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Gold Holds Below $1,300 as Dollar Strength Assessed With Ukraine

2014-08-06T10:58:00.003+05:30

Gold held below $1,300 an ounce as U.S. data that beat estimates strengthened the dollar, curbing demand for an alternative investment and countering haven bids from worsening tension between Ukraine and Russia.

Gold for immediate delivery traded at $1,290.22 an ounce at 11:05 a.m. in Singapore from $1,288.78 yesterday, when the metal rose and fell at least 0.4 percent before ending little changed, according to Bloomberg generic pricing. The dollar held near a nine-month high against the euro today.

Bullion ended a 12-year rally in 2013 on speculation the Federal Reserve would end monthly bond-buying used to fuel growth. Reports yesterday showed factory and service gains in the world’s largest economy, signaling that the recovery may be strengthening. Gold rebounded 7.2 percent this year, partly as unrest in Ukraine and the Middle East boosted haven demand.

Gold “is caught between an improving U.S. economy and tension in Ukraine,” said Huang Wei, a Shanghai-based analyst at Huatai Great Wall Futures Co. “We remain cautious as the Fed maintains its path to end asset purchases.”

Fed Bank of Dallas President Richard Fisher said yesterday that fellow policy makers are becoming more hawkish. In June, Fed officials forecast they would raise the federal funds rate above zero sometime next year, without specifying a month.

Poland said yesterday a renewed buildup of Russian troops on Ukraine’s border raises the specter of a possible invasion of its neighbor, as President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions.

Gold for December delivery advanced 0.5 percent to $1,291.50 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, were unchanged at 800.05 metric tons yesterday.

Silver for immediate delivery rose as much as 0.4 percent to $19.8634 an ounce and traded at $19.8612. Earlier, the metal dropped to $19.74, the lowest level since June 18.

Spot platinum traded at $1,458.50 an ounce from $1,457.44 yesterday, when prices dropped for a second day. Palladium increased 0.3 percent to $848.23 an ounce, halting a four-day losing streak. - Bloomberg

Venezuela Says It Wants $10 Billion for Citgo Oil Assets

2014-08-06T10:56:00.003+05:30

Petroleos de Venezuela SA, the Latin American nation’s state-owned crude producer, said the U.S. oil refining and marketing assets it’s seeking to sell are worth more than $10 billion.

“Their value is much, much more,” Rafael Ramirez, president of the oil producer known as PDVSA, told reporters yesterday. The company is receiving offers for assets of Houston-based Citgo Petroleum Corp., he said, without providing details of the value of the bids received.

PDVSA is seeking to sell Citgo assets, the U.S. unit said in a July 29 bond prospectus document. The company owns three refineries capable of handling about 749,000 barrels a day in Louisiana, Texas and Illinois, and sells gasoline through about 6,000 stations.

“We are not a refining company, we’re an oil producing company,” Ramirez said at an event marking 100 years of Venezuelan oil production in the western Zulia state.

Venezuela President Nicolas Maduro is seeking to sell foreign refineries to boost oil exports to China, raise cash and reduce the risk of having assets seized if it loses international lawsuits brought by former oil partners, GlobalSource Partners’ Ruth de Krivoy and Tamara Herrera said July 31 in an e-mailed report to clients.

“Our situation is not like many analysts have said, claiming that we need fiscal revenues,” Ramirez said. “We are doing well with our fiscal revenues from the oil sector.”

Contract Disputes

Contract disputes and expropriations have been filed at the International Centre for Settlement of Investment Disputes and the International Chamber of Commerce’s Court of Arbitration by mining and oil companies that operated in the country including Exxon Mobil Corp. (XOM), Gold Reserve Inc., Phillips 66 and ConocoPhillips.

“With takeovers of Exxon and ConocoPhillips upgraders, these assets could be potentially taken to satisfy an arbitration ruling against them,”Andy Lipow, president of Houston-based Lipow Oil Associates LLC energy consulting firm, said in a phone interview.

Venezuela is Latin America’s biggest oil exporter, shipping 1.8 million barrels a day in 2013, according to the BP Statistical Review of World Energy.

Maduro has spent revenue from exports on social programs created by predecessor Hugo Chavez and debt repayments, pushing the country’s public sector deficit to 12.3 percent of gross domestic product last year, according to Barclays Plc.

Citgo had sales of $42.3 billion last year and earnings before interest, taxes, depreciation and amortization of $1.8 billion, according to the bond prospectus. - Bloomberg

WTI Gains Second Time in Three Days on Stockpiles; Brent Rises

2014-08-06T10:52:00.000+05:30

West Texas Intermediate rose for a second time in three days after an industry report showed crude stockpiles declined in the U.S., the world’s biggest oil user. Brent climbed in London.

Futures advanced as much as 0.4 percent in New York. Crude supplies shrank by 5.5 million barrels last week, the American Petroleum Institute was said to report yesterday. Data from the Energy Information Administration today is projected to show inventories slid by 1.55 million, according to a Bloomberg News survey. Kurdish oil exports remain unaffected by the turmoil in Iraq, producer Genel Energy Plc said.

“There is a possibility that the market is starting to develop a bit of a range around here,” said Ric Spooner, a chief strategist at CMC Markets in Sydney who predicts investors may sell West Texas contracts if prices climb to about $98.70 a barrel. “Iraq looks to be contained for the short term. Markets are prepared to leave the premium at a relative low on a watching brief basis.”

WTI for September delivery rose as much as 34 cents to $97.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.62 at 12:15 p.m. Singapore time. The contract dropped 0.9 percent to $97.38 yesterday, the lowest price since Feb. 5. The volume of all futures traded was about 33 percent below the 100-day average.

Brent for September settlement climbed as much as 45 cents, or 0.4 percent, to $105.06 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.36 to WTI. It closed at $7.23 yesterday.

Fuel Supplies

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies fell by 3.6 million barrels during the week ended Aug. 1., the API in Washington said, according to Bain Energy. Inventories were probably unchanged at 218.2 million, the survey shows before the EIA report.

Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest oil-storage hub in the U.S., increased by 51,000 barrels, the API was said report. The group collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm.

The peak driving season in the U.S. typically starts at the end of May and runs through to Labor Day in September.

Mideast Unrest

Genel Energy, the largest producer in Iraqi Kurdistan, is confident that the region’s independent pipeline exports won’t be impeded by the violence and political turmoil engulfing the country. The regional government has loaded five cargoes in Ceyhan, Turkey, and two have been bought and paid for, Chief Financial Officer Julian Metherell said yesterday.

The conflict has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the Organization of Petroleum Exporting Countries’ second-largest producer, pumping 3 million barrels a day in July.

In Libya, National Oil Corp. is in talks to resume exports from the Es Sider port, according to Mohamed Elharari, a spokesman for the state-run company. Shipments from the Ras Lanuf terminal will start this week, Elharari said yesterday. The facilities were handed over last month by rebels seeking self-rule in the east of the country, the holder of Africa’s biggest crude reserves. - Bloomberg

Dollar Approaches 9-Month High on Economy, Ukraine; Kiwi Slides

2014-08-06T10:49:00.003+05:30

The dollar approached the strongest in almost nine months versus the euro as signs the U.S. economy is strengthening and tensions over Ukraine are increasing boosted the appeal of American assets.

