. Traders will be closely watching the ECB meeting this week but the marquee event will be Friday’s nonfarm payroll in the US, which will be followed by weekly inventory reports and then move to focus on the US Federal Reserve meeting on December 17-18th.  Gold gave back some of Friday’s gains as traders book profits dipping by $4.10 to trade at 1246.30 in a surprising convergence both gold and the US dollar declined this morning. The US dollar dipped by 12 pips to trade at 80.56. Gold dropped this morning, with investors jittery ahead of key US data this week that could provide clues on when the Federal Reserve will begin scaling back its monetary stimulus. US data including nonfarm payrolls, third quarter GDP and manufacturing PMI will be released this week, giving more insight into the strength of the economy.  A strong recovery could prompt the Fed to begin cutting back its $85 billion in monthly bond purchases, denting gold’s appeal as a hedge against inflation. The US central bank next meets on Dec. 17-18, when it could decide the fate of its stimulus. 

Gold futures rose on Friday in thin trade, but remained under pressure as ongoing expectations for the Federal Reserve to soon begin tapering its asset-purchase program continued to weigh. Gold prices rose on due to a weaker dollar but made its biggest monthly drop in five months on signs of recovery in the U.S. economy. Prices were also hurt as Eurozone CPI increased more than forecast, which indicated that the ECB would refrain from easing monetary policy further. Investors are likely to remain cautious this week ahead of US economic data on manufacturing growth, GDP, non-farm payroll numbers. The data would give insight on the duration of Fed’s bond buying program. Silver price rebounded at the domestic bullion market on renewed off-take from jewelers and traders as well as strong buying in India at the existing lower level amid ongoing marriage season. Silver is trading at 19.845 down by 185 points.

The metal has lost over a quarter of its value this year due to record outflows from gold-backed exchange-traded funds as investors shifted money to rallying equities. Markets seem to have already priced in a possible stimulus tapering from this month due to strong economic data, with gold prices trading below $1,300 an ounce for over three weeks. 

This morning data showed that China’s Purchasing Managers’ Index was 51.4 in November, the National Bureau of Statistics and China Federation of Logistics and Purchasing reported. China HSBC PMI November data signaled a further improvement of operating conditions in China’s manufacturing sector, albeit marginal. Output and new order growth both increased at their strongest rates in eight months in November, but renewed job shedding led to a solid increase in outstanding business. The good news which should help boost metal prices had little effect on copper which declined by 7 points to trade at 3.198. Copper prices gained slightly on Friday due to a weaker dollar and lower stockpiles. However copper posted its biggest monthly loss since June on expectations of growing supply and tepid demand going forward. Base metals are expected to remain in range to lower today as investors are likely to remain cautious ahead of US, UK and Eurozone PMI numbers.

 

 

Crude Oil Continues To Decline Headed Below $92

Crude Oil Continues To Decline Headed Below $92
Crude Oil Continues To Decline Headed Below $92

Crude oil continued to decline this morning down by 14 cents to trade at 92.16. Speculators will be surprised if oil breaks below the 92 price. Lower oil prices will help the global recovery easing costs to consumers and to businesses. Nymex crude oil prices declined around 1.5 percent yesterday on the back of rising trend in US crude oil inventories which has gained for 10th consecutive week. Further, US crude production rose by 45,000 barrels a day to 8.02 million and it is at the highest point in the last 25 years which exerted downside pressure on the prices. Current prices are below the EIA expectation earlier this year before the Middle East conflicts, when the EIA was forecasting an average price around 93.00 which it revised upwards after oil held over the $100 level after problems in Egypt, Libya and Syria pushed prices. The strong decline might pull prices down on the average to the EIA estimates. Weakness in the DX coupled with upbeat market sentiments could not provide respite to fall in oil prices. Crude oil prices touched an intra-day low of $92.18 and closed at $92.29 in yesterday’s holiday trading session. Crude oil prices fell on Thursday and are on track to decline for the third consecutive month as rising crude stockpiles in US and optimism over the nuclear deal between Iran and the western nations has kept oil prices under pressure.

The OPEC members are likely to keep crude production quota unchanged at the meeting on December 4, while OPEC oil exports are expected to increase by 3% from current levels in December. Crude oil prices are expected to move down as all time high crude inventories in US and increased exports from OPEC is likely to put pressure on prices. Brent oil is trading at 110.87 down by 6 cents this morning with the spread widening to over $18.00 which is becoming worrisome for traders. Despite the decline in international oil prices, there is going to be no cut in the month of December, said Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi yesterday. While addressing a meeting of the National Assembly Standing Committee on Petroleum and Natural resources chaired by Bilal Ahmad Varik, Abbasi also criticized the Oil and Gas Regulatory Authority. He said that the mandate of the regulator was to safeguard consumer interest and to work as a regulatory body as he expressed ‘concerns’ regarding the way Ogra was functioning. Meanwhile, talking about the price fluctuation, the minister said it was going to remain stable. On another note, Abbasi said that the Iran-Pakistan gas pipeline project had been delayed due to political transition in the two countries. “However, it is back on track once again,” said Abbasi. “The EPC contractor and financier were the key issues in this project and these would be settled in the near future.”

U.S. natural gas futures rose to a five-month high boosted by cold weather outlook for coming weeks and prices are expected to move further up today trading at 3.925 easing this morning by 9 points after hitting a recent high. Heating oil climbed 37 pips as the cold conditions continues across the US trading at 3.0394. Gasoline prices are in the green at 2.6946 this morning.

