Wednesday, 31 August 2016

CAN GOLD TOUCH $2000?

‘Why isn’t gold at $2,000 an ounce?’  
Gold is one of the best-performing asset classes this year, up nearly 24 per cent. But a small step back reveals it’s down by almost a third from its record intraday high of $1,921.15 an ounce in September 2011. So the real question is: why is gold so weak? 
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The first reason is that – obviously – the price of gold started its recent rally from a low base, of around $1,050 last December, while holdings in exchange traded funds – at just over 1,600 tonnes at the start of this year – are down from the January 2013 high of 2,818t.  


There could be multiple reasons why prices and volumes haven’t risen enough, but Macquarie says a key one is that the “macroeconomic backdrop is less supportive, and this boils down to the fact the US economy and economic outlook is not in the same dire straits that it was in 2011.” One key feature since September 2011 has been the stronger US dollar. Gold may have given up nearly a third of its value since then, but plenty of currencies have also posted double-digit declines against the greenback. 

One other reason is because physical demand is not as it once was. Notably, a slump in jewellery during the first quarter of this year, probably held the gold price back, and physical demand was again lacklustre in the June quarter. Even central banks aren’t buying with the same enthusiasm these days. 

From the perspective of its macroeconomic forecasts, we expects the dollar to appreciate in the short term as the market focuses on the Federal Reserve tightening interest rates, and weaken thereafter. Crucially, they expect neither move to be large.

Crude Oil News Update

Crude Can't Hold Gains As Dollar Strength Puts On Pressure  

October crude oil wasn’t able to hold onto its early gain on Tuesday, August 30, 2016, as US dollar  
strength pressured crude oil prices. The dollar traded up to 96.125, its highest level since August 9th as continued talk of 2 potential rate hikes by Fed speakers supported the US currency. With the dollar gaining strength crude oil reversed course from the high of the day (47.49) and traded through the August 25th low (46.42) and made a new low at 46.21. Price then traded in a tight range (46.70 to 46.27) for the remainder of the day as traders waited for the API report to come out at 3:30 PM CT.

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Crude oil settled at 46.35. The API showed overall crude oil inventories increasing by 942,000 barrels which was less than the expected increase of 1.5 million barrels. Cushing, Oklahoma inventories declined by 620,000 barrels and gasoline decreased by 1.6 million barrels. The surprise was the huge increase in distillates. Distillate inventories rose by 3 million barrels, much more than the 275,000 barrel build expected. 

Crude oil declined off of the report and ended the day at 46.26. The EIA report comes out on Wednesday morning at 9:30 AM CT. Any further breakdown in crude oil prices could lead to tests of support at the 100 DMA (45.99) and then trendline support at 45.27. The 50 DMA is at 45.42. Resistance is at 46.60, 47.49 and 48.46. Trend line resistance drops to 48.96.  

Daily Pivot Points for NYMEX CRUDE OIL 8/31/16 
R2 47.93 
R1 47.10 
PIVOT 46.65 
S1 45.82 
S2 45.37

Tuesday, 30 August 2016

Gold Slips on Firmer Dollar

Gold seesawed within a narrow range on Tuesday on the back of a steady dollar, as investors waited for
cues on the timing of US interest rate hike from non farm payroll data, due later this week. "Gold remains range-bound within a descending triangle over the past month, with price action likely to remain fairly stable while inside this," Alex Thorndike, senior precious metals dealer with MKS PAMP Group, said in a note. 
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"Prices will need to either breach the next major support at $1309-11 (July lows in gold) or $1334.80 (50-day moving average) and $1355 (two-month downtrend line) to the topside to garner more interest." Spot gold slipped 0.2 per cent at $1,320.79 per ounce at 0624 GMT. The metal had recovered from a near five-week low of $1,314.70 after a dollar run lost some steam late Monday.  

US gold futures was down 0.2 per cent to $1,324.80. "While we have seen some outflows from exchange-traded funds, investors are relatively happy to hold gold, considering the environment of low-interest rates and negative yield," said ANZ analyst Daniel Hynes. Federal Reserve Chair Janet Yellen said on Friday the case for "an increase" in the policy rate has strengthened in the recent months due to improvements in the labour market and expectations for solid economic growth.  

