News

Gold trends upward, investors eye FOMC minutes

Date Aug 20 2015 09:07:26 Source:
Aug.20,2015(SHMET)--

Gold prices were lingering above the previous settlement as market participants prepare to glean any new information from the Federal Open Market Committee (FOMC) July meeting minutes. 

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $2.80 or 0.3 percent to $1,119.70 per ounce. Trade has ranged from $1,115.50 to $1,124.30.

 

Today’s release of the FOMC minutes – a detailed account of the discussions from the previous month’s meeting – is one of the last key dates before the members approach a decision on a normalisation of interest rates.

 

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.

 

September is seen as a likely launch-point for the FOMC despite inflation lagging behind the Fed’s target rate of two percent.

 

“The uncertainty as to when the first Fed interest rate hike might happen is currently arguing against significantly higher prices.” Commerzbank said. “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.”

 

Currently, the probability of rate hike stands at 36 percent, according to the CME Group Fedwatch – a tool to gauge the market’s view on the likelihood of a change in US monetary policy.

 

In data today, EU current account in June was 25.4 billion, above the consensus of 19.2 billion. While in the US, CPI and CORE CPI month-over-month in July were up 0.1 percent, both below the forecast of 0.2 percent.

 

Besides the FOMC meeting minutes, crude oil inventories in the US are slated for release later today.

 

Turning to wider markets, Germany’s DAX and France’s CAC-40 were down 1.3 percent and 0.9 percent respectively, while the euro was 0.1 percent stronger at $1.1037 against the dollar.

 

As for the other precious metals, Comex silver for September delivery was last up 11.5 cents at $14.905 per ounce. Trade has ranged from $14.795 to $14.975.

 

Platinum for October delivery on the Nymex rose 90 cents to $995.0 per ounce, while the most-actively traded palladium contract was at $596.65 per ounce, up 35 cents.

 

 

Edited by SHMET

Gold stable, market awaits Fed minutes

Date Aug 20 2015 09:07:08 Source:
Aug.20,2015(SHMET)--

Gold was stable above $1,120 per ounce on Wednesday morning, as investors remained on the sidelines ahead of the Federal Reserve’s July meeting minutes that could give clues on whether the US central bank might raise interest rates next month.

 

The spot gold price was last at $1,121.9/1,122.4, up $4.40 on Tuesday’s close. Trade has ranged from $1,116.3 to $1,124.2 so far.

 

Gold came under pressure for a time on Tuesday, dropping to $1,110 at one point following upbeat US housing starts data for July, which came in at an annualised 1.21 million, above consensus of 1.19 million and the highest level in almost eight years.

 

“The rapid price recovery shows that lower prices generate buying interest and cause the selling pressure among speculators to abate,” broker Commerzbank noted.

 

The focus today is on the US data, including Fed minutes from the July 28-29 meeting and July CPI number.

 

“Market participants are desperate for a clear signal, in either direction, about the likelihood of a September 2015 rate hike in today’s FOMC minutes,” MKS said in a note.

 

“Should the minutes be less hawkish than expected, especially considering the market is tight short-term (1 month-3 month gold still trading below flat), we will likely see a test of upside resistance at $1,125-1,133,” it added.

 

Still, participants said that the minutes are for a meeting held before the Chinese yuan devaluation which rocked the markets last week.

 

“A September rate rise is still possible, but inflation will need to show signs of picking up from its recent rock-bottom levels,” Mitsubishi said in a report.

 

“The Fed is likely to cite low inflation as a reason to delay rate hikes, and this will be gold-positive, in our view,” it added.

 

According to Fed Fund futures, the market is pricing in a December rate hike as the most likely outcome at this stage.

 

In other data today, Japan’s trade deficit widened as exports slowed, while its all industries activity index climbed 0.3 percent. The eurozone’s current account came in better than expected at a 25.4 billion euro surplus.

 

In the other precious metals, silver was last at $14.96/15.01, up 11 cents. Platinum at $992/997 was unchanged, while palladium fell $3 to $592/597.

 

Edited by SHMET

LME MORNING – Base metals hit fresh lows, copper eyes break under $5,000/t

Date Aug 19 2015 09:04:44 Source:
Aug.19,2015(SHMET)--

 

Base metals, bar tin, were under pressure during Tuesday’s pre-LME sessions, with copper looking susceptible to dropping under the key $5,000 per tonne level.

 

The red metal was last at session and fresh six year lows of $5,012 per tonne, a $103 loss. Meanwhile volumes have picked-up as close to 7,500 lots have changed hands on Select so far.

 

LME stock data did little to improve sentiment. Inventories were back up to January-2014 highs, rising 2,950 tonnes today to 353,600 tonnes due to increases in Singapore, New Orleans and Triste. 

 

“There is general weakness triggered by fresh six-year lows, yuan devaluation, a global slowdown and oil threat. Add to this, a stock increase and China slowdown and it’s not looking good,” said an LME copper trader.

 

Oil prices are weak, amid concern that demand from China will be lower – Brent was down $0.27 to $48.47 per barrel and WTI crude at $41.59, down $0.28.

 

Chinese equities have fallen this morning – the CSI300 dropped 1.5 percent, following a decline in new home prices, which lost an average of 3.7 percent against the same period last year.

 

Concerns over Chinese growth and demand continue to weigh on the complex. Data released over the weekend showed that Chinese production of aluminium, copper and nickel rose in July, which will do little to improve sentiment.

 

Later the US will release its FOMC minutes from the last meeting, which investors will scrutinise for further signals as to when an interest rate rise will come into effect. Still, participants said that the minutes are for a meeting held before the Chinese yuan devaluation which rocked the markets last week.

 

As well, the US is set to release its building permits and housing starts data.