A gauge of the greenback climbed toward the highest since February after data yesterday showed factory orders and service activity increased and Federal Reserve Bank of Dallas President Richard Fisher said his fellow policy makers were becoming more “hawkish.” Poland said a buildup of Russian troops on the Ukraine border raises the specter of a possible invasion. New Zealand’s dollar slid to a two-month low after job growth slowed more than economists forecast and dairy prices fell.

“A strong batch of U.S. data helped the U.S. dollar’s cause,” said Imre Speizer, a markets strategist based in Auckland at Westpac Banking Corp. “There was also a good dose of risk aversion last night, and that would’ve helped the U.S. dollar as well.”

The dollar gained 0.1 percent to $1.3368 per euro as of 1:13 p.m. in Tokyo after advancing to $1.3358 yesterday, the strongest since Nov. 11. The U.S. currency was little changed at 102.56 yen. The yen appreciated 0.1 percent to 137.11 per euro.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose less than 0.1 percent to 1,023.45 after climbing to 1,024.01 yesterday, the highest since Feb. 13.

Recovery Signs

The Institute for Supply Management’s non-manufacturing index expanded in July at the fastest pace since December 2005, the group said yesterday. Factory orders climbed 1.1 percent in June, almost twice as much as predicted in a Bloomberg News survey, after falling a revised 0.6 percent the previous month, the Census Bureau said.

The Federal Open Market Committee “is coming in my direction,” Fisher said in an interview with Fox Business Network yesterday. The Dallas Fed president said he has a “hawkish slant” on monetary policy.

Fisher is trying to help out the dollar “with his usual hawkish comments,” Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney, wrote today in a client note. “It seems the market may just be swinging around to believe him.”

Traders are willing to pay a premium for one-month options to buy the dollar against all of its 16 major counterparts, 25-delta risk reversals show.

Ukraine Tension

Russian President Vladimir Putin ordered his government to prepare a response to U.S. and European sanctions. He has shown no sign of backing down over Ukraine, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.

The dollar has strengthened 1.7 percent in the past month, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen gained 1.2 percent, while the euro fell 0.2 percent.

The kiwi dropped for a second day after Statistics New Zealand said employment increased 0.4 percent in the second quarter, less than the median estimate of 0.7 percent growth among economists surveyed by Bloomberg.

“Before this report, there was a bias to sell the kiwi dollar,” Westpac’s Speizer said. “This gives the market an excuse to go and do some more.”

The currency also weakened after GlobalDairyTrade said whole milk powder prices tumbled 11.5 percent at auction yesterday to a two-year low. That extended the decline to 46 percent from a peak in February.

The New Zealand dollar declined 0.4 percent to 84.35 U.S. cents after sliding to 84.24 cents, the weakest since June 5. - Bloomberg

WTI Trades Near 3-Day High Before U.S. Supply Data; Brent Steady

2014-08-05T11:55:00.000+05:30

West Texas Intermediate crude traded near the highest price in three days before supply data that will signal the strength of fuel demand in the U.S., the world’s biggest oil consumer. Brent in London was steady.

Futures were little changed in New York after snapping a five-day losing streak yesterday. Gasoline stockpiles probably fell for the first time since June last week, according to a Bloomberg News survey before a government report tomorrow. Kurdish fighters in Iraq retook northern border towns seized by militants from Islamic State, a breakaway al-Qaeda group, the Kurdistan Democratic Party said on its website.

“It’s been a good driving season,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone, referring to the summer period of peak fuel demand. “There is quite a sound floor below the price at the moment.”

WTI for September delivery was at $98.38 a barrel in electronic trading on the New York Mercantile Exchange, up 9 cents, at 2:45 p.m. Sydney time. The contract gained 0.4 percent to $98.29 yesterday, the highest close since July 30. The volume of all futures traded was about 39 percent below the 100-day average. Prices are little changed this year.

Brent for September settlement rose 18 cents, or 0.2 percent, to $105.59 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.20 to WTI. It closed at $7.12 yesterday.

Fuel Supplies

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies probably fell by 300,000 barrels to 217.9 million during the week ended Aug. 1, according to the median estimate of nine analysts surveyed by Bloomberg before the Energy Information Administration report. The country’s peak driving season typically runs from the end of May to Labor Day on Sept. 1.

U.S. crude inventories shrank by 1.5 million barrels to 365.9 million, the survey shows. Distillate stockpiles, a category that includes heating oil and diesel, expanded by 700,000 barrels.

The American Petroleum Institute is scheduled to release separate supply data today. The industry-funded group in Washington collects data on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA.

Mideast Unrest

Kurdish fighters recaptured Sinjar and Rabia’ah near the Syrian border after heavy fighting yesterday, according to the Kurdistan Democratic Party. At least 50 Islamic State militants were killed as security forces battled to regain the village of Wana, south of Mosul dam.

In Libya, turmoil could have “negative ramifications on a global scale” if the country continues to spiral out of control, Abu Bakr Bueira, a senior lawmaker told the country’s newly elected parliament yesterday. The nation is the smallest OPEC producer and holds Africa’s biggest oil reserves. - Bloomberg

Gold Holds Below $1,300 as Easing Debt, Gaza Concerns Cut Demand

2014-08-05T11:47:00.000+05:30

Gold held below $1,300 an ounce as Portugal’s bailout of Banco Espirito Santo SA reduced concern the lender’s crisis may spread and tension in Gaza eased, damping demand for a haven. Silver rose from a six-week low.

Gold for immediate delivery was at $1,288.99 an ounce at 12:16 p.m. in Singapore from $1,288.25 yesterday, according to Bloomberg generic pricing. The metal fell 0.4 percent yesterday as Portugal’s central bank took control of Banco Espirito Santo, helping the Standard & Poor’s 500 Index rebound from the biggest weekly loss in two years. Bullion fell for a third week in the period to Aug. 1, the longest such slump since September.

Data from the Institute for Supply Management may show today that U.S. services expanded to 56.5 in July from 56 in June, supporting the case for the Federal Reserve to raise borrowing costs. Gold tumbled 28 percent last year on expectations for reduced stimulus in the world’s largest economy. Prices rallied 7.3 percent this year partly on tensions in Ukraine and in the Middle East, where Israel and the Palestinians yesterday agreed to a 72-hour truce in Gaza.

“Interest in gold is fading as U.S. economic data continue to show signs of improvement,” Xia Yingying, an analyst at Nanhua Futures Co., said from Hangzhou, China. “Gold is also losing support from geopolitical tensions.”

Gold for December delivery traded at $1,289.70 an ounce on the Comex in New York from $1,288.90 yesterday. Assets in the SPDR Gold Trust, the largest bullion-backed exchange traded-product, fell 0.2 percent to 800.05 metric tons yesterday after being unchanged for six days.

Silver for immediate delivery rose 0.1 percent to $20.1893 an ounce. Prices earlier dropped to $20.1402, the lowest since June 19, sending the metal’s ratio to gold to 64.4204, the highest since June 18.

Spot platinum increased 0.2 percent to $1,464.75 an ounce, while palladium added 0.2 percent to $857.40 an ounce. - Bloomberg

Gold Seen Reaching $1,400 by USAGOLD as U.S. Inflation Quickens

2014-08-05T11:39:00.002+05:30

Gold will extend this year’s surprise rally and climb to the highest price since September on the outlook for accelerating inflation, USAGOLD Centennial Precious Metals Inc. said.

