News

GOLD CLIMBS TO 1-MTH HIGH, EXTENDS RALLY ON DOVISH FOMC MINUTES

Date Aug 21 2015 08:57:48 Source:
Aug.21,2015(SHMET)--

 

Gold ascended to the highest point in over a month as prices extended yesterday’s rally stemming from a perceived dovish Federal Reserve statement.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $13.40 or 1.2 percent at $1,141.20 per ounce. Earlier, the price touched $1,143.60, the highest price for the most active contract since July 17.

 

The past two trading sessions have seen the yellow-metal jump over $25 as investors interpreted the Federal Open Market Committee (FOMC) July meeting minutes as quite dovish after weeks of hawkish speeches and statements from various board members.

 

Federal Reserve Chairwoman Janet Yellen has expressed a desire to raise interest rates this calendar year after rates have been at near zero levels since December 2008.

 

“Futures markets are now pricing a 38 percent to 45 percent probability of a Fed move in September, still not an odds-on bet,” Edward Meir, an analyst at INTL FCStone, said. “Adding to the uncertainty, Chairman Yellen will not be attending the central bank’s annual retreat in Jackson Hole, Wyoming, later this month, usually a relaxed gathering where officials leave clues about upcoming policy decisions.”

 

Meir did add that he sees a rate rise next month because the July meeting did not have access to new data released in the past few weeks.

 

After gold fell to multi-year lows at the beginning of the month, prices were due to recover as the dollar has shed most of its gains and likelihood of a September rate rise diminished.

 

The dollar was last 0.3 percent weaker at 1.1157 against the euro, down from August’s high of $1.0882 achieved on August 4.

 

“In line with our expectations, a short-covering rally occurred sooner rather than later,” FastMarkets analyst Boris Mikanikrezai said. “In the near-term, we expect that gold prices will continue to push higher, driven essentially by further short-covering.”

 

Turning to eurozone data, German PPI month-over-month in July was unchanged, above the consensus of a 0.1 percent dip.

 

In a heavy US data day, weekly unemployment claims were at 277,000, near the forecast of 272,000 and holding below the psychological 300,000 mark.

 

Scheduled for release later today is the Philly Fed Manufacturing Index, existing home sales, CB leading index and natural gas storage figures.

 

Meanwhile in wider markets, Germany’s DAX and France’s CAC-40 were down 0.5 percent and 0.9 percent respectively.

 

As for the other precious metals, Comex silver for September delivery was last up 29.1 cents at $15.470 per ounce. Trade has ranged from $15.225 to $15.550.

 

Platinum for October delivery on the Nymex rose $5.10 to $1,018.20 per ounce, while the most-actively traded palladium contract was at $614.75 per ounce, up $5.0.

 

Edited by SHMET

GOLD GAINS AFTER FED MINUTES DAMPEN SEPTEMBER RATE RISE HOPES

Date Aug 21 2015 08:57:34 Source:
Aug.21,2015(SHMET)--

Gold prices extended gains on Thursday morning, holding around one-month highs, as uncertainty surrounding a potential US September interest rate rise continues to support the precious metal.

 

The spot gold price was last at $1,137.5/1,138.0 per ounce, up $4.50 on Wednesday’s close. Trade has ranged from $1,132.8 to $1,142.2 so far.

 

“The next test for gold will be a break higher to test resistance around $1,145-1,150, while support remains around $1,125,” MKS said in a note.

 

The July 28-29 FOMC meeting minutes released overnight suggested that the Fed may resist raising rates in September.

 

“The minutes of the US Fed’s July meeting showed a committee relatively content with domestic economic activity and labour market progress, but a bit more cautious regarding the inflation outlook and external risks,” Credit Suisse said.

 

The dollar weakened following the release of the minutes with the basket index last at 96.30.

 

The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been at near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.

 

Over the last few months, various members of the organisation have become increasingly hawkish with Federal Reserve chairwoman Janet Yellen expressing a desire to raise rates sometime this year.

 

However, inflation continues to fall below the Federal Reserve’s target of two percent. In Wednesday’s US data, CPI in July was up 0.1 percent over the previous month, below the 0.2 percent forecast.

