News

Gold dips as safe haven appeal absent

Date Aug 28 2015 09:20:59 Source:
Aug.28,2015(SHMET)--

Gold prices declined for the fourth straight session as equity markets and the US dollar continues to recover from “Black Monday”.

 

Gold for December delivery on the Comex division on the New York Mercantile Exchange fell $2.0 to close at $1,122.60 per ounce. Trade ranged from $1,117.0 to $1,128.50.

 

Gold prices rallied from multi-year lows to end last week as fears over a major slowdown in China finally crested.

 

US equities and dollar correspondly sunk to begin the week, aptly deemed “Black Monday” as the contagion in Asia spooked investors in the world’s largest economy.

 

Capital fled from all assets except US treasuries, demonstrating the lack of safe haven for gold – the yellow-metal is seen as a popular asset during major price fluctuations.

 

“Overall, from a precious perspective, I believe the rally we have seen recently was also overdone,” David Govett at Marex Spectron said. “With the market as short as it was, the move was somewhat inevitable and this fueled the rally rather than the concept of gold being a safe haven during times of turmoil.”

 

US preliminary GDP quarter-over-quarter for the second quarter jumped 3.7 percent, beating the forecast of 3.2 percent and above the previous reading of 2.3 percent.

 

Additionally, the preliminary GDP price index quarter-over-quarter was at 2.1 percent, above the estimate of two percent, while weekly initial jobless claims stood at 271,000, below estimates of 275,000 and under the psychological 300,000 mark.

 

“Good GDP data and better initial jobless claims bode well… and should help restore some confidence” in the US economy, FastMarkets head of research William Adams said.

 

US equities and the dollar responded favourably with the Dow Jones industrial average and the S&P last up 1.6 percent and 1.8 percent respectively. The dollar was 0.6 percent stronger at $1.1251 against the euro.

 

As for the other precious metals, Comex silver for September delivery was surged 31.4 cents at $14.355 per ounce. Trade has ranged from $14.050 to $14.560.

 

Platinum for October delivery on the Nymex rose $16.90 to $997.10 per ounce, while the most-actively traded palladium contract was at $564.20 per ounce, up $34.55.

Edited by SHMET

GOLD PRICE STEADIES WHILE STOCKS RECOVER, US DATA IN FOCUS

Date Aug 28 2015 09:20:44 Source:
Aug.28,2015(SHMET)--

Gold steadied on Thursday morning after dropping to its lowest in a week in the previous session, with investors switching their attention from the turmoil in Chinese markets to the timing of a US interest rate rise.

 

The spot gold price was last at $1,128.4/1,128.8 per ounce, up $5.20 on Wednesday’s close. Trade has ranged narrowly from $1,123.20 to $1,129.20 so far.

 

Comments by New York Federal Reserve president William Dudley on Wednesday that a case for a rate rise increase in September is “less compelling”, given international developments and volatility in financial markets, provided some support.

 

“Turmoil across global markets did little to bring people back to gold as investors ignored the metal’s haven appeal and focused on the prospect of higher US interest rates,” ANZ said in a note.

 

In equities, shares in Asia and Europe rose today after the biggest gain in US stocks in more than four years on Wednesday. Ending five consecutive days of falls, the Shanghai composite index closed with gains of 2.13 percent at 2,989.693 – having earlier topped 3,000.

 

Currencies are correcting too, with the dollar index rallying – it was last at 95.35. Monday’s low was 92.56.

 

“With other markets getting some lift and with the dollar rebounding, gold may struggle for a while but as we expect only a short counter-trend up move in other markets. So the dip in gold may well find support because there may be more market anguish ahead,” FastMarkets William Adams’ said.

 

“The more industrial precious metals are likely to get some lift along with the base metals,” he added.

 

Investors will be eyeing today’s US preliminary GDP – forecast at 3.2 percent, up from the previous 2.3 percent – and jobless claims – estimated at 275,000 from last reading of 277,000 – for further clues of the timing of the Fed’s first rise in interest rates from near-zero levels.

 

Pending home sales and national gas storage numbers are also scheduled for release later this afternoon. Today is also the start of the Jackson Hole Symposium when central bankers and leading market players meet – Fed chair Janet Yellen is not attending this year.

 

In data already released in the eurozone, M3 money supply and private loans both came better than expected at 5.3 percent and 0.9 percent respectively but German import prices undershot at -0.7 percent.

 

In the other precious metals, silver was last at $14.25/14.30 per ounce, up 14 cents – it dipped below $14 in the previous session. Platinum at $994/999 climbed $13 and palladium at $545/550 was also up $13.