The metal will reach $1,400 an ounce by the end of the year, also supported by higher demand from Asia, Peter Grant, chief market analyst at USAGOLD in Denver said in a telephone interview yesterday. Bullion will climb even if the Federal Reserve increases interest rates, because gains in borrowing costs will probably be accompanied by rising consumer prices, he said.

Gold futures surged 57 percent in the two years through June 30, 2006, as the Federal Reserve raised its benchmark rate to 5.25 percent from 1.25 percent. Interest rates rose as the central bank struggled to contain inflation that accelerated to 4.3 percent, from 3.3 percent. Bullion fell 3 percent in July as the prospect of rising borrowing costs curbed the appeal of the metal as an alternative asset.

“If you look back over time, there are plenty of instances where rates have risen and gold has risen as well,” said Grant, who has tracked the precious metal for 28 years. “Inflation was going up and the Fed was chasing inflation by raising interest rates during that period,” he said, referring to 2004 to 2006.

The metal rallied 7.2 percent this year to $1,288.90 on the Comex in New York partly as violence in Ukraine and the Gaza Strip boosted demand for haven assets. Gold tumbled 28 percent in 2013, the biggest slump in three decades, as signs of accelerating U.S. economic growth raised concern that the Fed’s stimulus would end.

India Imports

The central bank reduced its monthly bond-buying program to $25 billion on July 30, making a sixth consecutive $10 billion cut.

Gold imports by India, the world’s second-largest user, jumped 65 percent in June after the central bank allowed more banks and traders to buy bullion overseas, widening the nation’s trade deficit to an 11-month high.

“I’m primarily looking at the actual physical demand driving prices higher,” Grant said. “I also think inflation is going to pick up a little bit as I anticipate that energy prices are going to rise by year-end as well.”

USAGOLD is a precious-metals dealer. - bloomberg

Zinc up 0.3% on overseas cues, spot demand

2014-08-04T15:05:00.003+05:30

Zinc futures edged higher by 0.28% to Rs 143.60 per kg today as speculators built-up positions amid positive cues from the global market and better domestic demand.

At the Multi Commodity Exchange, zinc for delivery in August gained 40 paise, or 0.28%, to Rs 143.60 per kg, with a business turnover of 247 lots.

The metal for delivery in September also rose 20 paise, or 0.14%, to Rs 143.85 per kg, with a business turnover of two lots.

Globally, at the London Metal Exchange (LME), zinc for delivery in three months advanced 0.90% to USD 2,359.75 per tonne.

Marketmen said besides a firming trend at domestic spot market, the metal's strength at the LME as stockpiles tracked in London and Shanghai decreased and Goldman Sachs Group projected a global deficit this year, supported the upside in zinc prices at futures trade.

LME inventories for zinc fell 1.9% in July, declining for the fourth straight month. Stockpiles monitored by the Shanghai Futures Exchange dropped 1.3% last week to the lowest level since 2009. - business-standard

RPT-GLOBAL ECONOMY WEEKAHEAD-Central bank meetings to set stage for parting of ways

2014-08-04T14:56:00.004+05:30

After the Federal Reserve maintained its path towards raising U.S. interest rates next year, other major central banks will jostle for space on a crowded stage this week.

The European Central Bank, Bank of Japan, Bank of England and the central banks of India and Australia all hold meetings. While imminent action is unlikely, the time when policy settings start pointing in different directions is nearing.

U.S. growth rebounded in the second quarter and the Fed upgraded its assessment of the economy last week. It is on course to stop creating money in October but the expectation is that there will be no interest rate rise before mid-2015.

That puts the Bank of England in pole position to be the first major central bank to push rates up from their record low 0.5 percent, perhaps before the year is out.

Although the UK economy is expanding at an annualised clip in excess of 3 percent and unemployment is tumbling, the absence of wage pressure means there is no immediate reason to act.

The consensus is that rates will not rise until early 2015 but polling by Reuters last week found economists expect a first voice or two on the nine-strong Monetary Policy Committee to call for a rate rise this week.

The last time the MPC was considering raising rates was in 2006. In May of that year, one MPC member voted for a hike and it took just three months before a majority followed suit.

"We expect the jobless rate will continue to fall rapidly, with the BoE hiking earlier and further than markets project," said Michael Saunders, chief UK economist at Citi.

The voting pattern will only become public when minutes of the meeting are released two weeks hence.

The Fed has just registered its first dissenter, with the hawkish Charles Plosser saying the commitment to keep rates near zero for "a considerable time" did not reflect the gains made by the economy.

Lack of wage inflation has been a common theme in the United States and euro zone as well, though U.S. labour costs recorded their biggest gain in more than 5-1/2 years in the second quarter. That spooked Wall Street last week as it may hasten the Fed's first move.

The European Central Bank, which also meets on Thursday, faces a very different problem to the Bank of England.

Euro zone inflation has slipped further - to just 0.4 percent in July - and if it does not start picking up soon, the pressure to start printing money will grow despite strong reservations within the ECB's Governing Council.

"(The inflation data) don't give any assurance that the euro zone is already out of the deflation danger zone," said Peter Vanden Houte, chief euro zone economist at ING.

"Moreover, with the escalating conflict with Russia dampening growth prospects, it seems unlikely that deflation fears will disappear any time soon."

Having cut all its key interest rates in June and unveiled a new scheme to prime banks with cheap long-term money from September in the hope they will lend it on, the ECB will not act until it has had time to judge the impact of those measures.

If the ECB won't consider more dramatic action until late in the year, it will have a small window of opportunity to act before U.S. rates start heading higher in 2015.

Policymakers admit there is little chance of euro zone long-term interest rates decoupling from U.S. ones if they start rising.

NO CHANGE IN ASIA

The Bank of Japan will deliver its latest policy verdict on Friday, following the sharpest fall in factory output since the devastating earthquake and tsunami of 2011.

With the BOJ already having created money at a furious rate, any policy shift is unlikely. But it may have to temper its assessment that production is "rising moderately as a trend", toning down its upbeat language on the outlook as it becomes less sure about when or even if exports will rebound.

The Reserve Bank of India will leave its key interest rate at 8 percent on Tuesday and won't ease policy until early next year on fears food inflation will spike if monsoon rains are below average, according to a Reuters poll.

Growth is slowing and has stayed below 5 percent in the past two years, well below levels needed to create enough jobs for India's young and expanding workforce.

The Reserve Bank of Australia is also expected to hold rates at 2.5 percent when it meets on Tuesday. Its next move is likely to be up rather than down, but not until next year.

Chinese trade data are due on Friday, kicking off the monthly run of indicators.

Latest survey evidence from the world's number two economy showed factories posted their strongest growth in at least 1-1/2 years in July, adding to evidence that the economy is gaining momentum after a spate of state stimulus measures. - reuters

Freeport Indonesian Unit May Start Exporting Copper Concentrate Wednesday -CEO

2014-08-04T14:44:00.003+05:30

PT Freeport Indonesia may start exporting copper concentrate on Wednesday after it reached an agreement with the government late last month to resume the exports after a six-month stalemate.