Daily commentary – European and US stock markets 27 November 2013

Daily commentary - European and US stock markets 27 November
Daily commentary – European and US stock markets 27 November

European markets

European stock markets opened higher this morning, supported further by positive German Consumer Confidence data which revealed an increase to 7.4, opposite forecasts for the same figure as last month’s result. Germany’s DAX30 was up by 0.22% to 9,310.02, France’s CAC40 was gaining 0.13% to 4,283.07, while the UK’s FTSE100 was climbing by 0.17% to 6,647.78 at 10:00 GMT. German mail delivery operator Deutsche Post AG, along with building materials company HeidelbergCement AG, were  the top earners in the DAX30, gaining 1.63% and 1,76%, respectively, at the time of writing. France’s mass media and telecommunications company Vivendi SA was the biggest gainer in the CAC40: by 1.75%, while hotel group Accor SA was the worst performer within the index, being down by 3.58%. The UK’s FTSE100 notable mover this morning was contract food service company Compass Group PLC, whose shares were up by 3.73% to 961.00p.

 DAX30

US stock markets

US stock indices have been making history in the past two weeks, with both the Dow and the S&P500 reaching milestone levels for the first time: above 16,000 and 1,800, respectively. During yesterday’s session, the Nasdaq Compsoite also joined the record-breaking club and closed above the 4,000 barrier for the first time in 13 years.

The Dow and the S&P500 registered minimal chart movements, as mixed data from the US failed to give them a boost, and the broader S&P500 ended at the foot of its record level.

A report released by the US Census Bureau showed that the building permits for new housing in the country has reached 1.03 million in October, or 60,000 more than the previous month, marking the highest level since 2008. Analysts’ forecasts were for a decrease to 930,000.

However, a separate report dampened the good news on building Permits, as it revealed that the US Consumer Confidence for November has dropped unexpectedly to a 7-month low. The index fell to 70.4, compared to a result of 72.4 in the previous month, indicating that Americans look more pessimistically upon the economic growth opportunities. Analysts’ expectations were for figures close to those in October, around 72.9.

The S&P500 gained an absolute minimum, or less than 1 point, to close at 1,802.75, after reporting an increase by 0.3% during the intraday trading. Three out of the ten industries within the index registered increases, with top performers being the technology companies, which added over 0.4%.

S&P500

The Dow also ended the session without a significant change at 16,072.80 points. The technological Nasdaq Composite increased by 0.6% to 4,017.745 points: its highest closing level since September 2000. The index has gained 261% since reaching its bottom in October 2002, when it sank to 1,114.11 points.

Among the winners in yesterday’s trading was Apple Inc., whose shares rose 1.8% to $533.40, reaching its highest level since January. Analysts commented that the launch of iPhone sales from China Mobile will boost the company’s profits for 2014. Tiffany & Co. also reported an increase, as it climbed by the impressive 8.7% to the record $88.02 per share; this is the largest rise in the S&P500 for the session.

 

Looking further in the day, US Durable Goods Orders for October, along with the country’s Initial Jobless Claims, are set to capture investors’ attention. As for the week, US stock market trading is expected to be below the usual volumes this week due to the Thanksgiving holiday tomorrow. On the last Friday of November, also known as Black Friday, stock markets will be with limited working hours. Black Friday is the unofficial start of the holiday shopping season in the US.

 

Source: dfmarkets.co.uk

 

Disclaimer: The Content of these charts and analyses does not constitute any form of advice or recommendation by Delta Financial Markets to buy, sell (or refraining from making) any trade or investment. You may wish to seek independent advice before entering into transactions.

Delta Financial Markets shall not be held liable by you or any others for any decision made or action taken by you or others based upon reliance on or use of information or materials obtained or accessed through use of these technical analyses and charts. DF Markets assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon the information on this page. DF Markets shall not be liable for any special, indirect, incidental, or consequential damages

Gold and Silver Recover After Iranian Sparked Sell Off

 

Gold and Silver Recover After Iranian Sparked Sell Off
Gold and Silver Recover After Iranian Sparked Sell Off

Gold recovered almost $11 in the Asian session as traders took advantage of the low prices to buy up the cheap metal. Gold is trading at 1252.55 at this time. Silver also gained 277 points to trade at 20.203 climbing on cues from gold. Institutional and ETFs continue to unload the shiny metal at a strong pace, prompted by the need to book higher profits before the end of the year and gold seems set to remain close its current level. With geopolitical tensions easing after the deal with Iran and signs of a global recovery traders are moving strongly into equities and other assets. SPDR Gold Trust GLD said its holding fell by 0.39% to 848.91 tones on Monday while India’s export of gold jewelry tumbled by 7% in October as government restrictions continued to hit imports and the trend is likely to continue for the rest of the year. A slight up-tick in physical demand from the world’s second largest gold consumer- China and a weak US dollar may have supported the commodity prices to certain extent in the global market. US gold prices in the global market rose from a four month low and were seen trading almost at a week high. The yellow metal prices edged up on up-tick in physical, option related demand and short covering. Comex gold futures for December delivery on electronic platform was seen trading with a gain of $10.4 at $1251.

Gold fell 25% in 2013 and turned bearish. Investors sold their holdings from Exchange Traded Funds at a record level on concerns that US Central Bank may start tapering its monetary stimulus on improving economic conditions in the US.

A list of US data releases is scheduled for the day and traders may get further clues for their trading from the data released.

  • US Building Permits, Housing Starts
  • US House Price Index
  • Conference Board (CB) Consumer Confidence
  • The Richmond Manufacturing Index

Yesterday the US Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 0.6 percent to 102.1 in October from an upwardly revised 102.7 in September, and is 1.6 percent below October 2012 when it was 103.8. The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings, according to the data released by the National Association of Realtors on Monday.