 

 

Edited by SHMET

LME MORNING – Metals steady but sentiment shaky, zinc cancellations jump

Date Aug 28 2015 09:20:32 Source:
Aug.28,2015(SHMET)--

Base metals were steady at mostly higher levels in Thursday’s LME premarket, underpinned by a recovery in equities after what has been a volatile week so far.

 

“There has been a marginal recovery… but sentiment is still very unsettled after the meltdown earlier this week. With the end of the month approaching and a long weekend in London, the proof will be in the pudding next week,” one market participant said. 

 

Ending five consecutive days of falls, the Shanghai composite index closed with gains of 2.13 percent at 2,989.693 – having earlier topped 3,000 – after US equities enjoyed their biggest rise in four years on Wednesday.

 

Beijing’s latest economic stimulus announcement on Wednesday provided support for Chinese bourses. The People’s Bank of China will inject 140 billion yuan ($21.80 billion) into the financial system through a short-term liquidity adjustment operation, it said on Wednesday.

 

This followed Tuesday’s announcement of a benchmark lending rate cut by 25 basis points to 4.6 percent – the fifth reduction since November – although share prices had continued to plunge after ‘Black Monday’.

 

In currencies, the euro remained steady against the dollar at 1.13.

 

“Market expectations of a September hike by the Fed have receded, given the great market volatility and fears of a spillover effect from the weak Chinese economy. As a consequence, the US dollar has corrected during the days of high market volatility, especially against the euro,” Credit Suisse said in a note.

 

In the metals, copper at $4,988 per tonne was up $39 on Wednesday’s close, having so far traded either side of $5,000. More than 8,000 lots have changed hands on Select so far.

 

Stocks continued to build, climbing a net 1,400 tonnes to 370,425 tonnes, while cancelled warrants fell 775 tonnes to 52,325 tonnes. In spreads, the benchmark cash/threes had eased to as $4 backwardation, having been above $30 earlier this week.

 

The tightness was unlikely to endure due to the sizeable deliveries arrived into LME-listed warehouses, traders said – the same company responsible for the recent zinc inventory moves is also thought to be involved here.

 

Zinc at $1,735 per tonne was up $45.50 following a substantial increase of 76,500 tonnes in cancellations, which now total 151,675 tonnes, the highest since April 16. Total stocks at 524,875 tonnes were down 1,875 tonnes.

 

Aluminium at $1,555 was $24 higher – stocks and cancelled warrants were both down more than 10,000 tonnes at 3,283,625 tonnes and 1,271,400 tonnes respectively.

 

Nickel at $9,760 was up $210; while stocks climbed 312 tonnes to 454,692 tonnes, cancelled warrants fell 312 tonnes to 163,500 tonnes.

 

Lead rose $27 to $1,667 after stocks fell 110 tonnes to 7,310 tonnes. Tin at $13,750 bucked the upward trend, slipping from the previous close of $13,945.

 

Steel, cobalt and molybdenum were neglected, with no changes to stocks.

 

Edited by SHMET

LME MORNING – Base metals slide despite further stimulus, copper down 2.3 pct

Date Aug 27 2015 09:05:13 Source:
Aug.27,2015(SHMET)--

Base metals shrugged off further Chinese stimulus measures on Wednesday’s morning, ignoring reports that the People’s Bank of China (PBoC) will inject $21.80 billion through a short-term liquidity adjustment to steady flagging financial markets.

 

The news follows yesterday’s announcement from the central bank that it would cut interest rates by 25 basis points from today.

 

Chinese equities have been in trouble since the tail-end of last week but Monday’s meltdown, dubbed “Black Monday” unsettled investors, who were quick to dump risky assets such as commodities.

 

And despite Monday’s PBoC announcement, the SCI closed down 1.3 percent today – the fifth consecutive down day – at its lowest since December after a late sell-off.

 

“The stock rout is long overdue but the question is: is it just isolated to China and just how much contagion there will be?” a trader said.

 

The recent declines in metal prices have taken the most metals into their cost curves and there are widespread expectations of further production cuts in some.

 

“There remains further downside to consensus metals demand expectations for 2015-16, and also to cost curves. Meanwhile, we expect global expansion capex will continue to trend lower, affective contractors and machinery suppliers alike” Macquarie said in a note.

 

“Once more, metals markets are highly reliant on China to provide stability if nothing else, while the supply side goes through its prolonged adjustment process,” it added.

 

In data, the US has core durable goods and durable goods orders set for release.

 

In the metals, Copper at $4,948 per tonne was down $117 or 2.3 percent on Tuesday’s close, while around 10,000 lots have changed hands on Select so far.