 

Zinc at $1,786 was down $29 as stocks soared by close to 40,000 tonnes to 502,900 tonnes and the highest since April 10. The increase was due to 30,700 tonnes of arrivals into New Orleans, while Johor was up 9,500 tonnes.

 

In spreads, cash/September, which had been in a backwardation in earlier sessions, was last level, although the cash/October remained backwardated at $2.

 

Aluminium was at a fresh July 2009 low, having dropped to $1,549.50 – it was last at $1,557, a $11 loss. Still, stocks were down 10,025 tonnes to 3,335,575 tonnes. Cancelled warrants were down 9,925 tonnes to 1,331,700 tonnes.

 

Nickel was last at $10,420, a $205 loss, but still comfortably off last week’s low of just $9,100. Expectations of tighter supplies, due to a strike at South Africa’s Nkomati nickel mine and a suspension of Vale’s Onca Puma in Brazil, are helping to keep a floor under prices, RDM Triland noted.

 

Stocks were up 156 tonnes to 454,974 tonnes and cancelled warrants fell 942 tonnes.

 

Lead at $1,698 was down $30, although stocks were down 2,275 tonnes to 201,425 tonnes.

 

Tin bucked the downward trend – it was last at $15,600, up $125, as it found support from the ongoing backwardation. The benchmark cash/threes was last at a backwardation of $100, amid reports that lengthy administrative procedures for tin smelters to obtain newly required export licences could result in zero shipments from Indonesia this month.

 

Stocks were down 60 tonnes to 6,285 tonnes and cancelled warrants fell 405 tonnes to 2,345 tonnes.

 

Steel, cobalt and molybdenum were all neglected. Cobalt stocks were 31 tonnes higher at 493 tonnes and cancelled warrants were down three tonnes to 49 tonnes.

 

 

Edited by SHMET

Gold steady, investors turn to FOMC minutes

Date Aug 19 2015 09:04:15 Source:
Aug.19,2015(SHMET)--

Gold prices were mostly flat today as investors were idle ahead of tomorrow’s release of the Federal Open Market Committee (FOMC) minutes.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange fell $1.50 to close at $1,116.90 per pounce. Trade ranged from $1,108.50 to $1,120.40.

 

The minutes from the July FOMC meeting are due for release tomorrow and could provide some final clues ahead of the Fed’s highly anticipated September meeting.

 

Currently, the probability of a September rate hike stands at 36 percent, according to the CME Group Fedwatch – a tool that gauges the market’s view on the likelihood of a change in US monetary policy.

 

“Citi strategists see continued strength for the dollar as the Fed begins tightening,” Citi Research said. “If this appreciation manifests, then we are likely to be in for more pain in gold markets even after the first hike takes place.”

 

Turning to currency news, the People’s Bank of China (PBoC) lowered the reference slightly of the yuan to 6.3966 from 6.3939. The ongoing devaluation to the dollar is leading investors to selloff Chinese positions.

 

Overnight, the Shanghai Composite Index fell 6.2 percent to 3,748.16.

 

In data, Chinese new home prices fell by 3.7 percent in July from the previous year. However, the decline didn’t match June’s 4.9 percent dip. New home prices climbed in 31 out of the 70 cities monitored, up from 27 previously.

 

Meanwhile in the US, building permits in July gained 1.12 million, below the forecast of 1.23 million, while housing starts in July were at 1.21 million, above consensus of 1.19 million.

 

For the year, housing starts are up 10.1 percent from the same period in 2014.

 

In US equities, the Dow Jones industrial average and S&P were down 0.1 percent and 0.2 percent respectively, while the dollar was 0.4 percent stronger at $1.1029 against the euro.

 

As for the other precious metals, Comex silver for September delivery was last down 48.3 cents at $14.815 per ounce. Trade has ranged from $14.680 to $15.325.

 

Platinum for October delivery on the Nymex fell $7.0 at $993.70 per ounce, while the most-actively traded palladium contract was at $596.55 per ounce, down $17.25.

 

 

Edited by SHMET

Gold slips after upbeat US housing data, Fed minutes in focus

Date Aug 19 2015 09:04:02 Source:
Aug.19,2015(SHMET)--

Gold slipped on Tuesday afternoon following better than expected US housing starts data, with the market now looking towards the release of minutes from the last FOMC meeting.

 

The spot gold price was last at $1,115.5/1,116.0 per ounce, down $1.50 on Monday’s close. Trade has ranged from $1,109.8 to $ 1121.2 so far.

 

The US housing starts data in July was at an annualised 1.21 million, above consensus of 1.19 million and the highest level in almost eight years. For the year, housing starts are up 10.1 percent from the same period in 2014.

 

Meanwhile, building permits in July were 1.12 million, below the forecast of 1.23 million.

 

“Despite the release of slightly weaker-than-anticipated building permits in July, the dollar continues to push higher, exerting downward pressure on metals,” Boris Mikanikrezai, FastMarkets analyst, said.

 

The mostly better-than-expected data should strengthen expectations of the Federal Reserve lifting US interest rates in September.

 

“If the bounce in gold is to get a second wind over the next couple of days market expectations of a September Fed rate rise will need to diminish,” Tom Kendall, ICBC Standard Bank analyst, said.

 

Minutes from the Fed’s July 28-29 meeting will be released on Wednesday, which investors will scrutinize for further signals as to when an interest rate rise will come into effect.

 

“Any change in language that suggests December is now a more likely date for the Fed to act than September would likely be sufficient to get gold back up to the $1,135 area, particularly if (as expected) the German lower house votes through the latest Greek bailout package and the euro revisits the 1.13 level,” Kendall said.

 

In the other precious metals, silver was last at $14.81/14.86, down 48 cents. Platinum at $988/993 dropped $7 and palladium at $597/601 was down $15.

 

 

Edited by SHMET
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