News

Gold rebounds ahead of weekend, dollar softens

Date Aug 31 2015 08:40:41 Source:
Aug.31,2015(SHMET)--

Gold posted small gains on Friday as the yellow-metal moved in concert with rising equity markets.

 

Gold for December settlement on the Comex division of the New York Mercantile Exchange was last up $4.40 or 0.5 percent to $1,127.0 per ounce. Trade has ranged from $1,123.10 to $1,132.30.

 

The Dow Jones industrial average has jumped 1,000 points in the last two trading sessions, the largest two-day increase December 2008 as global equity markets continue to recover from “Black Monday”.

 

However, SPDR Gold trust – the world’s largest gold exchange-traded-fund – saw inflows of 1.5 tonnes yesterday, demonstrating that gold is still an attractive investment option for market participants.

 

Yesterday, second quarter US GDP figures were released showing the country grew 3.7 percent, above the forecast of 3.2 percent and besting the initial reading of 2.3 percent.

 

Despite the better than anticipated figure, the CME Group FedWatch was barely unchanged at a 24 percent probability of a rate hike in September.

 

“Neither the sharply rising equity markets…nor the renewed increase in Fed rate hike expectations in response to robust US GDP data have been able to put any further pressure on gold,” Commerzbank said.

 

In news, investors will parse the language of various Fed officials during the multi-day Jackson Hole Symposium in Wyoming for any clues on the central bank’s decision whether to raise interest rates or not.

 

It should be noted that Federal Reserve chairwoman Janet Yellen is not in attendance.

 

In US data today, Core PCE price index was in-line with estimates at a 0.1 percent increase, with personal income coming also matching expectations of 0.4 percent uptick.

 

However, personal spending rose 0.3 percent, below forecast of 0.4 percent.

 

Turning to wider markets, UK second estimate GDP quarter-over-quarter matched consensus at 0.7 percent, while preliminary business investment quarter-over-quarter jumped 2.9 percent, above the projected 1.6 percent gain.

 

Meanwhile in eurozone equities, Germany’s DAX and France’s CAC-40 were last down 0.5 percent and 0.1 percent respectively, while the euro was virtually unchanged at $1.1245 against the dollar.

 

As for the other precious metals, Comex silver for September delivery was surged 3.80 cents at $14.455 per ounce. Trade has ranged from $14.340 to $14.540.

 

Platinum for October delivery on the Nymex was unchanged $1,006.0 per ounce, while the most-actively traded palladium contract was at $570.20 per ounce, up $1.60.

 

 

Edited by SHMET

Far East gold premiums drop, Indian imports set to soar

Date Aug 31 2015 08:40:27 Source:
Aug.31,2015(SHMET)--

The premium for gold in India was effectively unchanged this week against the backdrop of a weaker rupee, although inventories are set to increase – there is speculation that imports will exceed 100 tonnes in August.

 

The premium in Ahmedabad/Mumbai was quoted at $1.00-$2.00 per ounce above the London spot price on .995 gold, traders in India told FastMarkets.

 

This is slightly lower than last week but a weaker rupee – at its lowest in around two years against the dollar at 67.03, not far from all-time lows at 69.22 – has nudged the local price of gold higher.

 

The greenback has also picked up some of the slack of recent weeks to reach around 1.13 against the euro, putting downward pressure on many emerging-market currencies.

 

Still, much more than 100 tonnes of gold have been imported in August so far, according to sources – dealers and fabricators are stocking up ahead of the fast-approaching festival season, which kicks off early next month.

 

Inventories were already high following the removal of the 80:20 legislation in November, which prompted a rise in imports – refiners capitalised on a better environment for sourcing semi-pure doré bars with average purity of 80-85 percent, according to Metals Focus.

 

Around 95 tonnes of gold were imported in July after 55 tonnes in June, 62 tonnes in May, 81 tonnes in April and 131 tonnes in March, with extremely high import figures also recorded towards the end of 2014.

 

There was already the impression that bullion dealers and jewellers across the country were collectively holding as much as 100 tonnes of gold – mostly by dealers. Some of the country’s larger banks have denied this, though.

 

A good monsoon season so far has also bolstered sentiment. The domestic agricultural sector accounts for as much as 60 percent of gold demand – farmers use gold as a primary store of wealth because they have limited access to the formal banking system.

 

In Dubai, many dealers had been moving material out of the Emirates to meet the uptick in demand from India, resulting in a rare shortage of metal in one of the region’s largest consumers.

 

But the premium has normalised while dealers restock, with local sources pegging the local price on four-nines gold at around $0.50 over the London spot price and slightly less on .995 metal.

 

The premium for gold in China has also stabilised after a spike in volatility in the previous weeks. The premium in Shanghai remains at $2-3 over the London spot price, with demand said to have improved following interventions from the Chinese central bank.

 

After the PBoC’s interest rate and RRR cuts earlier this week, there is increased pressure on the onshore yuan, which is playing into the onshore gold market’s hands, traders said.

 

Still, despite huge liquidations in the SCI, there is little to suggest a shift in investors to gold from equities during this period of uncertainty.

 

“Overall demand for gold is still weak, making the traditional safe-haven asset less attractive, even against the backdrop of China stock markets turmoil,” one analyst in China said. “The PBoC has sent a signal that the yuan won’t be devalued significantly in the near future, helping calm the market.”

 

Withdrawals from Shanghai Gold Exchange vaults – a useful barometer but not necessarily a direct indication for demand – suggest that buying has been higher since the start of July.

 

Vault withdrawals exceeded 250 tonnes in July, the highest total in years. August has been steadier – for the week ending August 14, some 65 tonnes were withdrawn, slightly higher than the 56 tonnes in the previous week.