Base metals traded on a negative note yesterday on the back of decline in US pending home sales data. Also, strength in the DX coupled with weak global market sentiments in the later part of the trade acted as negative factor. However, speculation that a drop in oil prices will boost economic growth thereby, leading to a rise in demand for the base metals. Also, decline in LME inventories of all the base metals restricted sharp negative movement in prices of the base metals. Copper gave back a few pips this morning to trade at 3.226 well above last week’s trading range. Copper gained 0.1 percent yesterday on the back of decline in inventories by 0.4 percent to 437,500 tonnes. However, weak global market sentiments in the later part of the trade along with strength in the DX capped sharp gains in prices of the red metal. 

 

Iran Deal Sends Oil Tumbling

Iran Deal Sends Oil Tumbling
Iran Deal Sends Oil Tumbling
Last week President Obama publicly supported easing sanctions against Iran in exchange for an agreement on their nuclear program. Most traders thought that this signaled a deal would come at the November 20th meeting. Most market watchers were surprised when the summit ended on Thursday with no agreement, although comments were fairly positive. Crude and Brent oil climbed with Brent oil topping 111.00. In a surprise announcement late Saturday a completed signed deal with announced. Within minutes the news headlines read “Iran has struck a landmark nuclear deal with world powers in what is being billed as the most significant development between Washington and Tehran in more than 30 years. Israel’s Benjamin Netanyahu called the agreement “an historic mistake”.

Oil prices fell sharply today after world powers struck a landmark deal with Iran to curb its nuclear program in exchange for an easing of international sanctions. While Iran will not be allowed to increase its oil sales for six months, any easing of Middle East tensions tends to lead to lower crude prices. Brent oil is down $2.43 at $108.62 a barrel on the ICE futures exchange in London. Benchmark U.S. crude fell 85 cents to $93.99 on the New York Mercantile Exchange.

After marathon negotiations in Geneva, Iran on Sunday reached an agreement with the U.S., Britain, France, Russia, China and Germany to limit enrichment of uranium to 5 percent, far below the level needed for nuclear weapons.

Iran got limited relief from sanctions that have hobbled its economy, but an embargo on its oil exports remains in place while negotiations continue for a more enduring deal to ensure the country only uses nuclear technology for peaceful purposes such as power generation.

If Iranian oil returns to international markets, the additional supply is likely to make crude less expensive. U.S. crude is down from about $110 in October because of ample supplies and muted demand.

Crude oil slipped lower during early European trading hours on Friday, but remained within close ranged of a three-week high following the release of positive U.S. economic reports on Thursday. Oil price (WTI and Brent) rallied last week: WTI rose by 1.07%; Brent oil increased by 2.3%. As a result, the gap of Brent oil over WTI widened again: The premium ranged between $13.58 and $16.21 – the highest range since March 2013. Last week, the EIA’s weekly report showed a sharp fall in oil’s stockpiles by 11.7 million barrels.

Natural gas continues to surprise traders climbing by 72 points this morning to trade at 3.884. Natural gas has been on the upswing ever since the US northeast and Midwest were blanketed by an unexpected storm and cold spell. Accuweather updated its near term forecast to call for colder weather over the Thanksgiving holiday weekend. Natural gas is heating up again as its price rallied last week. Based on the recent EIA update, part of the rise could be attributed to the first extraction from storage for this season buildup: the storage extraction was 45Bcf. This week’s extraction was higher than last year’s pace.

 

Metals Give Back Yesterday’s Gains

Metals Give Back Yesterday's Gains
Metals Give Back Yesterday's Gains
Positive indicators that the US economy is recovering and bets that the US Federal Reserve could begin cutting its stimulus programme could keep gold prices flat today. Data from the US showed that jobless claims dropped last week, while its factory output showed a growth that was the best in eight months. This has added fuel to the fire ignited by the release of October 29-30 US Federal Reserve’s meet minutes, putting further pressure on gold.

Speculations are that the US Fed could decide tapering its $85-billion-a-month stimulus programme from as early as December. German GDP data due later in the day should give further indications of the direction the economy is headed. There was further bearish news for the yellow metal as gold holdings in exchange-traded funds dropped further. SPDR Trust, the world’s biggest gold exchange-traded fund, said that gold holdings slipped to 856.71 tons. Holdings fell 3.6 tonnes on Thursday — their lowest since early 2009. Outflows have totaled 450 tonnes this year. Physical demand picked up slightly due to the price drop but many buyers were still on the sidelines hoping for further declines, dealers said.

Gold is heading for its sharpest weekly drop in more than two months as strong US economic data and uncertainty over the timing of the rollback of the Federal Reserve’s stimulus measures sent the metal to its lowest since early July. Gold and silver were both on track for a near 4% weekly drop.

Selling-pressure on the metal was not as strong as in the first half of the year due to assurances from some top Fed officials that stimulus would continue for longer. But positive US data was hurting prices as it could bolster the case for curbing stimulus soon. The Fed’s massive bond-buying programme has burnished gold’s appeal as a hedge against inflation. The number of Americans filing new claims for jobless benefits fell sharply last week and a gauge of factory activity hit an eight-month high in early November, hinting at some strength in the economy. Uncertainty over the timing of the tapering has pushed investors to take money out of gold, causing the metal to drop 25% this year.

Industrial and base metals eased a bit this morning reflecting a drop in eurozone manufacturing. Copper climbed yesterday to trade at 3.19 and is easing this morning. Copper prices were set to close higher for the first week in three on Friday, buoyed by an improving outlook for demand and a temporary shortfall in supply after the shutdown of a Philippine smelter. Poor Chinese and US Manufacturing Index kept the prices in check. However, manufacturing PMI from Eurozone and Germany helped retaining some strength in base metals. Base metals are expected to move higher for the day today as supply shortage for time being over the absence of Philippine smelters can push the prices higher. 