Freeport Indonesia's Chief Executive Rozik Soetjipto said that the local unit of U.S. copper and gold producer Freeport-McMoRan Inc. (FCX) may resume overseas shipments with 10,000 metric tons of the mineral bound for China.

The Indonesian government in January imposed an export ban on unprocessed ores aimed at keeping lucrative refining work within the country. In addition to the ore-export ban, the government in January imposed export duties on mineral concentrates of copper, iron, zinc, and manganese. The duties, which begin at 20%-25%, would rise to 60% before a complete ban on concentrate exports is imposed in 2017.

The government and Freeport Indonesia on July 25 struck a deal allowing the miner to pay lower export taxes as it agreed to build a smelter in Indonesia.

Director General of Coal and Mineral Resources Sukhyar said then that Freeport Indonesia's total copper-concentrate exports are expected to reach 756,300 tons by year-end, with an estimated value of $1.56 billion. - morningstar

Gold Above One-Month Low as U.S. Economy Assessed With Rates

2014-08-04T12:09:00.000+05:30

Gold traded above a one-month low after three weeks of losses as investors weighed the health of the U.S. economy against the outlook for higher borrowing costs. Silver climbed from the lowest level in six weeks.

Gold for immediate delivery was at $1,292.90 an ounce at 11:31 a.m. in Singapore from $1,293.75 on Aug. 1, according to Bloomberg generic pricing. That day the metal fell to $1,279.30 an ounce, the lowest since June 19, before rebounding to pare the third week of losses that was the longest since September.

U.S. data Aug. 1 showed that while employers added more than 200,000 jobs for a sixth month, the jobless rate rose, damping bets the Federal Reserve will raise interest rates soon after ending monthly bond purchases later this year. That buoyed bullion as the Bloomberg Dollar Spot Index snapped a six-day win streak. Gold also rose on Aug. 1 as global equities fell after Banco Espirito Santo SA, which was taken over by Portugal’s central bank yesterday, was ordered to raise capital and Argentina defaulted.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” said Zhang Lin, an analyst at Yongan Futures Co. in Hangzhou, China. “The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term.”

Gold for December delivery traded at $1,293.80 an ounce on the Comex in New York from $1,294.80 on Aug. 1, when futures climbed 0.9 percent to trim a third weekly drop. Money managers cut their net-long position 10 percent in the week through July 29, the most since June, U.S. government data show.

Silver for immediate delivery added 0.2 percent to $20.3665 an ounce, after earlier falling to $20.255 an ounce, the lowest price since June 19. The metal retreated 3 percent in July for the biggest monthly loss since March.

Spot platinum lost 0.1 percent to $1,462.88 an ounce after declining in July. Palladium decreased 0.1 percent to $863.85 an ounce after prices capped a sixth month of gains in July for the longest such run since January 2011. - Bloomberg

Hedge Funds Cut Gold Bull Wagers by Most in Eight Weeks

2014-08-04T12:03:00.001+05:30

Hedge funds reduced bets that gold would rally from the longest retreat in a year as U.S. economic growth exceeded analysts’ estimates.

Money managers cut their net-long position by 10 percent in the week through July 29, the most since June, U.S. government data show. Prices dropped for a third week, the longest slide since July 2013. The decline helped to erase almost $610 million from the value of exchange-traded products backed by the metal.

Gold fell 3 percent in July, snapping a 10 percent rally in the first half of the year that outpaced gains for commodities, equities and Treasuries. Even as violence escalated in the Middle East and Eastern Europe, investors sold bullion as signs of quickening American expansion reignited concern that the Federal Reserve will raise borrowing costs. The U.S. grew 4 percent in the second quarter.

“The economic climate has become more moderate in the U.S., and there’s no sign of inflation picking up, so the fear factor that typically drives gold has subsided,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem,Pennsylvania, said Aug. 1. “If we continue to see this reasonable growth rate, I think gold will stay in a narrow range.”

Futures fell 0.6 percent in the past 12 months to $1,294.30 an ounce in New York. The Bloomberg Spot Commodity Index of 22 raw materials rose 2 percent, while the MSCI All-Country World Index of equities climbed 11 percent. The Bloomberg Treasury Bond Index advanced 3 percent.

Short Holdings

The net-long position in gold declined to 122,092 futures and options contracts as of July 29, U.S. Commodity Futures Trading Commission data show. Short holdings betting on a drop jumped 24 percent to 26,101, the highest in five weeks.

The U.S. economy expanded after shrinking 2.1 percent in the first three months of 2014, government data showed July 30. Analysts had predicted second-quarter growth of 3 percent. Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, the Labor Department said the next day. Sales of gold coins by the U.S., Mint fell 38 percent to 30,000 ounces last month, the lowest since March.

Bullion tumbled 28 percent last year, the most in three decades, as a stronger U.S. economy and the prospect of less monetary stimulus curbed demand for alternative assets. The Fed reduced its monthly bond-buying program to $25 billion on July 30, making a sixth consecutive $10 billion cut.

Jobs Report

Even as the central bank stayed on pace to end its debt purchases by October, policy makers repeated that they’re likely to keep interest rateslow for a “considerable time” as they look for more improvement in the job market.

Employers added fewer jobs than forecast in July, and the unemployment rate climbed to 6.2 percent from 6.1 percent in June, data showed Aug. 1. Gold futures jumped 0.9 percent that day, the most in a week.

Investors boosted gold holdings through ETPs by 15.7 metric tons in July, the first gain since March and the biggest since November 2012. The appeal of the metal as a haven rose as tensions escalated between Ukraine and Russia. More than 1,500 Palestinians, most of them civilians, have been killed after Israel’s attack on Gaza. More than 60 Israelis have also died, mostly soldiers, since the conflict escalated July 8.

‘Risk Premium’

“Although the risk premium has eased, if we continue to see geopolitical unrest in Europe and the Middle East, that could certainly be a driver for gold,” Brian Hicks, who helps manage about $350 million at U.S. Global Investors in San Antonio, Texas, said July 31.

Combined net-wagers across 18 U.S. traded commodities dropped 9.1 percent to 822,001 contracts as of July 29, the lowest since January, the CFTC data show.

Analysts at Goldman Sachs Group Inc. last week kept their 12-month recommendation for commodities at neutral. Citigroup Inc. said in June that interest is returning to the asset class as Societe Generale SA called raw materials a “really mixed bag” across the sectors.

Bets on higher oil prices slid 0.5 percent to 276,741 contracts last week, the government data show. Copper holdings dropped 12 percent to 38,859. Inventories tracked by the Shanghai Futures Exchange climbed 37 percent in July, the most since February 2012.

Farm Bets

A measure of net-long positions across 11 agricultural products declined 11 percent to 303,637, the smallest since January, the CFTC data show.

Investors cut bullish bets on cotton by 75 percent to the lowest since December 2012. Prices have fallen for 13 straight weeks, the longest slump since at least 1959.

Bullish bets on corn fell for a third straight week to 63,024, the lowest since February. The grain slumped 14 percent in July, the most since September 2011. U.S. production will climb 4.3 percent to a record 14.518 billion bushels, The Linn Group said Aug. 1.