 

Core CPI – excluding food and energy – was also up 0.1 percent month-over-month in July, again missing the consensus of 0.2 percent.

 

“We feel gold is finally attracting safe-haven demand as concerns over the fallout from China’s devaluation spreads and the market is waking up to the likelihood that emerging market economies are entering another tough time and that could spread to mature economies,” William Adams, FastMarkets head of research, said.

 

In data today, the key release will be the weekly US unemployment claims and existing home sales.

 

In the other precious metals, silver was last at $15.37/15.42, up 10 cents. Platinum at $1,015/1,021 climbed $6 – around its one-month high – and palladium at $613/618 was $5 higher.

Edited by SHMET

LME MORNING – Metals steady, spreads at forefront as tin backwardation explodes

Date Aug 20 2015 09:08:09 Source:
Aug.20,2015(SHMET)--

Base metals were steady during Wednesday’s pre-LME sessions as the complex took stock of the previous day’s sell-off which had seen copper slide under $5,000 per tonne to fresh six-year lows.

 

 “Base metals show signs of consolidation recovering off yesterday’s lows despite ongoing concerns to Chinese growth and in turn demand prospects,” a trader said.

 

Still, the trader said that these technically oversold conditions leave metals vulnerable to sharp short-covering rallies with any strength offering opportunities for fresh short-sales.

 

Focus has now returned to spreads which have been providing interest. The most notable are the tin spreads – its benchmark cash/threes was last at a substantial $520 backwardation, while the sensitive ‘Tom/Next’ spread  was at a $20 backwardation – yesterday the latter spread had been above $150, before lending guiding kicked in and took it down to $1.

 

Copper’s cash/threes contango narrowed to last trade at $4.00. Meanwhile, its September/3-month and October/3-month rates were at backwardations of $4.00 and $2.25 respectively.

 

Elsewhere, the aluminium October/3-month spread remained tight at a backwardation of $5.50. Zinc ‘Tom/Next’ was at a backwardation of $1, while the cash/September carry was at a backwardation of $0.50.

 

Still, some participants said this may not result in higher prices for these metals.

 

“It is worth noting that while there is much talk of squeezes in metals as shorts roll positions forwards, the tin market is reminding us of what can happen. Despite cash/3-months trading out to $500 back the three month price is still falling, so anyone looking for a spread-driven price rally might end up being disappointed,” Malcolm Freeman at Kingdom Futures said.

 

Wider market attention today will be focused on the minutes from the Fed’s July 28-29 meeting, which investors will scrutinize for further signals as to when an interest rate rise will come into effect. However, participants said that the minutes are for a meeting held before the Chinese yuan devaluation which rocked the markets last week.

 

“Volumes this morning remain relatively light with markets eyeing the Fed meeting minutes released later today to see if inflation-cooling yuan devaluation will serve to alter monetary policy outlook,” the trader said.

 

In economic releases, the EU current account data was better than expected at 25.4 billion. Later, US CPI and crude oil inventories are scheduled for release.

 

Copper was holding above $5,000 per tonne and was last at $5,036, a $1 increase on the previous day’s close. Stocks were routine, inventories were up a net 600 tonnes to 354,200 tonnes and cancelled warrants were 875 tonnes higher at 27,300 tonnes.

 

Aluminium at $1,564 was up $10, while stocks increased 2,650 tonnes to 3,338,225 tonnes and cancelled warrants fell 10,875 tonnes. Lead at $1,709 was $18 higher as stocks fell 2,650 tonnes to 198,775 tonnes.

 

Zinc was up $23 at $1,786 and stocks increased 575 tonnes to 503,475 tonnes. Cancelled warrants were 8,875 tonnes higher at 77,625 tonnes, due to metal booked for removal in New Orleans.

 

Nickel at $10,440 was $195 higher, while both stocks and cancelled warrants increased to 456,168 tonnes and 152,370 tonnes respectively.

 

Tin at $15,330 was $190 higher, while stocks were up 700 tonnes to 6,985 tonnes.

 

Steel, cobalt and molybdenum were all neglected.