Crude Oil, Brent Oil and Natural Gas Climb Above Recent Trading Ranges

Crude Oil, Brent Oil and Natural Gas Climb Above Recent Trading Ranges
Crude Oil, Brent Oil and Natural Gas Climb Above Recent Trading Ranges
Crude oil and Brent oil recovered yesterday after Iranian diplomatic negotiations seemed to reach an impasse easing hopes that sanctions could be lifted as early as this week. WTI oil climbed yesterday to trade at 95.44 but eased this morning by 34 cents to 95.10 while brent oil climbed over 110$ yesterday and gave back 27 cents in this morning session. A senior Iranian negotiator said yesterday that “serious issues” continue to divide Tehran and world powers in talks over the country’s nuclear drive after a “very useful” session in Geneva. The EU said they had been “very substantial and detailed”. “It seems not conclusive as of now but most Americans support a deal between Iran and the six powers,” he said.

“This generates positive sentiment. New sanctions are unlikely to be imposed, so concern over Iranian crude going into the market adds pressure to oil prices.” The P5+1 group of Britain, China, France, Russia and the United States plus Germany wants Iran to suspend certain parts of its nuclear energy program, which the West suspects to be a cover for weapons development. Iran denies the accusation. The two sides had resumed talks late Wednesday aimed at reaching a landmark deal although Tehran’s supreme leader Ayatollah Ali Khamenei has vowed not to retreat “one step’’.

The opening plenary session in Geneva lasted less than 10 minutes and was described by diplomats as an “introductory” meeting before delegates headed into bilateral talks. The talks, the third since President Hassan Rouhani took office, are aimed at getting major crude exporter Iran to scale back some of its nuclear programme in exchange for minor sanctions relief. Oil traders reacted also to minutes of the last Federal Reserve meeting, which showed the US central bank has considered the possibility of tapering its huge stimulus programme in the coming months.

The minutes were published on Wednesday and after the Department of Energy said US commercial crude inventories had risen 400,000 barrels last week — lower than market expectations of a gain of 700,000 barrels. Market analysts said that the rise in crude oil futures was attributed to a firm trend in Asia after US President Barack Obama said that he was not sure a deal could be reached this week on Iran’s disputed nuclear program

Natural gas consumption over the April-through-October period this year was 2.9 Bcf/d lower than in 2012. A combination of higher natural gas prices relative to coal prices and cooler summer weather compared to last year contributed to a 14%. Natural gas climbed by 13 points this morning to reach a recent high of 3.713. Inventories started the injection season in April at 1,724 Bcf, more than 30% below the April 2012 level. This was largely a reflection of the record-high levels at the start of the injection season in 2012, following a warm winter with reduced residential and commercial consumption for heating coupled with robust production. Although inventories have remained below 2012 levels,

The Comex Halts Gold Trading For 60 Seconds On Sharp Decline

The Comex Halts Gold Trading For 60 Seconds On Sharp Decline
The Comex Halts Gold Trading For 60 Seconds On Sharp Decline
Industrial metals, base metals and precious metals all took major falls over the last days. Gold tumbled to trade at 1246.20 declining almost $12.00 in the Asian session after tumbling from the 1275 range early on Wednesday. Silver followed on the heels of gold to trade at 19.810 down by 248 points. Platinum actual bucked the trend this morning adding $3.75 as traders took advantage of yesterday’s huge declines to buy up the precious metal on the cheap. Palladium remains at 713.20. Copper remained flat trading near recent lows at 3.148. Federal Reserve minutes seemed to upset the applecart on Wednesday evening as traders read too much into the minutes. Mr. Bernanke and Ms. Yellen have both been on the speaking circuits continuously saying that the Fed stimulus would continue into 2014, but traders reading the minutes have concluded that the Fed could begin to taper its huge monthly purchases regardless of the improvement in the jobs market.  Metals should have and would have most likely rebounded this morning until the lackluster release of Chinese manufacturing sent metal traders running for the hills. China manufacturing growth fell to a two-month low as export orders swung to a decline, according to preliminary results from HSBC’s monthly PMI report issued this morning. The “flash” version of the HSBC/Markit China manufacturing Purchasing Managers’ Index eased to 50.4, compared to last month’s 50.9 reading. The result was also well below the official government version of the PMI, which hit 51.4 in October. Among the sub-indexes, new export orders slid below the 50 mark dividing growth from contraction, while overall new orders rose, but at a slower rate than in October. Traders pay more attention to the HSBC private data release as the official numbers are always suspicious and have been fixed in the past.

Gold is heading for a significant decline in 2014, Goldman Sachs Group Inc. said in a report yesterday that outlined investment themes for next year. Bullion may drop to $1,050 by the end of 2014, analysts including Jeffrey Currie wrote. Prices slumped 26 percent this year, heading for the first annual loss since 2000, amid expectations that the Fed will trim its $85 billion in monthly asset purchases as growth picks up. Policy makers expected data would signal further improvement in the labor market and “thus warrant trimming the pace of purchases in coming months,” according to minutes of the Fed’s October meeting released yesterday.

The Comex stopped trading in December gold futures for about 20 seconds yesterday after the December contract fell about $11 within a minute before trading was suspended.

There is little data for traders to look at today, so markets are expected to be quiet with Chinese and the Bank of Japan decision behind the markets. This morning the BoJ held rates and policy. The US dollar is trading at 81.21 while the JPY is trading right on the 100 price.