“There is abundant supply of grains, and we just have a lot of corn,” Shonda Warner, the managing partner of Chess Ag Full Harvest Partners in Clarksdale, Mississippi, which oversees about $150 million, said July 31. “The price could drop another 10 to 15 percent. The only thing that could reverse the trend would be a surge in demand, or something that would reduce supply, like a weather event.” - Bloomberg

WTI Trades Near Six-Month Low Before Economic Data; Brent Holds

2014-08-04T11:56:00.001+05:30

West Texas Intermediate crude traded near the lowest price in six months before data that will signal the strength of the economy in the U.S., the world’s biggest oil consumer. Brent was steady in London.

Futures were little changed in New York after capping the biggest weekly decline in seven months on Aug. 1. The Markit Economics purchasing managers index for U.S. services is due tomorrow, while factory order data is also scheduled this week. In Iraq, militants took control of two oil fields in the north after clashes, according to the Northern Oil Co.

“There is no fear about supply,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “On technical charts, we saw big drops last week, and both WTI and Brent are down to one of the support levels. WTI is very close to $97.50 a barrel and Brent to $104 a barrel. If those levels hold, the market will rebound.”

WTI for September delivery was at $98 a barrel in electronic trading on the New York Mercantile Exchange, up 12 cents, at 1:15 p.m. Singapore time. The contract slid 0.3 percent to $97.88 on Aug. 1, the lowest close since Feb. 6. The volume of all futures traded was about 1.3 percent above the 100-day average. Prices are down 0.5 percent this year.

Brent for September settlement rose 21 cents, or 0.2 percent, to $105.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.08 to WTI. It closed at $6.96 on Aug. 1.

Fuel Demand

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies rose to the highest level in four months as average consumption of the fuel dropped to the lowest since May, even after the country’s peak driving season started with the Memorial Day holiday on May 26.

Markit’s final reading of a gauge for U.S. services is projected to be 60.8 in July, down from 61 in June, according to a Bloomberg News survey. Factory orders probably rose to 0.6 percent in June, a separate survey shows.

Hedge funds and other money managers trimmed their bullish bets on WTI, extending the drop from this year’s peak in June to 22 percent, U.S. Commodity Futures Trading Commission data show. Net-long positions fell 1,375 to 276,741 futures and options combined in the week ended July 29, according to the CFTC.

Mideast Unrest

In Iraq, the Ain Zala and Batma oil fields are under full control of Islamic State, a breakaway al-Qaeda group, according to the state-run Northern Oil Co. Together they have an output of 30,000 barrels per day. The Sunni Islamist militants last month occupied the Qayyara field north of Baghdad.

Fighting has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the second largest producer in the Organization of Petroleum Exporting Countries, pumping 3 million barrels a day in July.

In Libya, Britain dispatched its navy to evacuate its nationals as 22 other people were killed as a result of militia feuds near Tripoli’s international airport. The nation is the holder of Africa’s biggest oil reserves.

Crude oil futures - weekly outlook: August 4 - 8

2014-08-04T11:47:00.003+05:30

West Texas Intermediate oil futures tumbled to a six-month low on Friday, as concerns over U.S. demand for oil and fuel products like gasoline drove prices lower.

On the New York Mercantile Exchange, crude oil for delivery in September fell to a session low of $97.09 a barrel on Friday, the weakest since February 5, before coming off the lows to settle at $97.88, down 0.3%, or 29 cents.

Nymex oil prices were likely to find support at $96.80, the low from February 5 and resistance at $99.85, the high from July 31.

The U.S. Department of Labor said Friday that non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

For the week, Nymex oil futures plunged 4.12%, or $4.21, the worst weekly decline since January.

U.S. oil futures lost more than $2-per-barrel on Thursday as bearish inventory data and heavy losses on Wall Street sent oil below the $100-level.

Weekly supply data showed that total motor gasoline inventories in the U.S. increased by 0.4 million barrels last week to 218.2 million, the highest level in four months.

The ongoing buildup in gasoline stocks during the peak summer driving season in the U.S. was seen as bearish for oil prices, amid speculation of slowing demand.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in New York-traded oil futures in the week ending July 29.

Net longs totaled 276,741 contracts as of last week, down 0.49% from net longs of 278,116 in the preceding week.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for September delivery fell to a daily low of $104.39 a barrel on Friday, the weakest level since April 2, before settling at $104.84 by close of trade, down 1.11%, or $1.18.

The September Brent contract lost 3.27%, or $3.55, on the week, as global supplies were seen as ample despite ongoing violence in Iraq, Libya and Eastern Europe.

Meanwhile the spread between the Brent and the WTI crude contracts stood at $6.96 a barrel by close of trade on Friday, compared to $6.30 in the preceding week.

In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the European Central Bank, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments. - investing.com

Natural gas futures - weekly outlook: August 4 - 8

2014-08-04T11:42:00.002+05:30

U.S. natural gas futures lost more than 1% on Friday, as demand for the fuel was likely to remain limited after meteorologists predicted mild summer weather in much of the U.S. through the next few days.

On the New York Mercantile Exchange, natural gas for delivery in September dropped 1.12%, or 4.3 cents, on Friday to settle the week at $3.798 per million British thermal units by close of trade.

Futures were likely to find support at $3.725 per million British thermal units, the low from July 28 and resistance at $3.890, the high from July 31.

Natural gas prices have been under heavy selling pressure in recent sessions after updated weather-forecasting models called for mild summer weather across much of the U.S. over the next several days.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Despite Friday’s losses, Nymex natural gas prices tacked on 0.44%, or 1.7 cents, on the week, the first weekly gain in seven weeks.

Natural gas futures rallied almost 1.5% on Thursday after the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 88 billion cubic feet, below expectations for an increase of 93 billion cubic feet.

Total U.S. natural gas storage stood at 2.307 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 21.7% from 23.5% a week earlier and down from a record 54.7% at the end of March.

The EIA's next storage report is slated for release on Thursday, August 7, with analysts expecting a build of 87 billion cubic feet for the week ending August 1.

Inventories rose by 90 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 49 billion cubic feet.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers significantly decreased their bullish bets in natural gas futures in the week ending July 29.

Net longs totaled 16,060 contracts, down 42.1% from net longs of 27,748 in the previous week.

Elsewhere on the Nymex, U.S. crude oil for September delivery settled at $97.88 a barrel by close of trade on Friday, down 4.12%, or $4.21, on the week.

Meanwhile, heating oil for September delivery slumped 1.57% on the week to settle at $2.866 per gallon by close of trade Friday. - investing.com

Gold / Silver / Copper futures - weekly outlook: August 4 - 8

2014-08-04T11:37:00.001+05:30

Gold futures bounced off a six-week low to end Friday’s session almost 1% higher, following the release of weaker than expected U.S. nonfarm payrolls data for July.

On the Comex division of the New York Mercantile Exchange, goldfor December delivery jumped 0.94%, or $12.00, on Friday to end the week at $1,294.80 a troy ounce.

Prices fell to a session low of $1,281.00 an ounce earlier Friday, the weakest level since June 19.

Gold prices were likely to find support at $1,276.20, the low from June 19 and resistance at $1,314.60, the high from July 29.

Gold regained strength after the U.S. Department of Labor said non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

Despite Friday’s strong gains, Comex gold prices declined 0.65%, or $8.50, on the week, the third consecutive weekly loss, as strong U.S. economic data underlined the view that the recovery is gaining momentum.