Edited by SHMET

Gold rises on dovish FOMC minutes release

Date Aug 20 2015 09:07:53 Source:
Aug.20,2015(SHMET)--

 

Gold prices jumped on the early release of the Federal Open Market Committee (FOMC) July meeting minutes, which raised concerns over the persistent low inflation and gave no indication that a September interest rate hike is a certainty.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $14.00 or 1.3 percent to $1,130.00 per ounce. Trade has ranged from $1,115.50 to $1,131.50.

 

The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been at near zero since December 2008,

 

In April, the Fed removed all calendar references its in forward guidance meaning the bank is now entriely data dependent.

 

Over the last few months, various members of the organisation have become increasingly hawkish with Federal Reserve chairwoman Janet Yellen expressing a desire to raise rates sometime this year.

 

However, inflation continues to fall below the Federal Reserve’s target of two percent inflation. Today in US data, CPI in July was up 0.1 percent over the previous month, below the 0.2 percent forecast.

 

Core CPI – excluding food and energy – was also up 0.1 percent month-over-month in July, again missing the consensus of 0.2 percent.

 

The persistent lack of inflation cuts across the dual-mandate of the Federal Reserve of maximum employment and price stability.

 

“The Committee agreed to continue to monitor inflation developments closely, with almost all members indicating that they would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term,” the FOMC statement read.

 

Currently, the probability of rate hike next month stands at 45 percent, according to the CME Group Fedwatch – a tool to gauge the likelihood of a change in US monetary policy.

 

Earlier in the trading session, 36 percent of investors expected a rate hike in September.

 

The minutes were released sometime around 12:45 pm central time, fifteen minutes ahead of the scheduled release time of 1pm central.

 

Equity markets reacted favorable with the Dow Jones industrial average and S&P both trending higher. Currently both are down 0.4 percent respectively, with the dollar 0.8 percent softer at $1.1113 against the euro.

 

US commercial crude stocks rose 2.6 million barrels last week, up 94 million barrels from 2014. Oil has responded by falling nearly $2.03 or 4.7 percent to $41.09 per barrel.

 

As for the other precious metals, Comex silver for September delivery was last up 45 cents at $15.240 per ounce. Trade has ranged from $14.795 to $15.320.

 

Platinum for October delivery on the Nymex rose $17.50 to $1,011.60 per ounce, while the most-actively traded palladium contract was at $607.85 per ounce, up $10.75.

 

Edited by SHMET

Gold climbs to one-month high after disappointing US data, awaits Fed minutes

Date Aug 20 2015 09:07:40 Source:
Aug.20,2015(SHMET)--

Gold climbed to its highest in a month during Wednesday’s afternoon trading following the release of downbeat US data, ahead of the release of the Federal Reserve’s July meeting minutes.

 

The spot gold price was last at $1,128.0/1,128.2 per ounce, up $10.50 on Tuesday’s close and its highest since July 20. Trade has ranged from $1,116.3 to $1,129.5 so far.

 

In today’s data, the CPI and core CPI month-over-month in July were up 0.1 percent, both below the forecast of 0.2 percent.

 

Attention is now switching to the release of the Fed minutes from the July 28-29 meeting, which will be scrutinized for clues on whether the US central bank might raise interest rates next month. However, participants said that the minutes are for a meeting held before the Chinese yuan devaluation which rocked the markets last week.

 

At the moment, the Fed Fund Futures regard the probability of a rate hike in September as being less than 50 percent.

 

“If the market prices in a higher probability as a result, the gold price could come under renewed pressure, though the kind of sharp price fall seen in July is no longer likely, given the now better market sentiment and buying which would then be expected,” Commerzbank said.

 

In other data today, out of the eurozone, the region’s current account in June was 25.4 billion, above the consensus of 19.2 billion.

 

Japan’s trade deficit widened as exports slowed, while its all industries activity index climbed 0.3 percent.

 

In the other precious metals, silver was last at $15.17/15.22, up 32 cents. Platinum at $1,003/1,008 was $11 higher and palladium at $602/607 climbed $7.

 

 

Edited by SHMET
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