 

Industrial Metals On The Upswing While Precious Metals Directionless

Industrial Metals On The Upswing While Precious Metals Directionless
Industrial Metals On The Upswing While Precious Metals Directionless
Gold continues to search for direction on Wednesday in the futures market. Investors could get some cues from the minutes of the October 29-30 US Federal Reserve meeting that will be released later this evening. Gold has been trading at a pretty tight range at the 1275.00 level. Lending support to gold is US Federal Reserve Chairman Ben S. Bernanke’s comments that a few months of economic data have not altered the Fed’s view that the American economy is gaining strength. Nor does it have an intention to start pruning its $85-billion-a-month stimulus program. Though the US labour market is showing signs of improvement, more proof is needed before the winding up the stimulus programme can be done. The comments have not really set the counter on fire as it is stuck near a week’s low. Last week Janet Yellen the soon to be Fed Director seemed to indicate that she would be looking at growth along with labor and inflation before taping the Fed’s easy money policies. Later today, gold traders will get a look at US inflation numbers with CPI due in the North American trading session. U.S. retail sales are due also and analysts aren’t looking for any change in October. Existing-home sales are slated for at 10 a.m. USA time and are projected to dip to an annual rate of 5.10 million last month from 5.29 million in September. Later in the day, the Federal Reserve is slated to release the minutes from its last meeting, possibly providing clues to the timing of its plan to slow monetary stimulus Money managers and hedge funds are still bearish about gold with one view that gold’s halt near $1,280 is temporary before it can head below $1,150. Holdings in SPDR Gold Trust, the world’s biggest exchange-traded fund, fell to 863.01 tonnes on Tuesday. It is a four-and-a-half-year low.

Industrial metals including silver and copper are continued their losing streak for the seventh straight session yesterday, tumbling to a three-month low on back of frantic speculative unwinding coupled with subdued demand from coin makers. This morning metals are trading on a positive note after comments from China’s central bank. Silver is trading at 20.432 up by 98 points and copper has added 16 pips to trade at 3.177. The People’s Bank of China said it would widen the daily range that China allows the renminbi (also called the yuan) to trade in and also would phase out investment caps for foreign and domestic investors. China also clearly wants the yuan to become a competitive medium of exchange with the US dollar and this announcement is just the latest in a series of policy moves to encourage this development in global capital markets. Copper on the LME gained for the first time in three days after Fed Chairman Ben S. Bernanke said the benchmark interest rate will remain low long after policy makers reduce bond purchases. Bernanke said a “preponderance of data” would be needed to start removing stimulus, after his nominated successor, newly appointed Fed Head Janet Yellen, signaled last week that the U.S. economy is not yet strong enough to warrant cuts to the record bond-buying program. The Federal Open Market Committee publishes minutes of its October meeting today.

Daily commentary – European and US stock markets

Daily commentary – European and US stock markets
Daily commentary – European and US stock markets
European markets

European stock markets opened lower this morning, ending their five-year high which was reached yesterday when the Stoxx Europe 600 index rose to its highest level since May 2008. Investors are also anticipating ECB President Mario Draghi’s speech on Thursday for more direction of the bank’s outlook on the economic situation.

Germany’s DAX30 was down 0.40% to 9,188.69, UK’s FTSE100 was falling by 0.55% to 6,686.54, while France’s CAC40 was slipping by 0.96% to 4,279.14 at the time of writing.  EasyJet Plc. was among the best performers in the FTSE100, gaining 6.29% to 1,335.00 p at the time of writing, while the German semiconductor manufacturer Infineon Technologies AG was the top DAX30 earner, increasing by 1.14% to €7.13. Renault SA was the only company on the green side of the charts in CAC40 this morning, rising by 0.94% to €63.0700.

 dax30

US markets

After a strong rally at the end of last week, caused by White House favourite for Fed Chairman Janet Yellen’s support for the QE, US stocks started the new week a bit unconvincingly, ending Monday’s session in opposite directions. The Dow and the S&P500 touched milestone levels for the first time, crossing the 16,000 and 1,800 borders, respectively; however, both indices lost ground and closed lower.

Trading opened with confidence, but investors’ optimism was dashed by the report on the housing sector. Data was not very disappointing: a 54-point growth, just 2 points below analysts’ expectations. Investors, though, are used to getting strong support from the sector’s performance and unstable results usually have a negative effect.

The S&P500 declined by 0.37%, or 6.65 points, to close at 1 791.53, while during the session, the index peaked above the psychological 1,800 mark for the first time, but failed to sustain it.

s&p500

The Dow was the only index to end trading with an increase in value, adding 14.32 points, or the modest 0.09%, to 15,976.02 points, still marking another historic high for this year. The blue-chip index also climbed, albeit briefly above the 16,000 level for the first time.

The technological Nasdaq ended trading on negative territory, wiping 36.90 points, or less than 1% off its value, to close 3,949.07.

One of the worst performers was Tesla Motors, as the company’s shares plunged by more than 10% to $121.49 per share after several workers were injured in a work accident in one of the company’s factories in California. Fresh stock market member Twitter Inc. also experienced a decline, with shares falling by 6.5% to $41.14 on concerns over the company’s growth potential.

On the winning side of the charts was Boeing Co. (BA.N), whose shares increased by 1.7% to $138.36.

 

Looking further in the day, not much is schedule to be announced, apart from Japan’s Exports and Imports for October (YoY). However, Fed’s Bernanke speech and the FOMC minutes tomorrow are expected to cause more action on the markets; the Bank of England Minutes and the US Retail Sales are some of the other events which will be closely followed as well.

 

Source: dfmarkets.co.uk

 

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Crude Oil Supplies Continue to Grow While Natural Gas Demands Increase

Crude Oil Supplies Continue to Grow While Natural Gas Demands Increase
Crude Oil Supplies Continue to Grow While Natural Gas Demands Increase
Crude oil demand continues to wane while production continues to increase pushing prices to recent lows. Crude oil is down on Tuesday morning by another 20 cents trading at 93.48 while brent crude fell below the 108 level to trade at 107.96 off by 25 cents. The spread continues to widen moving towards the $15 differential. The US dollar has eased over the past two days, but does not seem to be helping support oil prices as the global glut continues to deepen. Crude oil prices fell on Monday as investors awaited the meet between Iran and western nations starting Nov 20 on a possible deal on the nuclear program. Over the weekend, US President Obama said that he would support an easing of sanctions against Iran as a first step in improving the relations with the West and opening Iran’s nuclear projects to inspection. All indications are that we should see the first steps completed at this week’s meeting. This would open Iran oil to the global marketplace increasing international supplies and would weigh heavily on brent oil prices.