Official data on Wednesday showed that U.S. economy grew at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0% and following a contraction of 2.1% in the first three months of the year.

Meanwhile, the Fed cut its asset purchase program by $10 billion to $25 billion per month at the conclusion of its two-day meeting on Wednesday, staying on course to end the bond-buying program in October.

Gold has been under heavy selling pressure in recent weeks as an improving U.S. economy fuelled speculation that the Fed will hike interest rates sooner than expected, which would reduce the need for gold for use as a hedge against loose monetary policy.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in gold futures in the week ending July 29.

Net longs totaled 122,092 contracts, down 10.3% from net longs of 136,120 in the preceding week.

Also on the Comex, silver for September delivery shed 0.2%, or 4.1 cents, on Friday to settle the week at $20.37 a troy ounce. Prices slumped to a daily low of $20.24 earlier in the session, the cheapest since June 19.

On the week, the September silver futures contract lost 1.26%, or 26.0 cents, the third straight weekly decline.

Data from the CFTC showed that net silver longs totaled 41,699 contracts as of last week, compared to net longs of 46,221 contracts in the preceding week.

Elsewhere in metals trading, copper for September delivery declined 0.51%, or 1.6 cents, on Friday to end the week at $3.214 a pound by close of trade.

On the week, Comex copper prices fell 0.8%, or 2.9 cents a pound, as investors gauged the health of China’s manufacturing sector.

Official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.

Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.

China is the world's biggest buyer of copper, accounting for roughly 40% of the market.

According to the CFTC, net copper longs totaled 38,859 contracts as of last week, down from net longs of 44,107 contracts in the preceding week.

NYMEX crude prices down in Asia as deamnd lags global supply

2014-08-01T11:26:00.003+05:30

Crude oil prices continued to fall in Asia on Friday with demand seen lagging global supplies though geopolitical events offer a floor.

On the New York Mercantile Exchange, West Texas Intermediate Crude oil for delivery in September traded at $97.77 a barrel, down 0.41%, after hitting an overnight session low of $97.96 a barrel and a high of $99.84 a barrel.

Brent oil on ICE Futures Europe fell 0.5%, to $106.02 a barrel. Prices fell 5.6% this month and are down 4.3% so far this year.

OPEC countries pumped more oil in July than in June, according to Reuters data, which sent oil futures dropping on fears the world is awash in crude.

Reuters reported that supply from OPEC member states averaged 30.06 million barrels per day (bpd) in July, up from 29.92 million bpd in June.

Fears that conflicts in the Middle East were going to disrupt supply never panned out, which softened oil prices despite consensus that the global economy continues to recovery, the U.S. especially. - investing.com

Gold Heads for Longest Stretch of Weekly Losses Since September

2014-08-01T10:56:00.001+05:30

Gold headed for a third weekly loss in the longest run of declines since September as U.S. employment data may add to signs that the world’s largest economy is gaining traction.

Gold for immediate delivery fell as much as 0.3 percent to $1,279.30 an ounce, the lowest level since June 19, and was at $1,283.69 at 11:29 a.m. in Singapore, according to Bloomberg generic pricing. The metal declined 3.4 percent in July to post the biggest monthly loss this year as the Bloomberg Dollar Spot Index completed the largest advance since May 2013.

Gold slumped 28 percent last year on speculation that the Federal Reserve would reduce monthly bond purchases, which were cut this week for a sixth time. Data today may show U.S. employers added more than 200,000 jobs for a sixth month after a report yesterday showed claims ofunemployment benefits in the past month sank to an eight-year low. Bullion failed to rally this week even as weaker corporate results sent global equities tumbling amid Argentina’s debt default.

“Gold prices continued to pull back as stronger-than-expected reports on the U.S. economy damped demand for safety plays,” said Sarah Xie, a Hong Kong-based analyst at Wing Fung Financial Group Ltd. “Investors are reluctant to take big positions ahead of the U.S. jobs data.”

Gold for December delivery climbed 0.1 percent to $1,284.60 an ounce on the Comex in New York. Assets in the SPDR Gold Trust, the largest bullion-backed exchange traded-product, were unchanged for a fifth day yesterday at 801.8 metric tons.

U.S. Payrolls

The Bloomberg Dollar Spot Index held gains after rising yesterday to the highest level since March 20. While the average monthly advance in U.S. payrolls so far in 2014 has been about 231,000, Fed policy makers said in their statement this week that the labor market still has plenty of room for improvement.

Palladium for immediate delivery traded at $873.82 an ounce from $872.88 yesterday, when prices capped a sixth month of gains in the longest such run since January 2011. The metal climbed to $889.75 on July 17, the highest since February 2001, on concern that Russian supplies may be curbed on sanctions.

Palladium, used mainly in catalytic converters, rose 22 percent this year as output was disrupted by a five-month mine strike that ended in June in South Africa, the largest producer after Russia, while demand from the auto industry increased.

Spot silver was at $20.395 an ounce from $20.3962 yesterday, when the metal completed a monthly decline. Platinum added 0.4 percent to $1,465.81 an ounce after dropping in July for the first month in four. - Bloomberg

WTI Drops Below $100 as U.S. Fuel Supplies Rise; Brent Declines

2014-07-31T12:20:00.000+05:30

West Texas Intermediate dropped for a fourth day and slipped below $100 as gasoline stockpiles rose and demand declined in the U.S., the world’s biggest oil user. Brent decreased in London.

Futures fell as much as 1.1 percent in New York. Gasoline supplies expanded by 365,000 barrels last week to 218.2 million, the highest level in four months, the Energy Information Administration said yesterday. Average consumption shrank 0.5 percent over the past four weeks to thelowest since May, even as the country’s peak driving season started with the Memorial Day holiday on May 26.

“This should be a period of peak demand,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The price action is telling us the world does not have an issue with the supply of crude. Oil at $100 is a big level, and I don’t think it will give it up so quickly.”

WTI for September delivery slid as much as $1.11 to $99.16 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.63 at 1:58 p.m. Singapore time. The contract fell 0.7 percent to $100.27 yesterday, the lowest close since July 15. The volume of all futures traded was about 7 percent above the 100-day average. Prices are down 5.5 percent in July, the most in nine months.

Brent for September settlement fell as much as 63 cents, or 0.6 percent, to $105.88 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.64 to WTI, from $6.24 yesterday.

Crude Stockpiles

WTI slid last week as gasoline stockpiles rose the most in six months to the highest level since March, fueling speculation of slowing demand. Consumption of the fuel during the past four weeks shrank to an average 8.95 million barrels a day, according to the EIA, the Energy Department’s statistical arm.

Crude inventories dropped 3.7 million barrels to 367.4 million in the week ended July 25, said the EIA. Supplies at Cushing, Oklahoma, the delivery point for WTI, decreased by 924,000 barrels to 17.9 million, the lowest since October 2008.

Stockpiles of distillates, a category that includes heating oil and diesel, expanded by 789,000 barrels to 126.7 million, the highest level since September 2013.

Gold Heads for Longest Drop in 2 Months as U.S. Economy Improves

2014-07-31T12:04:00.000+05:30

Gold retreated for a fourth day to head for a monthly decline as further signs that the U.S. recovery is gaining momentum strengthened the case for higher borrowing costs in the world’s largest economy.