Friday's non farm report for August, as well as other data, could reinforce hawkish messages from Yellen and other Fed officials. Employers are expected on Friday to show 180,000 job gains in August, according to a Reuters poll, below the better-than-expected 255,000 additions in July and 292,000 gains in June. "Gold may be especially sensitive to that (jobs data) release should the data be seen as likely to influence the timing of a future interest rate hike," HSBC analyst James Steel said in a note. "Other upcoming data will detail personal consumption, consumer confidence, car sales, and factory activity, and may also influence gold."

Monday, 29 August 2016

Gold Slips on Steady Dollar

Gold slips on steady dollar with Fed rate hike in focus  
Gold edged lower on Monday as the dollar got a boost after hawkish comments from Federal  
Reserve Chair Janet Yellen left the door open to a US interest rate hike as early as next month. The case for raising US interest rates has strengthened in recent months due to improvements in the labour market and expectations for moderate economic growth, Fed Chair Janet Yellen said on Friday. Spot gold had dipped 0.25 per cent to $1,317.60 per ounce by 0344 GMT. The metal closed last week down 1.5 per cent. US gold futures fell 0.41 per cent to $1,320.40.
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"We think the pressure on gold will likely increase as we go into September, as participants are now more willing to bet on a rate hike given what they have gleaned from top Fed officials on Friday," INTL FCStone analyst Edward Meir said in a note. Gold is highly-sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. Spot gold may drop to support at $1,308 per ounce, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao. "I think gold prices will still see support at about $1,300 despite what has been said in the Jackson Hole (Fed) symposium. It is of no doubt that the rate hike expectations have gone up for the year ahead," said OCBC Bank analyst Barnabas Gan. 

Hedge funds and money managers increased their net long position in COMEX gold contracts in the week to August 23, while they cut it in silver, US Commodity Futures Trading Commission (CFTC) data showed on Friday. The dollar stood tall in Asian trading on Monday with the dollar index, which tracks the greenback against a basket of six rivals, steady at 95.523, not far from Friday's high of 95.594, its loftiest level since August 16. Among other precious metals, spot silver dropped about 1 per cent to $18.43 an ounce, and spot palladium eased 0.42 per cent to $682.63 per ounce. Platinum was up 0.29 per cent at $1,070.60 per ounce.

Friday, 26 August 2016

Commodity Updates 26-Aug-2016

Oil prices dip as Saudi Arabia dampens prospects of output freeze 
Oil prices dipped in early trading on Friday after the Saudi energy minister tempered expectations of strong market intervention by producers during talks next month. International benchmark Brent crude oil prices were trading at $49.55 per barrel at 0114 GMT, down 12 cents from their previous close. U.S. West Texas Intermediate (WTI) crude was down 7 cents at $47.26 a barrel.
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RBI to review foreign commodity hedging framework 

The Reserve Bank of India (RBI) has proposed a review of the existing framework for hedging of commodity price risk in markets abroad. A working group of members from RBI, the Securities and Exchange Board of India, and a few external experts will do the review, RBI said on Thursday.

Thursday, 25 August 2016

Oil Prices Fall on Record U.S. Inventories

Oil prices slid Wednesday after weekly inventory data showed U.S. stockpiles of crude oil and
petroleum products at a record high. U.S. commercial stockpiles of crude oil and refined products increased by 6.6 million barrels in the week ended Aug. 19 to a record 1.4 billion barrels, the Energy Information Administration said, an indication that the global glut of crude that has weighed on prices for two years has yet to fully shrink. U.S. crude for October delivery fell $1.33, or 2.8%, to $46.77 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 91 cents, or 1.8%, to $49.05 a barrel on ICE Futures Europe. Crude-oil stockpiles rose by 2.5 million barrels in the latest week. Analysts surveyed by The Wall Street Journal had expected that crude supplies fell slightly in the week. 
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Oil prices are up more than 10% this month, buoyed by anticipation that the major exporting countries might agree on a deal to freeze production. After such a strong rally, “it is not entirely unexpected for traders to use the supply build as a reason to take some profits off the table,” analysts at optionsXpress said in a note. Stockpiles of distillate fuels including diesel, propane and ethanol also rose. “There was nothing bullish in this data,” said Donald Morton, senior vice president at Herbert J. Sims & Co. Even as demand for petroleum products has risen, “there is no shortage. None,” he said.  

Gasoline futures settled higher, buoyed by concerns that a tropical wave in the Atlantic Ocean could develop into a storm over the Gulf of Mexico, threatening the many refineries located in the region. Gasoline futures settled up 1.08 cents, or 0.7%, at $1.5096 a gallon. Diesel futures fell 0.55 cent, or 0.3%, to $1.4963 a gallon.  