Also, Saudi crude production rose close to 10 million bpd, the highest average level sustained over a four-month period. Rising production from Saudi Arabia amid the shale gas boom and soaring inventories in US have put additional pressure on crude prices, ignoring the supply disruptions from Libya. Russia expects its 2014 oil output, the world’s largest, to meet or slightly exceed the 520 million tons forecast this year, Anatoly Yanovsky, deputy minister at the Russian Ministry of Energy, told Reuters on Monday.

Nymex crude oil prices declined around 0.9 percent yesterday on the back of estimates of decline in demand for fuel after statement from Federal Reserve Bank of New York President William C. Dudley added to speculation that the central bank will reduce stimulus. Further, mixed market sentiments exerted downside pressure on prices. The American Petroleum Institute is scheduled to release its weekly inventories later today and US crude oil inventories are expected to increase by 0.1 million barrels for the week ending on 15th November 2013. Gasoline stocks are expected to gain by 0.2 million barrels and distillate inventories are expected to slip by 0.4 million barrels for the same week. Traders will wait for Wednesday official inventory release from the EIA but any climb in stocks will weigh heavily on prices.

Natural gas continued to climb this morning making a surprise chart upwards over the past few days. Natural gas is trading at 3.621 as cold weather continues across the US, signs of an early winter increasing heating days for the year. U.S. natural gas futures ended lower on Monday as profit booking emerged at resistance levels. Prices are expected to remain in range today. 

The EIA, OPEC, Obama And Iran All In Play

The EIA, OPEC, Obama And Iran All In Play
The EIA, OPEC, Obama And Iran All In Play
Crude oil declined as the markets opened for a new week, dropping 21 cents to trade at 94.28 while Brent oil only gave up 7 cents to trade at 108.30. The spread widened to $14.00 well passed its average gap of $12.00 indicating that WTI crude oil might be getting ready to climb. “The Brent premium could easily continue to grow because of the North American supply picture,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “I would hate to stand in front of a runaway train, which is what the WTI-Brent spread is right now.” WTI crude oil prices dipped around 0.8 percent in the last week on the back of rising trend in API and US crude oil inventories. In the U.S., the world’s biggest oil consumer, crude stockpiles rose to 388.1 million barrels in the seven days ended Nov. 8 as output surged to the highest rate since January 1989, the Energy Information Administration said last week. The EIA is the Energy Department’s statistical arm. The EIA expectations that US to be world’s biggest crude oil producer by 2015 exerted downside pressure on prices. Additionally, a surprising decline in GDP data from Eurozone led to estimates of decline in demand for fuel acted as a negative factor.

 At the end of the week statement from Federal Reserve nominee Janet Yellen to continue with stimulus measures until improvement is seen in US economy coupled with weaker DX cushioned sharp downside in prices. Crude oil prices touched a weekly low of $92.51.

News from OPEC in the Joint Organizations Data Initiative (JODI), data published over the weekend showed that Saudi Arabia exported the most oil in last eight years. Saudi Arabia produced around 10.12 million barrels in October as against 7.84 million barrels in September increasing the global supplied and weighing on Brent oil prices.

Brent oil rose 3.2 percent this week after a meeting between Iran and Western Allies concluded last weekend in Geneva without coming to an agreement on the nation’s nuclear program, tempering projections of a resolution to the dispute that has cut Iranian oil exports. The talks with the five permanent members of the UN Security Council and Germany will resume Nov. 20.  Brent oil is more sensitive to potential changes in Middle East output than WTI because Europe depends more on the region’s production. President Barack Obama commented at a White House news conference that he supports giving Iran “modest” relief on sanctions in exchange for progress on nuclear talks and urged Congress to hold off on imposing more economic penalties.

Natural gas is trading at 3.681 adding 33 points this morning as the US turns cold over the weekend, increasing residential demand for heating. On a weekly basis, Nymex natural gas prices gained around 0.4 percent on the back of forecast for cooler winter weather conditions. Also a less than expected rise in inventories supported an upside in prices.  Additionally, weakness in the US dollar index acted as a positive factor. Gas prices touched a weekly high of $3.667 and closed at $3.534 in last trade of the week.

Base Metal, Precious Metals and Industrial Metals React To Janet Yellen

Base Metal, Precious Metals and Industrial Metals React To Janet Yellen
Base Metal, Precious Metals and Industrial Metals React To Janet Yellen

Base metals continue to trade with a negative bias. Silver and copper have rebounded from recent lows this morning after taking major tumbles this week. Silver has added 356 points to trade at 20.789 well below its have range at $22.00 while copper rebounded adding 20 points to trade at 3.179 below its near term trading range at 3.25. Industrial metals have been steadily falling on worries from China and the possibility of tapering of asset purchases by the US FOMC in December.

Copper tumbled to its lowest level in 90 days after a Federal Reserve official raised the prospect of a retreat from monetary stimulus next month. Uncertainties about policy reforms in China and weak eurozone factory output also weighed on the metal. Copper prices fell on Wednesday as disappointment from the Chinese Communist Party meet and looming market surplus weighed on prices. Eurozone industrial production fell by 0.5% from growth of 1% in the previous month, which also hurt base metals prices. Base metals are expected to move down as investors are likely to remain cautious ahead of Yellen’s testimony and Eurozone GDP data today.