Gold for immediate delivery fell as much as 0.2 percent to $1,294.24 an ounce, and was at $1,294.97 at 11:28 a.m. in Singapore, according to Bloomberg generic pricing. A fourth day of losses would be the longest streak since June. Bullion dropped 2.4 percent in July, while the Bloomberg Dollar Spot Index headed for the biggest monthly rise since May 2013, as data including gross domestic product beat estimates.

Gold sank 28 percent last year on expectations that the Federal Reserve would trim monthly bond buying, which it did for a sixth time yesterday. Policy makers also said in their July 30 statement that slack in the labor market persisted even as the economy was picking up, repeating that they will keep interest rates low for a considerable time after ending asset purchases. Data tomorrow may show U.S. employers added more than 200,000 jobs for a sixth month.

“Positive U.S. economic data is good for the dollar and bad for gold,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds inChina created to buy bad debt from banks. “Geopolitical concerns still exist for support but the longer-term downtrend is unchanged as the U.S. moves toward tighter monetary policy.”

Bullion rebounded 7.8 percent this year as unrest in Ukraine and the Middle East boosted haven demand. Gaza’s main public market was hit by Israeli air strikes yesterday as the U.S. and European Union escalated sanctions against Russia.

ETP Inflow

Gold for December delivery traded at $1,296 an ounce on the Comex in New York from $1,296.90. U.S. exchange-traded products backed by precious metals took in $536.81 million this month, as of July 29, after a net outflow of $319 million in the six months to June, data compiled by Bloomberg show.

Palladium for immediate delivery traded at $880.76 an ounce from $880.35 yesterday, poised for a sixth month of gains in the longest such run since January 2011. The metal rallied to $889.75 on July 17, the highest price since February 2001, amid concern sanctions against Russia may curb supplies from the world’s largest producer.

Palladium, mainly used in catalytic converters, advanced 23 percent this year as output was disrupted by a five-month mine strike that ended in June in South Africa, the second-largest producer, while usage in cars increased.

Spot silver fell 0.2 percent to $20.5712 an ounce, heading for a 2.1 percent decline this month. Platinum was at $1,478.69 an ounce from $1,479.63 yesterday, set for the first monthly drop in four. - Bloomberg

US economy grows 4% in second quarter

2014-07-31T10:37:00.001+05:30

The US economy grew at an annual rate of 4 per cent in the second quarter, according to an initial Government estimate on Wednesday.

The figure marks a turnaround after gross domestic product registered its first decline in three years in the previous quarter.

The rebound in the April-June period reflected gains in consumer spending and business inventory. Consumer spending rose 2.5 per cent, spurred by purchases of durable goods after growing just 1.2 per cent in the previous quarter, the Bureau of Economic Analysis said.

The boost in second quarter GDP outpaced economists’ expectations. A survey of economists by Bloomberg news agency had predicted 3 per cent growth in the period.

Updated data showed first quarter growth fell a revised 2.1 per cent, less than the 2.9 per cent drop the Bureau of Economic Analysis reported last month.

The steep first quarter decline was attributed to an extremely hard winter that kept consumer spending down along with declines in private inventory investment and state and local Government spending.

The International Monetary Fund (IMF) last week lowered its 2014 growth forecast for the US economy, pointing to the extremely weak first quarter.

GDP would increase by a “disappointing” 1.7 per cent over the year, the Washington-headquartered IMF said in a report.

Meanwhile, the Federal Reserve said it would cut its monthly purchases of government-linked bonds to $25 billion, down from the $35 billion level set at the central bank’s last meeting in June.

The latest cut continues a policy launched in January of regularly trimming the stimulus programme. Until then, the Fed had been buying $85 billion of bonds every month.

The Fed left its benchmark interest rate unchanged at the unprecedented, near-zero level in place since December 2008.

The GDP figures released on Wednesday are an initial estimate based on incomplete data and the Government is due to release more complete figures next month. - thehindubusinessline.com

Zinc glistens with promise

2014-07-28T12:15:00.001+05:30

Zinc prices have risen sharply in the last few months. Since March, spot prices of the metal on the LME have rallied 21 per cent. The metal now trades at $2,392 a tonne The market for zinc had run into deficit in 2013 after being in surplus for six consecutive years. According to data from the International Lead and Zinc Study Group (ILZSG), there was a deficit of 91,000 tonnes in the metal in 2013. This deficit has already widened to 1,07,000 tonnes between January and April this year.

The domestic zinc futures contract, which moves in tandem with LME zinc, is also up about 21 per cent since March this year. The uptrend in MCX Zinc is likely to continue. Investors can consider buying the contract and holding it for gains in the medium term.

Supply constraints

The supply deficit was due to drawdown in mine production. Mine output, which increased 3.8 per cent in 2012, rose by just 0.5 per cent in 2013.

Canada’s two major mines, Brunswick and Perseverance, had shut their operations last year. Together they contributed nearly 3 per cent to the global mine production in 2012.

Supply constraints in the zinc market may remain for some more time to come. Australia’s Century mine, the world’s second largest zinc mine, is expected to close its operations by 2016. Although there have been reports of new mines coming up in the next one-two years, they may not make up for the loss of closed mines, say market experts.

However, while supply will be tight, various projections indicate that demand for zinc will only increase in the coming years. ILZSG forecasts refined zinc consumption to go up over 4 per cent to 13.58 million tonnes this year. With global zinc production (from mines) to increase by only 2.8 per cent to 13.57 million tonnes, a deficit of 1,17,000 tonnes is anticipated.

Lower production and increasing demand could aid further rise in zinc price in the coming months.

Outlook

For the medium term, the outlook is bullish for the MCX Zinc (₹144 a kg) futures contract. The price action from August 2013 to June 2014 shows formation of a triangle. The contract has witnessed a bullish breakout of this triangle pattern this month and also breached a key resistance at ₹139 last week.

Though currently it is in another resistance zone, the downside could be limited if a pullback is seen from this level. A rally to ₹160, the target level of the triangle pattern, looks likely in the medium term. Supports for the contract are at ₹139, ₹134 and ₹129.

Traders with a medium-term perspective can consider taking long positions in MCX Zinc futures contract. If the contract reverses lower from ₹145, accumulate more long positions near ₹139 and ₹135. The contract’s price chart says that the downside will be limited to ₹134. An immediate decline below this level looks less probable at the moment. Stop-loss can be kept at ₹128 for the target of ₹160.

The medium-term outlook will turn negative only if the contract records a strong close below ₹129.

The ensuing target on such a break will be ₹123 and ₹110 — the 55- and 200-week moving average support levels, respectively.

For the short term, the MCX Zinc futures contract has a significant resistance near the current levels at ₹145. Since the contract has risen sharply in a short span of time, there is a high probability for this resistance to trigger a short-term correction in the contract. A reversal from ₹145 can pull the contract lower to ₹139 initially and then to ₹137 — the 21-day moving average.