U.S. crude production fell by 49,000 barrels in the week to 8.5 million barrels a day, the EIA said. Domestic production unexpectedly rose last week, but the EIA attributed the increase to a “re-benchmarking” of its data. Analysts are closely watching output estimates to see whether this spring’s rally that pushed oil prices above $50 a barrel enabled companies to increase production.  

Prices rose Tuesday on reports that Iran is set to participate in a meeting of Organization of the Petroleum Exporting Countries members in September to discuss taking coordinated action to raise oil prices. Major producers failed to reach an agreement to freeze production at talks in April, due largely to Iran’s unwillingness to cooperate.

Wednesday, 24 August 2016

Gold Down Rs 78 in Futures Trade

Gold Down Rs 78 in Futures Trade on Weak Global Cues  
Gold prices drifted lower by Rs 78 to Rs 31,292 per 10 gram in futures trade on Wednesday as participants lightened their positions, largely in tandem with a weak trend overseas.  

In futures trading, gold for delivery in October was trading Rs 78 or 0.25 per cent down at Rs 31,292 per 10 gram at the Multi Commodity Exchange with a business turnover of 578 lots.  

The metal for delivery in far-month December fell by Rs 75 or 0.24 per cent to Rs 31,548 per 10 gram in 15 lots.  

Analysts said trimming of positions by traders, tracking a weak trend in the overseas markets, mainly weighed on gold futures.  

Globally, gold lost 0.06 per cent to US$ 1,336.10 an ounce in Singapore. 
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Tuesday, 23 August 2016

Commodity Market Live

Oil slips below $49 as rising supply trumps hopes for producer action 
Oil fell below $49 a barrel on  Tuesday, giving up part of August's strong rally, as signs of rising supply outweighed hopes that producing nations will agree steps to support prices. A Nigerian militant group, which has claimed a wave of attacks on oil facilities, said at the weekend it was ready for a ceasefire and Iraq resumed pumping through a northern pipeline halted earlier this year. Brent crude was down 59 cents at $48.57 a barrel at 0845 GMT (0445 ET).
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Illicit gold: India's smugglers shut out refiners, banks 
Indian gold refiners just months ago were ramping up capacity and struggling to secure enough ore from miners. Now, they are suspending operations as a surge in smuggled bullion+ wipes out wafer thin margins. Gold importing banks and big jewellers have also been hit by the growing entry of illicit gold+ , which avoids import duties and makes its way on to the so-called "grey market" where it is sold to end-users at a discount. Smuggled gold+ could account for more than a third of demand this year in India - the world's second-biggest buyer of the metal after China - potentially costing the government over $1 billion in lost revenue.  


Silver down 0.3% on weak global cues 
Tracking a weak trend in global markets, silver prices were down by Rs 116 to Rs 45,601 per kg in futures trade today as participants trimmed positions. In futures trading at the Multi Commodity Exchange, silver for delivery in far-month December shed Rs 116 or 0.26% to Rs 45,601 per kg in a business turnover of 15 lots. Similarly, the white metal for delivery in September declined by Rs 109 or 0.24% to Rs 44,625 per kg in a business volume of 405 lots. In the international market, silver fell 0.42% to USD 18.95 an ounce in Singapore today. Marketmen attributed the fall in silver prices at futures trade was largely in line with a weak trend in precious metals in global markets.

Friday, 12 August 2016

Latest Commodity Market News

Silver futures decline to Rs. 46,300 per kg 
Taking weak cues from global market, silver prices declined 0.52 per cent to Rs. 46,513 per kg at the futures trade today as participants reduced their positions. At the Multi Commodity Exchange, silver for delivery in September fell Rs. 242 or 0.52 per cent to Rs. 46,513 per kg in a business turnover of 911 lots. Likewise, the white metal for delivery in December traded lower by Rs. 241 or 0.50 per cent to Rs. 47,577 per kg in 27 lots. Analysts attributed the fall in silver prices at the futures trade to a weak trend in the precious metals overseas. Globally, silver was trading 1.15 per cent down at $19.87 an ounce in Singapore. 