Copper on the London Metal Exchange closed down 2 percent at $6,980 a ton, after touching a low of $6,956, the weakest since Aug. 7. Copper extended losses from the previous session when it broke through its 100-day moving average of $7,118. The move lower sent the market crashing through the floor of a $7,000 to $7,420 range it had held since early August.

Gold saw a mini rally in the Asian session this morning gaining $15.50 as traders took advantage of the lower US dollar and cheap prices to buy up the shiny metal. Gold prices fell on Wednesday as gains in US equities dented gold’s safe haven appeal. However, a weaker dollar after the Fed Chairman nominee Janet Yellen supported Fed’s stimulus program and said that the economy and the labor market were performing far short of their potential while inflation remained low limited the downside in prices. Yellen is likely to testify before the Senate Banking Committee today. Gold prices are expected to remain in range today as investors are likely to remain cautious ahead of Yellen’s testimony which would give cues on the Fed’s future course of monetary policy.

The other factor pushing up gold is demand from China, where volumes on the Shanghai exchange were near a month’s high on Wednesday. A bearish factor could be paring of holdings in gold in exchange-traded funds. SPDR Trust, the world’s biggest gold exchange-traded funds, reported that the holdings fell to 865.71 tons.

After a fairly muted response at the beginning of the week, platinum prices were boosted by South African supply concerns before better-than-expected US economic data towards the end of the week acted to dampen prospects for platinum. Platinum has climbed $10.95 this morning to trade at 1443.70. A wage-related strike called by the National Union of Mineworkers (NUM) at Northam Platinum saw 7,000 workers down tools at the company’s Zondereinde operations over the weekend. Initially this seemed to have little impact as the platinum price started the week at $1455, lower than it had ended the previous week. Palladium gained $4.80 as auto sales were once again climbing in the US. Palladium proved more resilient, shrugging off news that US car and light-truck sales in October declined to the lowest annualized rate since April.

The International Energy Agency Issues An Interesting Report For Crude Oil & The US

The International Energy Agency Issues An Interesting Report For Crude Oil & The US
The International Energy Agency Issues An Interesting Report For Crude Oil & The US
Crude oil remains well below its recent trading ranges but within the predicted EIA price range prior to the tensions in the Middle East. During the late summer, the EIA issued a forecast for crude oil to trade for the balance of the year (average) in the 94.00 price range. This became distorted after the Egyptian political turmoil followed by strikes in Libya and then chemical weapons in Syria. Crude oil has now returned to the forecast trading range and is expected to hold at this range for the balance of the year. Crude oil is trading at 93.10 this morning up a few cents as the US dollar eased. The official EIA government data might show crude stocks rising by under a million barrels for the week ended 9th November. US crude inventories are expected to rise to 386.2 million barrels according to a survey by Bloomberg. Product-related stocks, gasoline inventories are seen falling by 900,000 barrels whereas distillate supplies are seen dropping by nearly a million barrels. This week’s EIA inventory report usually due on Wednesday has been delayed by one day as Monday was a legal holiday in the US. Traders will have to wait until Thursday to get the official data.  

The International Energy Agency said that America will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations. Crude prices will advance to $128 a barrel by 2035 with a 16 percent increase in consumption supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil, the IEA said today in its annual World Energy Outlook. The role of the Organization of Petroleum Exporting Countries will recover in the middle of the next decade as other nations struggle to repeat North America’s success with exploiting shale deposits, the agency predicted.

News yesterday showed that OPEC increased its global demand forecast by 34,000 barrels a day and projected that global demand for OPEC crude will decline by 300,000 barrels a day next year. OPEC appeared to backpedal from previous skepticism over the significance of the rise in oil production from shale, the Paris-based International Energy Agency dismissed speculation that unconventional resources could weaken OPEC’s role in supplying oil over the long term. Brent oil eased by 5 cents to trade at 105.77 after breaking above the 106 level.

Natural gas prices eased by 5 points after a strong rally on Tuesday pushed prices close to 3.70. Natural gas is trading at 3.636 this morning. Natural gas ended higher for a sixth straight session on Tuesday, as investors focused on the mostly colder shift in the temperature outlook for the next two weeks and shrugged off the brief warm-up expected later in the week. The United States is likely to export 10-15 billion cubic meters (bcm) of liquefied natural gas (LNG) per year to Europe from 2020, although it will ship much more to Asian markets, a report by Wood Mackenzie showed. Future demand for US NG continues to rise as the DOE slowly approves new projects and global demand for the cheap energy product increases. Traders can expect prices to remain higher for the day on account of expectations of colder weather in the eastern US next week.

Prepare For a New Surge in Gold Prices on 2014

2013 has been a rather bad year for gold prices, with the precious metal losing $200 in April alone, following a suspicious dip. Even though a correction occurred soon after, overall, gold is trading at less than $1300 per ounce, almost $500 short of the values of 2012. After the optimists were proven wrong by the market and those who expected gold to surge above $2000 this year were disappointed, there are finally some good reasons to be confident in a new gold prices surge next year.

Potential Gold Drivers For 2014

Mining companies are trying to increase their output but just as some people fear that the so-called “peak oil” has been hit, there are some who worry that gold miners are becoming unprofitable. The truth is that if the gold price stays below $1250 for too long, mining companies can no longer afford to extract the precious metal. As a result, many of them will go bust and as they close down some of their operations, it is only fair to expect that demand will surpass the offer in 2014.

Speaking of which, the Chinese are purchasing gold at the same accelerated pace they did one year ago and it is most unlikely for the communist government to change its attitude in 2014. The bottom line is that with China being one of the biggest gold buyer in the world, the demand for the precious metal will remain the same while mining companies would have a hard time to provide. The Chinese are purchasing gold companies at a frantic pace and as they lose confidence in fiat currency, they will be willing to buy gold even if the prices spike.

