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12 Dec 2012

LME MORNING - Base metals steady, high expectations for FOMC meeting

London 12/12/2012 - Base metals were back in positive territory in Wednesday's premarket, helped by a steadier euro - last at 1.3017 against the dollar - and expectations of further economy-boosting monetary measures in the US. “Metals are steady with a slightly stronger euro, moderately positive economic data and the prospect of continued stimulus by the US Fed,” a trader said. "Technically, the chart picture suggests the path of least resistance is to the upside."

How to buy Gold, Silver, Platinum and Palladium

By Heather Connon There is a wide range of ways to get access to gold; for the other precious metals, however, the choice is more limited, with exchange traded products (ETPs) providing the best access. Nicholas Brooks, head of research at ETF Securities, says that only gold, silver, platinum and palladium are actively traded. Gold has attracted huge investment with platinum, too, enjoying good recent inflows as investors have sought to hedge their exposure to strike-hit platinum producers. For platinum and palladium, there are only physically-backed securities while,

Copper futures trade near 7-week high ahead of FOMC

Copper futures traded just below a seven-week high during European morning hours on Wednesday, as market players looked ahead to the Federal Reserve’s policy decision later in the day amid expectations for further easing. Investors also continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis. On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.708 a pound during European morning trade, up 0.6% on the day.

11 Dec 2012

Base metals strong but ease back from highs, eurozone data weighs

London 10/12/2012 - Base metals rose in start-of-week trading, with several hitting multi-week highs, boosted by positive Chinese data over the weekend. But disappointing eurozone numbers and a softer euro capped gains. This morning, the German trade balance disappointed at 15.2 billion euros against a forecast of 15.9 billion euros, while French and Italian industrial production at -0.7 percent and -1.1 percent respectively were also under par. Sentix investor confidence at -16.8 undershot the expected -16.2. The euro stepped back to 1.2902 against the dollar, down around a fifth of a cent. And in Italy, Prime Minister Mario Monti’s pledge to tender his resignation once the Italian government has approved the 2013 budget has unsettled markets and pushed up the country’s borrowing rates.

Today Market View (INTRADY LEVELS)

11-DEC-2012 RESISTANCE LEVELS SUPPORT LEVELS
COMMODITY RES-1 RES-2 RES-3 SUP-1 SUP-2 SUP-3
ALUMINIUM 115.78 116.67 117.88 113.68 112.47 111.58
COPPER 451.17 453.63 456.82 445.52 442.33 439.87
CRUDEOIL 4729 4757 4776 4682 4663 4635
GOLD 31591 31689 31819 31363 31233 31135
LEAD 125.70 127.10 129.60 121.80 119.30 117.90
NATURALGAS 191.57 195.73 198.17 184.97 182.53 178.37
NICKEL 980.00 992.00 1012.00 948.00 928.00 916.00
SILVER 63256 63564 63863 62649 62350 62042
ZINC 113.60 114.80 116.65 110.55 108.70 107.50
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6 Dec 2012

Gold futures fall to lows of the day as Draghi speaks


Gold futures traded at the lowest level of the session during U.S. morning hours on Thursday, after European Central Bank President Mario Draghi maintained a downbeat outlook on the euro zone economy. Market players also continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis, while looking ahead to Friday’s key U.S. nonfarm payrolls data. On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,688.85 a troy ounce during U.S. morning trade, down 0.25% on the day. Prices fell by as much as 0.35% earlier in the day to trade at a session low of USD1,687.35 a troy ounce. Gold prices were likely to find support at USD1,672.55 a troy ounce, the low from November 5 and resistance at USD1,708.25, the previous day’s high.

Stock futures flat ahead of jobless claims

U.S. stock index futures were little changed Thursday as investors awaited data on weekly jobless claims, amid a lack of progress on talks aimed at averting the so-called fiscal cliff.


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1 Oct 2012

IMF completes $3.8 billion Gold profit distribution

WASHINGTON: Six months after allocating the first part of profits from the 2009-10 403.3 tons gold sales to member country's, IMF agreed to release the remaining $2.7 billion to boost financing to low-income countries. According to a statement, IMF said it's executive board earmarked the money for the global lender's concessional lending program, the Poverty Reduction and Growth Trust. The IMF earlier earmarked the release the total $3.8 billion windfall from the gold sales to it's 188 member country's and released the first part of $1.1 billion in March.

Gold drops as global data points to a cooling economy

Gold prices dropped in Asian trading on Monday after Chinese factory figures coupled with Japanese and U.S. sentiment data fueled fears that the global economy continues cooling, which sent investors snapping up safe-haven dollar positions. Gold and the dollar normally trade inversely with one another. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.30% at USD1,768.65 a troy ounce, up from a session low of USD1,766.85 and down from a high of USD1,768.95 a troy ounce. Gold futures were likely to test support at USD1,755.35 a troy ounce, Thursday's low, and resistance at USD1,785.65, Friday's high. Soft Chinese factory data sent gold prices falling on sentiment the global economy continues softening.