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IEA: Crude Production to Fall Behind Demand 
The world’s production of crude oil is falling behind demand, the International Energy Agency said Thursday. From July through September, global production of crude oil is likely to lag behind demand by almost one million barrels a day, said the IEA, a Paris agency that monitors energy trends for oil-consuming nations. The current glut of crude is clearing out even as OPEC producers pump at record or near-record levels. “Our balances show essentially no oversupply during the second half of the year,” the IEA said in its monthly report.   

Crude oil oversupply is set to clear, IEA says 
The world’s crude-oil glut is gone. From July through September, global production of crude oil will fall behind demand by almost 1 million barrels a day, said the International Energy Agency, a Paris-based agency that monitors energy trends for oil-consuming nations. And the oversupply of crude is clearing out even as OPEC producers pump at record or near record levels. “Our balances show essentially no oversupply during the second half of the year,” the IEA’s monthly report said Thursday.

Monday, 8 August 2016

Muthoot Finance, Manappuram Finance Hit Record High

Shares of gold financing companies Muthoot Finance and Manappuram Finance have hit their respective  
record highs on the bourses in an otherwise range-bound market. Muthoot Finance surged 15% to Rs 405 on the BSE in intra-day trade after the company said it is confident that the Income Tax Department would have found that the company maintains it account books satisfactorily.
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The company made a clarification on media reports the Income Tax department has conducted raids in the premises of Kerala-based financial institutions under the Muthoot banner, across the country. In a statement filed on the exchanges, the company said the Income Tax Department carried out a search at various company offices between August 5 and August 7. We are not expecting any material adverse finding against the company by Income Tax Department.  

In past eight trading sessions, the stock rallied 31% from Rs 309 on July 27, after the company reported 48% increase in net profit at Rs 270 crore for the quarter ended June 2016 (Q1FY17) compared with Rs 183 crore in the same quarter last year. Manappuram Finance has touched soared 6% to Rs 91.40 ahead of its board meeting on Tuesday, August 09, 2016, to consider the un-audited financial results of the company for the quarter ended June 30, 2016 (Q1).  

Edelweiss Securities expect Manappuram Finance to report more than double net profit of Rs 135 crore for Q1FY17. The company had profit of Rs 59 crore in June 2015 quarter. “Significant efforts put in at a branch level to push volumes which coupled with rise in gold prices will lead to gained traction in disbursement growth; lower auctions & under recoveries will also boost interest income,” the brokerage house said in a results preview.  

Given the surge in gold prices in Q4FY16, we expect 3% to 5% assets under management (AUM) growth on a sequential basis for Manappuram and Muthoot Finance respectively. Margins are expected to remain strong given that legacy portfolio for both have run down,” Antique Stock Broking said in a report.

Friday, 5 August 2016

Gold Rises to 4-Week Highs, U.S. Data in Focus

Gold prices rose to four-week highs on Friday, as the Bank of England’s decision to lower interest rates continued to support and as investors eyed the release of key U.S. employment data due later in the day. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were up 0.23% at $1,370.55. The December contract ended Thursday’s session 0.20% higher at $1,367.40 an ounce. Futures were likely to find support at $1,347.00, Thursday’s low and resistance at $1,374.90, the high from July 6. 
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Gold prices moved higher after the Bank of England delivered its first rate cut in seven years on Thursday and announced more measures to stimulate the economy in a bid to ward off recession following Britain's vote in June to leave the European Union. The BoE cut interest rates to a record-low 0.25% in a bid to buffer the economy from a downturn following the Brexit vote. The central bank also boosted its quantitative easing program by £60 billion and slashed its growth forecast for next year. It now expects growth of just 0.8% in 2017, down from 2.3% in its May forecasts.  

Almost all economists had expected the BoE to cut rates and many also expected it to resume its multi-billion-pound program of government bond purchases. The precious metal was also supported by a weaker dollar following Thursday’s mixed U.S. data. Sentiment on the greenback remained vulnerable after the U.S. Census Bureau said that factory orders decreased by 1.5% in June, better than forecasts for a decline of 1.8%.  

The report came after the Labor Department said initial jobless claims increased by 3,000 to 269,000 from the previous week’s total of 266,000. Analysts expected jobless claims to decline by 1,000 to 265,000 last week. Market participants were now looking ahead to the highly-anticipated U.S. nonfarm payrolls report, due later Friday, for further indications on the strength of the job market. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.13% at 95.63.  

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies. Elsewhere in metals trading, silver futures for September delivery were little changed at $20.447 a troy ounce, while copper futures for September delivery edged up 0.09% to $2.176 a pound.