Japan and India to Play a Big Part

When trying to determine whether gold prices will surge in 2014, analysts instinctively look at the current major buyers but tend to overlook potential customers. India for instance is purchasing much more gold than it did one year ago and even though the amounts are yet to reach the same levels as those recorded in China, this is a change to take seriously. The import tax on gold is higher than anywhere else, but the Indians are undeterred by the obstacle and purchase gold whenever they can lay their hands on it.

The fiscal policy in Japan has changed dramatically since Shinzo Abe became prime minister and inflation has crossed the 2% threshold. With Bank of Japan planning on printing more currency, the elderly citizens are concerned about the prospect of seeing their reserves losing their worth. Private and government pensions are at the highest levels ever and many of the retirees regard gold as a smart hedge against inflation.

Metals Traders Waiting For Chinese Leaders Reforms

Metals Traders Waiting For Chinese Leaders Reforms
Metals Traders Waiting For Chinese Leaders Reforms
After taking a major tumble on Friday, gold remains directionless adding just 0.15% in the Asian session to trade at 1286.50 falling steadily at the end of the week after the US nonfarm payroll report showed that the US had created in excess of 200k jobs against a forecast of 120k, this was followed by a revision of the previous jobs added upwards. Earlier in the week, US data showed that its GDP was much stronger than forecast printing at 2.8% while expected to only grow by 2%. This raised the possibility that the US Federal Reserve might move up its timetable to being tapering their asset purchases.

On the other side, unemployment ticked up a drop, which is the gauge that the FOMC has set for changing its policy. Despite the stronger than expected job growth, the unemployment rate ticked up to 7.3 percent in October from 7.2 percent in September. The modest increase by the unemployment rate, which matched economist estimates, largely reflected the way furloughed federal workers were counted in the household survey.

The major event from last week was the ECB’s decision to reduce its cash rate to its lowest level of 0.25%; this news pulled down precious metals prices and rallied the US dollar against the Euro. This week traders will be closely watching U.S industrial production, German GDP for the third quarter, China’s new loans, U.S federal budget balance, Yellen testifies, ECOFIN summit, and U.S. jobless claims. The price of gold decreased by 2.19% last week; moreover, the average price reached $1,306.70 which was 2.24% below last week’s average rate. Gold ended the week at $1,284.50. Gold holdings of SPDR gold trust ETF rose for the first week in the past ten consecutive weeks.  Nonetheless, during the month, the ETF’s gold holdings decreased by 0.41%. The ETF was also down by 35.71% for the year (up-to-date). Current gold holdings are at 868.418 tons. If the ETF’s gold holdings continue to pick up, this may signal the demand for gold as an investment is picking up.

Strong Chinese industrial production and export data has helped lift market sentiment, but the euro remained under pressure as looming deflation fears in the eurozone saw the ECB cut rates to a record low 0.25 percent last week. Inflation remains below expectations in the US, Japan and the Eurozone, which is pressurizing the prices of gold, which is a hedge against inflation.

Silver and copper are trading in the green this morning, silver is holding at 21.362 up by 45 points and copper is at 3.262 adding 4 points. Platinum and palladium are both in the red, fighting the trends. Platinum is trading at 1443.85 while platinum is down 2.50 at 756.50. Copper prices rose on Friday on optimism over positive Chinese trade data. However, a stronger dollar after US jobs report limited the upside in prices. China’s inflation climbed to 3.2%, raising fears of another tightening the central bank to curb credit supply and control inflation. However, Chinese factory output rose by 10.3% while fixed asset investment also rose to 20.1%. Base metals are expected to remain in range as investors would await the announcement of reforms at the Chinese Communist Party meet ending on November 12 to gauge the growth expectations for China. Tomorrow will be a big day for metals and commodities.

Is the Twitter IPO Euphoria Sustainable?

On Thursday, Twitter opened up higher than its $26 IPO price on huge speculative demand. The shares opened at $45.10 on the New York Stock Exchange, under the ticker TWTR. Speculators chased the market to a high of $50.09 before settling at $44.90, up 73%. The strong finish puts the stock’s capitalization at more than $31 billion. This is lower than Facebook’s $120 billion value, but above the valuation of LinkedIn’s $26 billion.

Now that the euphoria of the IPO is over, investors will have to decide the value of the company’s long-term opportunities. The service is already a popular global media tool, but investors will have to decide if its growth can be sustainable given the stiff competition it faces from Facebook and LinkedIn. Because of these doubts, sellers may take this market back to its original IPO price of $26 before reassessing its future prospects.

The key to success of this stock will be how fast it can turn its business model into a viable money-making venture. Patient investors and those in for the long haul are likely to back away from this stock until it comes down to a value area. This often happens with popular IPO stocks which have been pumped up by excessive speculative demand.

Although the service has huge brand recognition, it has yet to turn a profit. It lost $67 million in 2010, $164 million in 2011 and $79 million in 2012. It has also continued to bleed cash in 2013. Its ad revenue may be increasing, but it is still well behind Facebook in this category. This stock had to retreat after its IPO and didn’t reach a bottom or exceed its IPO price until it began making money from its mobile advertising.

The question that long-term investors have to ask themselves is does this company have long-term growth potential. Some reports suggest Twitter is adding new users at a slower pace. In addition, although revenue is rising, it is doing so at a slower rate. If this trend continues then the stock may have to wallow at prices below current levels before it finally rights the ship. This is no guarantee either since there have been social media darlings in the past like MySpace which never lived up to its initial hype.

If the stock is overvalued, smart money will take care of that situation over the long-run. Speculators may try to hold this market above the $26 IPO price over the short-run, but eventually the market will begin to trade off the key fundamentals and this may set up the stock for a correction back to a more suitable value area.