A further break below this level can drag the contract to ₹134 in the short term. On the other hand, if the contract manages to surpass this hurdle at ₹145, it can extend the current rally to ₹149. The next key short-term resistance for the contract is at ₹149.5 which is the 61.8 per cent Fibonacci retracement level. - thehindubusinessline.com

Asia Stocks Rise as H Shares Head for Bull; Soybeans Gain

2014-07-28T12:05:00.000+05:30

Asian stocks rose, with a gauge of Chinese shares in Hong Kong heading toward a bull market, while Treasuries and oil slipped as investors await data on U.S. services before the Federal Reserve meets this week. Soybeans and corn rallied.

The MSCI Asia Pacific Index (MXAP) added 0.3 percent by 12:33 p.m. in Tokyo, following last week’s 1.4 percent advance. The Hang SengChina Enterprises Index climbed to 11,105.70, more than 20 percent above a March 20 closing low, while trading volume in Shanghai surged. Standard & Poor’s 500 Index futures lost 0.1 percent and the yield on 10-year U.S. notes climbed one basis point after the equity benchmark retreated from a record. Oil in New York and London dropped at least 0.4 percent. Soybean and corn futures jumped at least 0.9 percent.

U.S. reports on services activity and pending home sales are due before the Fed meets to discuss monetary policy, while Goldman Sachs Group Inc. said last week rising yields may spur a retreat in global stocks and bonds over the next three months. Chinese industrial-company profits jumped the most last month since September, data yesterday showed. Israel resumed its offensive against Hamas militants in the Gaza Stripafter a lull in fighting, while the U.S. said it has photos of Russia shelling into Ukraine.

“Sentiment has turned in favor of growth and cheap valuations in the Chinese market,” said Khiem Do, who helps oversee about $60 billion as the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd. The shares have “been lagging for a long time so they’re catching up with world markets. The Fed has communicated to the market that the first Fed-fund rate hike will be more like next year than this year, so should they change their mind then that would be quite negative.”

Asian Valuations

The Hang Seng China Enterprises Index climbed 1 percent today, after it jumped 5.3 percent last week, the most since March. The Hang Seng Index advanced 1 percent while the Shanghai (SHCOMP) Composite Index surged 2.1 percent, with the number of transactions about 170 percent above the 30-day average for the time of day.

The gauge of Chinese shares in Hong Kong trades at 7.7 times estimated earnings, compared with 13.6 times for MSCI’s Asia-Pacific measure. The S&P 500 is at 16.6 times.

Profits at industrial companies in Asia’s largest economy increased by 17.9 percent in June from a year earlier, after gaining 8.9 percent in May, data from China’s statistics bureau yesterday showed. It was the biggest gain since an 18.4 percent climb in September of last year and came after a private gauge of Chinese manufacturing advanced to an 18-month high, data last week showed.

Price Gap

The Hang Seng China AH Premium Index climbed 1.7 percent to 91.65, signaling a narrowing gap between the Hong Kong and mainland share prices of companies with dual listings. A link between the Shanghai and Hong Kong bourses will start from Oct. 13, the National Business Daily said, citing an unidentified brokerage.

The S&P/ASX 200 Index (AS51) was little changed in Sydney, while South Korea’s Kospi index climbed 0.6 percent. Markets in Indonesia, Malaysia and Singapore are closed for holidays.

Goldman Sachs cut its rating on stocks to neutral, the equivalent of hold, for the next three months, according to a quarterly research report from its portfolio strategy group July 25. The bank also lowered corporate credit to underweight and predicted U.S. government bond yields will increase.

U.S. Notes

Amazon.com Inc. drove U.S. stock declines July 25, sliding almost 10 percent after reporting the widest loss since 2012, distracting investors from an earnings season where 79 percent of S&P 500 members have exceeded analysts’ profit estimates. The benchmark U.S. equity gauge fell 0.5 percent to 1,978.34 July 25, declining for the first time in four days.

Yields on 10-year Treasuries climbed to 2.48 percent after slipping four basis points July 25. Australian bonds due in a decade paid 3.42 percent, after rates rose six basis points, or 0.06 percentage point, last week.

The gap between rates on 30-year Treasury notes and five-year debt narrowed to the least since 2009 last week as uncertainty over whether the U.S. economic recovery is on a strong footing vied with concern that the Fed may raise rates earlier than previously anticipated.

The Treasury will auction $29 billion in two-year securities today, $35 billion in five-year debt tomorrow and $29 billion in seven-year bonds July 30. It will also sell $15 billion in two-year floating-rate notes July 30.

Employers probably added 231,000 workers to nonfarm payrolls in July, after a 288,000 increase in June, according to 69 economists’ estimates compiled by Bloomberg before Aug. 1 reports.

Copper, Lead

The Markit Economics composite and service industries purchasing managers’ indexes for the U.S. are due today, along with data on pending home sales. An update on second-quarter gross domestic product is scheduled for July 30, with the FOMC meeting July 29-30.

Copper for delivery in three months on the London Metal Exchange fell as much as 0.5 percent to $7,090 a ton. Freeport-McMoRan Inc. said July 25 that it will resume full operations in Indonesia at its Grasberg copper operation, the world’s third-largest, and plans to restart exports next month after resolving a dispute with the government.

Lead on the LME rose as much as 0.8 percent to $2,284 a ton, heading for the highest close this year. The metal gained 3.7 percent last week, the biggest advance since January. Aluminum was up 0.7 percent to $2,010.50 a ton. - Bloomberg

Asia Stocks Rise as H Shares Head for Bull; Soybeans Gain

2014-07-28T11:55:00.001+05:30

Asian Valuations

The gauge of Chinese shares in Hong Kong trades at 7.7 times estimated earnings, compared with 13.6 times for MSCI’s Asia-Pacific measure. The S&P 500 is at 16.6 times.

Price Gap

The S&P/ASX 200 Index (AS51) was little changed in Sydney, while South Korea’s Kospi index climbed 0.6 percent. Markets in Indonesia, Malaysia and Singapore are closed for holidays.

U.S. Notes

Employers probably added 231,000 workers to nonfarm payrolls in July, after a 288,000 increase in June, according to 69 economists’ estimates compiled by Bloomberg before Aug. 1 reports.

Copper, Lead

Copper Holds Losses as Freeport Set to Resume Indonesia Exports

2014-07-28T11:43:00.004+05:30

Copper dropped for a second day after Freeport-McMoRan Inc. received approval from Indonesia to resume exports from its Grasberg mine.

The metal for delivery in three months fell as much as 0.5 percent to $7,090 a metric ton on the London Metal Exchange and traded at $7,123 at 10:36 a.m. in Hong Kong. Copper has lost 3.2 percent since the start of the year.

Freeport plans to resume copper concentrate exports from Indonesia in August, the company said in a statement Friday. The company had reduced operations by about half at the Grasberg mine, the third largest in the world, after the government introduced restrictions in January to encourage local raw-material processing.

“The exports of concentrates will now be priced in and that’s why prices are down,” Tetsu Emori, a fund manager at Astmax Asset Management Inc., said by phone from Tokyo. “We don’t know yet how much of an impact it will have on actual production on metals.”

Copper futures for September in New York was little changed to $3.242 a pound, while the contract for the same month in Shanghai dropped 0.5 percent to 50,570 yuan ($8,173) a ton.

On the LME, aluminum, zinc and lead climbed, while nickel fell. Tin hadn’t traded.

Tin shipments from Indonesia, the largest exporter, are set to contract the most in seven months in July, Agung Nugroho, corporate secretary at PT Timah, said July 23.