Thursday, 4 August 2016

GST will Lower Commodity Prices

GST will lower commodity prices : Arun Jaitley 
A day after the Goods and Services Tax (GST) Bill was passed in the Rajya Sabha, Finance Minister Arun Jaitley said the new legislation will lower the price of commodities once implemented. 
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Yesterday was a major step forward in having a uniform tax in the country The GST will help a large body of traders and business people, Jaitley told reporters on Thursday. He said once rolled out, the one nation one tax system will improve the ease of doing business as it will replace the regime of multiple taxation system. The tax rate will go down which will lead to lesser prices of commodities, he said.  

The important thing is that the GST bill was passed unanimously, except for the AIADMK who walked out. The constitutional amendment was pending for a long time, predominantly because RS was unable to reach a consensus, the Finance Minister said.

Wednesday, 3 August 2016

Gold Futures Rise to Rs 31,809 per 10 gm

  • Gold futures were up by 0.11 per cent at Rs. 31,809 per 10 grams as traders raised bets amid positive cues from the global markets. 
  • At the Multi Commodity Exchange, gold for delivery in August rose Rs. 34 or 0.11 per cent to Rs. 31,809 per 10 grams in a business turnover of one lot. 
  • Similarly, the metal for delivery in far-month October traded higher by Rs. 24 or 0.08 per cent at Rs. 31,839 per 10 grams in 548 lots. 
  • Analysts said raising of bets by speculators triggered by a firm trend overseas, mainly led to rise in gold futures here. 
  • Meanwhile, gold advanced 0.01 per cent to $1,362.90 an ounce in Singapore. 
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Tuesday, 2 August 2016

Commodity MCX Market Live

Gold Futures Slide on Weak Global Cues 
Gold futures fell by 0.23 per cent to Rs 31,460 per 10 grams today as participants cut bets amid a weak global trend. Besides, profit-booking by speculators weighed on gold prices. At the Multi Commodity Exchange, gold for delivery in August shed Rs 74, or 0.23 per cent, to Rs 31,460 per 10 grams in a business turnover of 2 lots. Also, the metal for delivery in far-month October declined by Rs 67, or 0.21 per cent, to Rs 31,495 per 10 grams in 92 lots. Market analysts attributed the fall in prices to weak trend overseas and profit-booking by participants at existing levels. 
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Oil Prices Push Higher after Entering Bear Market 
Oil prices pushed higher today, scraping back losses as bargain-buyers took advantage of a weaker dollar, the day after slipping into a bear market. Crude dipped below USD 40 a barrel yesterday after US data pointed to an unexpected increase in commercial oil and gasoline supplies, adding to concerns about a lasting supply glut. Oil settled down more than a fifth from its June highs in New York, meaning it is now in a bear market by the most common definition of the term. Prices scraped back some of their losses on Tuesday after disappointing US GDP growth figures hurt the greenback, making dollar-priced oil cheaper for those using other currencies.

Monday, 1 August 2016

Gold Slips as Equities Rise, Dollar Recovers

Gold edged down slightly on Monday, after rising over one per cent to a near 3-week high in the previous session, as equities rose and the dollar recovered from lows hit after disappointing US growth figures last week. Spot gold fell 0.3 per cent to $1,346.89 an ounce at 0056 GMT. Bullion hit a high of $1,355.10 on Friday, its highest level since July 12. US gold was down 0.3 per cent at $1,354 an ounce. The US Commerce Department had reported on Friday that the US economy grew at a 1.2 per cent annual rate in the second quarter, much less than expected, as inventory investment fell for the first time in nearly five years.
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Asian shares ticked up slightly on Monday, while the dollar index, which tracks the greenback against a basket of six rival currencies, was up 0.1 perc ent at 95.654, crawling away from its Friday low of 95.384, its lowest since July 5. The Federal Reserve should not overreact to Friday's weaker-than-expected US GDP report, but needs to consider more data before contemplating another interest rate increase, Dallas Fed President Robert Kaplan said.  
The Federal Reserve could raise interest rates up to two times before year-end, San Francisco Fed President John Williams had said on Friday as he downplayed data that showed the US economy grew far less than expected in the last quarter. Hedge funds and money managers increased their net long position in COMEX silver contracts for the seventh straight week, but cut net long position in gold futures and options, in the week to July 26, US Commodity Futures Trading Commission data had showed on Friday.  
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.40 per cent to 958.10 tonnes on Friday.