 

Inventories are reportedly high – according to data from the Census and Statistic Department of the Hong Kong government, China imported a net 55 tonnes of gold from Hong Kong in July, up nearly 50 percent on June. 

 

Demand in Hong Kong has slowed. Swiss dealers are holding out for premiums around $1 on fresh bars, though Japanese bars are available at around 70 cents.

 

In Singapore, the premium has also dropped in line with the general calming of Far East premiums. Sources pegged the premium at around $1-1.30 on Swiss bars.

 

In Tokyo, the discount has widened again despite it looking likely to hit parity towards the start of August. Traders maintain that demand has been slightly better in line with the weaker yen but the discount has now widened to $0.50-0.70 on Japanese LBMA-brand kilobars.

 

In Turkey, the premium has disappeared after recently hitting its strongest this year at $3. The lira hit a fresh all-time low earlier this week against the dollar at 3.0003, pressuring the local market – the premium on the favoured LBMA .995 1kg bar is now around a discount of $1.

 

Turkish imports of gold jumped in July to their highest since November 2014 at 14 tonnes, though much of Turkey’s supply comes from the secondary market and the country’s small mining industry.

 

In Bangkok the premium is marginally higher at around $1-1.50 on 96.5-percent purity bars although traders note that there are simply more sellers than buyers for now.

 

Edited by SHMET

Gold stable above $1,120/oz, volatility eases as weekend nears

Date Aug 31 2015 08:40:11 Source:
Aug.31,2015(SHMET)--

Gold was steady in subdued trading on Friday morning, mostly driven once more by expectations about the timing of the US Federal Reserve’s first interest-rate rise in more than a decade.

 

The spot gold price was last at $1,127/1,127.40 per ounce, up $1 on Thursday’s close. Trade has ranged from $1,124.50 to $1,133.10 so far.

 

Overnight, US equities closed more than two percent higher. Better-than-expected US data on Thursday helped to calm sentiment after what has been a volatile week for global markets.

 

The US preliminary GDP quarter-over-quarter jumped 3.7 percent – beating the forecast of 3.2 percent and above the previous reading of 2.3 percent – while the preliminary GDP price index quarter-over-quarter was at 2.1 percent, above the estimate of two percent.

 

And US weekly initial jobless claims stood at 271,000, below estimates of 275,000 and under the psychological 300,000 mark.

 

“Gold has not done much over the past few days and therefore its short-term trajectory is somewhat up in the air at this point,” INTL FCStone analyst Edward Meir said.

 

“However, we think prices will likely head lower over the next few days, since gold is not only selling off on bearish news, but more importantly, it does not seem to be pushing higher on bullish news, such as when equities are under pressure,” Meir added.

 

Today, the Shanghai composite index closed at 3,232.349, up 4.82 percent and building on Thursday’s uptick – still, they ended the week down more than eight percent.

 

US data today includes goods trade balance, the core PCE price index, personal spending, personal income, revised UoM consumer sentiment and revised UoM inflation expectations are due.

 

“Headlines out of Jackson Hole, as the symposium unfolds, could also create some price volatility,” UBS analysts noted.

 

Market participants will parse the language of various Fed officials during the multi-day Jackson Hole Symposium in Wyoming for any clues on the central bank’s decision whether to raise interest rates or not.

 

“Gold will remain subdued until commodities have snuffed out their lows and inflation is back on the cards; it appears now we may be waiting a little longer than we initially anticipated,” broker Triland said.

 

As for the other precious metals, silver was last at $14.40/14.45 per ounce, down 10 cents. Platinum drifted $6 lower to $998/1,003 and palladium at $563/568 was $7 softer.

 

 

Edited by SHMET

Stock market rebounds on rate cut, rally in US shares

Date Aug 28 2015 09:21:27 Source:
Aug.28,2015(SHMET)--

 

China stocks rose on Thursday as a strong rally on Wall Street helped calm shaky global markets, prompting Chinese and foreign investors to hunt for bargains after a 20 percent plunge over the past week.

 

The benchmark Shanghai Composite Index jumped 5.34 percent to 3,083.59 on Wednesday, the smaller Shenzhen Component Index up 3.58 percent to 10,254.35 points.

 

Wall Street rallied nearly 4 percent overnight, easing fears of a deep and protracted global market rout after a heavy selloff earlier in the week, sparked in part by worries about China's cooling economy and plunging stock markets.

 

On Tuesday evening, the People's Bank of China (PBOC) cut interest rates for one-year lending and deposits by 25 basis points, and announced a reduction of the reserve requirement ratio (RRR), the portion of money banks need to set aside.

 

This is the fourth RRR reduction in nearly seven months, and the fifth round of interest cuts in nearly nine months.

 

The central bank said the move was aimed at supporting the real economy amid downward pressure on growth and fluctuations on global financial markets.

 

Chinese stocks have tumbled in the past week following the release of weak economic data and a depreciation of the yuan, with the benchmark Shanghai index diving 8.49 percent on Monday in its biggest daily slump since February 2007.

Edited by SHMET

China's central bank pumps more money into market

Date Aug 28 2015 09:21:13 Source:
Aug.28,2015(SHMET)--

BEIJING - The central bank on Thursday pumped more money into the market to ease liquidity strain.

 

The People's Bank of China (PBOC) conducted 150 billion yuan ($23.4 billion) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future.

 

The reverse repo was priced to yield 2.35 percent, down from the 2.5 percent yield on Tuesday's net injection of 150 billion yuan using reverse repos, according to a PBOC's statement.

 

Liquidity in the money market has tightened due to dropping new yuan funds outstanding for foreign exchange and a depreciating Chinese yuan.

 

Following the cash injection, in Thursday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one other, dropped by 2.7 basis points to 1.759 percent.

 

 

Edited by SHMET
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