Crude slides on Chinese factory output figures, U.S. data

Crude oil futures fell in Asian trading on Monday on weaker-than-expected output data in China and in the U.S. On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at USD91.53 a barrel on Friday, down 0.72%, off from a session high of USD91.63 and up from an earlier session low of USD91.47. Soft Chinese factory data sent oil prices falling on sentiment the global economy continues cooling. The HSBC China Manufacturing purchasing managers index came to 47.9 for September from 47.6 in August. A reading of 50 separates expansion and contraction. In the U.S., meanwhile, the Chicago purchasing managers' index contracted for the first time since September 2009, dipping to seasonally adjusted 49.7 compared to 53.0 August. Analysts had expected the Chicago PMI to remain unchanged at 53.0 in September. The Thomson Reuters/University of Michigan's final index on consumer sentiment for September fell to a seasonally adjusted 78.3 from 79.2 the previous month. Analysts had expected the index to fall to 79.0 in September. The numbers painted a picture of a global economy in need of less fuels and energy to operate. On the ICE Futures Exchange, Brent oil futures for November delivery were down 0.35% and trading at USD111.75 a barrel, up USD20.22 from its U.S. counterpart.

Courtesy: ForexPros

Today Market View (INTRADAY LEVELS)

01-OCT-2012 RESISTANCE LEVELS SUPPORT LEVELS
COMMODITY RES-1 RES-2 RES-3 SUP-1 SUP-2 SUP-3
GOLD 31296 31375 31433 31159 31101 31022
SILVER 63145 63476 63736 62554 62295 61963
COPPER 442.20 443.80 445.60 438.80 437.00 435.40
NICKEL 985.50 993.70 999.40 971.60 965.90 957.70
ZINC 111.30 112.20 112.85 109.75 109.10 108.20
LEAD 121.10 122.10 122.75 119.45 118.80 117.80
ALUMINIUM 112.00 112.90 113.60 110.40 109.70 108.80
CRUDEOIL 4916 4936 4968 4864 4832 4812
NATURAL GAS 176.90 178.60 180.60 173.20 171.20 169.50

27 Sep 2012

Today Market View (INTRADAY LEVELS)

27-SEP-2012 RESISTANCE LEVELS SUPPORT LEVELS
COMMODITY RES-1 RES-2 RES-3 SUP-1 SUP-2 SUP-3
GOLD 31194 31077 30950 31438 31565 31682
SILVER 62060 61465 61101 63020 63385 63980
COPPER 439.55 437.10 434.40 444.70 447.40 449.85
NICKEL 958.00 951.20 940.00 976.10 987.20 994.00
ZINC 109.25 108.40 106.85 111.65 113.20 114.05
LEAD 120.30 119.35 117.95 122.65 124.05 125.00
ALUMINIUM 109.25 108.65 107.90 110.60 111.35 112.00
CRUDEOIL 4783 4745 4690 4878 4933 4972
NATURAL GAS 167.20 162.30 159.30 175.10 178.10 183.00

25 Sep 2012

Today Market View (INTRADAY LEVELS)

25-SEP-2012 RESISTANCE LEVELS SUPPORT LEVELS
COMMODITY RES-1 RES-2 RES-3 SUP-1 SUP-2 SUP-3
GOLD 31290 31147 31022 31558 31683 31826
SILVER 61924 61435 60837 63011 63609 64098
COPPER 440.55 438.60 436.35 444.75 447.00 448.95
NICKEL 952.50 945.30 939.40 965.60 971.50 978.70
ZINC 109.90 109.00 108.35 111.45 112.10 113.00
LEAD 119.75 119.10 118.65 120.85 121.30 122.00
ALUMINIUM 109.80 109.25 108.55 111.05 111.75 112.30
CRUDEOIL 4875 4849 4806 4944 4987 5013
NATURAL GAS 150.40 148.50 146.60 154.20 156.10 158.00

24 Sep 2012

Crude Drops Fifth Time in Six Days on European Debt Concern

Oil dropped for the fifth time in six days as discord among European leaders on when to introduce a banking union renewed concern that the region’s debt crisis will reduce oil demand. Prices fell as much as 1.8 percent after German Chancellor Angela Merkel and French President Francois Hollande disagreed over closer integration of Europe’s banking system at the weekend. The euro dropped against the dollar as German business confidence unexpectedly fell to the lowest level in more than two years in September. “The news out of Europe is not good and the dollar is stronger, and the combination is putting pressure on oil demand expectations,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It’s making people thinking that even $90 for oil is a little too high.”