 

Inventory moves weighed – there was a net 13,475-tonne increase in stocks to 369,025 tonnes, mostly into New Orleans. Total stocks are now the highest since December 2013. Cancelled warrants slipped 600 tonnes to 53,100 tonnes.

 

Despite the stock rise, tightness remained in the spreads – the benchmark cash/threes was last at a backwardation of $25. The sensitive Tom/Next spread has moved this morning to a contango of $0.25 from a backwardation of $1.

 

Aluminium fell $17 to $1,540; stocks and cancelled warrants both fell 9,825 tonnes to 3,294,125 tonnes and 1,281,600 tonnes respectively. The October date remains in backwardation, with Oct/Nov at $8.75 and Oct/3-mth at $8

 

Nickel at $9,480 was down $130. Inventories climbed 528 tonnes to 454,380 tonnes.

 

Zinc briefly dipped back under $1,700 but last traded at $1,705, still down $32. Stocks rose 1,200 tonnes to 526,750 tonnes while cancelled warrants fell 1,975 tonnes to 74,050 tonnes.

 

Lead at $1,654 was $26 lower; stocks fell 100 tonnes to 190,675 tonnes. Its October and November dates are in marginal backwardations – Oct/Nov, Oct/3-mth and Nov/3-mth were at $0.35, $1.65 and $1 respectively.

 

Tin recently traded $300 lower at $13,950 but off its earlier lows of $13,905, the softest since July 10. Cash/threes remain in backwardation although at $90 it was considerably lower than $500 last week.

 

“We do see increased activity for warrant delivery or interest to sell as trades took advantage of the backwardation last week,” Triland noted.

 

Steel, cobalt and molybdenum were neglected.

 

Edited by SHMET

Gold slips as investors prefer equities, dollar

Date Aug 27 2015 09:04:28 Source:
Aug.27,2015(SHMET)--

Gold prices regressed for the second straight day as investors returned capital into US equities and the dollar.

 

Gold for December delivery on the Comex division on the New York Mercantile Exchange declined $13.70 to settle at $1,124.60 per ounce. Trade ranged from $1,116.90 to $1,146.0.

 

“The rally we have seen recently was overdone. With the market as short as it was the move was somewhat inevitable and this fuelled the rally rather than the concept of gold being a safe haven during times of turmoil,” Marex Spectron noted.

 

In news, New York Federal Reserve president William Dudley said today that a September hike is now “less compelling to me than it was a few weeks ago” given the deteriorating conditions outside of the United States.

 

The Federal Open Market Committee (FOMC) is in an intense debate over the exact timing of increasing the federal funds rate.

 

After lingering at near zero levels since December 2008, the FOMC is trying to juggle persistently low inflation and the growing Chinese contagion, which has leaked into US equity markets.

 

The Federal Reserve hasn’t increased interest rates in over a decade, but Chairwoman Janet Yellen has expressed a desire to normalise rates in 2015.

 

The CME Group FedWatch – a tool to gauge market expectations of a rate hike – stood at 24 percent and has fluctuated between zero and fifty the past month.

 

“With financial markets now attaching a lower probability to a Fed rate hike this year, the market impact will be more substantial if the Fed decides to hike as we still expect,” ABN AMRO said in a report.”Then, financial markets will adjust upwards their interest hiking expectations for this year and next year.”

 

“This will spur the US dollar and result in lower gold and other precious metal prices,” the report added.

 

In US equities, the Dow Jones industrial average and S&P were last up 1.8 percent and 1.7 percent, while the dollar was was 1.3 percent stronger at $1.1365 against the euro.

 

Key data points the Fed and market participants will be watching is tomorrow’s US weekly unemployment claims, along with the Jackson Hole Symposium and the non-farm US payroll data released on September 7.

 

In strong US data today, durable goods orders month-over-month was up 0.6 percent, above the forecast of -0.4 percent and the revised figure was changed to 3.4 percent.

 

Core durable goods orders month-over-month jumped two percent, smashing expectations of a 0.3 percent uptick.

 

Meanwhile, inflows into gold ETFs continued – holdings in the funds tracked by FastMarkets have increased to 1,536.95 tonnes.

 

As for the other precious metals, Comex silver for September delivery was last down 54.5 cents at $14.065 per ounce. Trade has ranged from $13.910 to $14.705.

 

Platinum for October delivery on the Nymex rose $0.70 to $977.40 per ounce, while the most-actively traded palladium contract was at $527.60 per ounce, down $12.50.

 

 

Edited by SHMET
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