Gold futures drop as U.S. dollar firms against euro

Gold futures declined during U.S. morning hours on Monday, holding on to earlier losses as renewed concerns over the euro zone’s debt crisis and uncertainty over whether Spain will need a full-scale bailout boosted demand for the U.S. dollar. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,767.15 a troy ounce during U.S. morning trade, shedding 0.6%. Earlier in the session prices fell by as much as 1% to trade at a session low of USD1,757.95 a troy ounce. Gold futures rose to a high of USD1,787.55 a troy ounce on September 21, the strongest level since February 29.

Copper futures drop more than 1% as growth jitters weigh

Copper futures tumbled to the lowest level in more than a week during European morning hours on Monday, as appetite for growth-linked assets weakened amid mounting concerns over global growth prospects, while uncertainty over whether Spain will request a full scale sovereign bailout also weighed. On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.736 a pound during European morning trade, tumbling 1.4%. Earlier in the day, prices fell by as much as 1.6% to trade at a session low of USD3.731 a pound, the weakest level since September 13. Futures rallied to a four-month high of USD3.838 on September 19.

Gold slides as fresh European concerns spark profit taking

Gold prices fell in Asian trading on Monday as talk that France and Germany are at odds as to when the currency zone should centralize banking supervision sent the precious metal falling amid profit taking. Gold last week rose to a few dollars shy of 2012's record-high price of USD1,792.15 hit on Feb. 29 on talk of a Spanish bailout as well on the coattails of central bank decisions around the world to stimulate their economies with monetary easing measures. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.53% at USD1,768.65 a troy ounce, up from a session low of USD1,768.25 and down from a high of USD1,772.55 a troy ounce early during the session.

Crude dips as Europe concerns spark profit taking

Crude oil futures dipped in Asian trading early Monday as investors sold for profits on reports France and Germany may be at odds concerning a timetable to centralize eurozone banking supervision. The commodity rose in recent sessions on Federal Reserve monetary easing measures and on reports Spain may seek a bailout, though the commodity fell amid profit-taking Monday. On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at USD92.79 a barrel on Monday, down 0.11%, off from a session high of USD92.89 and up from an earlier session low of USD92.75.

Today Market View (INTRADAY LEVELS)


24-SEP-2012 RESISTANCE LEVELS SUPPORT LEVELS
COMMODITY RES-1 RES-2 RES-3 SUP-1 SUP-2 SUP-3
GOLD 31816 32089 32240 31392 31241 30968
SILVER 64276 65181 65764 62788 62206 61300
COPPER 452.30 458.15 461.35 443.35 440.20 434.35
NICKEL 970.70 979.80 985.10 956.30 951.00 941.90
ZINC 112.85 114.10 114.85 110.85 110.15 108.85
LEAD 122.30 123.45 124.25 120.35 119.55 118.40
ALUMINIUM 112.85 114.00 114.70 111.00 110.30 109.15
CRUDEOIL 5027 5092 5131 4923 4884 4819
NATURAL GAS 155.20 157.80 160.80 149.40 146.40 143.70

20 Sep 2012

Natural gas futures hold gains after U.S. supply data

Natural gas futures were higher during U.S. morning trade on Thursday, holding on to gains after a report from the U.S. Energy Information Administration showed U.S. gas supplies rose broadly in line with market expectations last week. On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD2.792 per million British thermal units during U.S. morning trade, jumping 1.1%. It earlier rose by as much as 2.1% to trade at a session high of USD2.821 per million British thermal units. The October contract traded at USD2.794 prior to the release of the U.S. Energy Information Administration report.

Crude oil futures trim losses after Philly Fed data

Crude oil futures trimmed losses during U.S. morning hours on Thursday, coming off the lows after official data showed that manufacturing activity in the Philadelphia-region improved more-than-expected in September. Prices fell to a six-week low earlier in the session, amid mounting fears over the outlook for global economic growth, following a string of weak economic reports from the euro zone and China. On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD92.19 a barrel during U.S. morning trade, easing down 0.1%. Earlier in the session prices fell by as much as 1.45% to hit a daily low of USD90.97 a barrel, the weakest level since August 6. In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved by 5.2 points to minus 1.9 in September from August’s reading of minus 7.1. Analysts had expected the index to improve by 3.1 points to a reading of minus 4.0 in September. The data came after The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending September 15 fell by 3,000 to a seasonally adjusted 382,000, compared to expectations for a decrease of 10,000 to 375,000. The previous week’s figure was revised up to 385,000 from a previously reported 382,000. Some bargain buying also helped futures off the lows, after prices moved into oversold territory. Technical traders said prices had fallen too far, too fast and were due for a technical bounce. New York-traded oil prices have lost more than 8% in the three sessions leading up to Thursday. Oil prices have been under heavy selling pressure in recent sessions amid signs that top oil exporter Saudi Arabia was pumping more oil. The country’s output is near the highest level in more than three decades, according to a Persian Gulf official with knowledge. Prices fell to a six-week low earlier as fresh concerns over the outlook for growth in China were fueled by data showing that the HSBC flash purchasing managers' index ticked up to 47.8 in September from a nine-month low in August of 47.6, but remained below 50 for an 11th consecutive month in a row, showing the sector was still contracting. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis. Separately, concerns over the worsening of the debt crisis in the euro zone resurfaced after preliminary data showed that manufacturing activity in France tumbled unexpectedly in September, dropping to a three-and-a-half year low. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Futures managed to come off the lowest levels of the session after data showed manufacturing activity in Germany in September contracted at the slowest rate in six months, while service sector activity grew modestly. Germany’s manufacturing PMI rose to 47.3 in September from a final reading of 44.7 in September. Analysts had expected the index to come in at 45.3. Service sector activity in Germany increased to a four-month high of 50.6 in September from a final reading of 48.3 in August. Oil traders often use manufacturing numbers as indicators for future fuel demand growth. Also Thursday, Also Thursday, Spain saw borrowing costs fall at an auction of ten-year government bonds on Thursday, amid ongoing uncertainty over whether Spain is about to ask for more financial aid, which would mean signing up to a permanent bailout fund. Spain’s Treasury sold EUR859 billion worth of 10-year government bonds at an average yield of 5.66%, down from 6.64% at a similar auction last month. Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery added 0.5% to trade at USD108.75 a barrel, with the spread between the Brent and crude contracts standing at USD16.56 a barrel. Prices fell to as low as USD107.19 a barrel earlier in the session, the weakest level since August 3.

Courtesy: ForexPros

Gold futures off the lows after jobless claims data


Gold futures came off the lowest levels of the session during U.S. morning hours on Thursday, after data showed that the number of people who filed for unemployment assistance in the U.S. last week fell less-than-expected, while the previous week’s figure was revised higher, underlining concerns over the U.S. economy. On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,765.75 a troy ounce during U.S. morning trade, dipping 0.2%. Earlier in the session prices fell by as much as 0.75% to trade at a session low of USD1,755.75 a troy ounce. Gold futures rose to as high as USD1,779.25 a troy ounce on Wednesday, the strongest level since February 29. Gold prices were likely to find short-term support at USD1,751.95 a troy ounce, the low from September 18 and resistance at USD1,792.25, the high from February 29. Prices came off the lowest levels of the session after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending September 15 fell by 3,000 to a seasonally adjusted 382,000, compared to expectations for a decrease of 10,000 to 375,000. The previous week’s figure was revised up to 385,000 from a previously reported 382,000. Jobless claims have remained below 400,000, a level historically associated with an improving labor market, in 45 of the past 47 weeks, though lately claims have been pushing higher from the 350,000 associated with above-average job growth. The disappointing data underlined concerns over the weak U.S. labor market. Gold prices rallied to a six-and-a-half-month high after the Federal Reserve said last week it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves. Prices fell to the lowest levels of the session earlier in the day, following the release of worse-than-forecast purchasing managers' survey from France, the euro zone’s second largest economy. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Meanwhile, fresh concerns over the outlook for growth in China were fueled by data showing that the nation’s HSBC Flash Purchasing Managers Index rose slightly to 47.8 in September from a final reading of 47.6 in August. Despite the modest uptick higher, manufacturing activity in China remained in contraction territory for the 11th consecutive month, adding to fears over a deeper-than-expected slowdown in the region’s largest economy. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis. Also Thursday, Spain saw borrowing costs fall at an auction of ten-year government bonds on Thursday, amid ongoing uncertainty over whether Spain is about to ask for more financial aid, which would mean signing up to a permanent bailout fund. Spain’s Treasury sold EUR859 billion worth of 10-year government bonds at an average yield of 5.66%, down from 6.64% at a similar auction last month. Elsewhere on the Comex, silver for December delivery retreated 0.15% to trade at USD34.54 a troy ounce, while copper for December delivery tumbled 1.65% to trade at USD3.751 a pound.

Courtesy: ForexPros

Commodities Boom May Have Peaked as Fed Stimulus Fades


The biggest advances in commodities this year may be over because of mounting concern that policy makers aren’t doing enough to bolster economic growth at a time when producers are expanding supply. The Standard & Poor’s GSCI gauge of 24 raw materials will end the year at 677, 3.1 percent higher than now, based on the median of 10 investor and analyst estimates compiled by Bloomberg. The index is 1.8 percent lower since the European Central Bank announced an unlimited bond-purchase program Sept. 6 and 3.8 percent below its level when the Federal Reserve pledged a third round of debt-buying Sept. 13.That contrasts with a 92 percent surge from the end of 2008 through June 2011 as the Fed bought $2.3 trillion of debt in two bouts of quantitative easing. The impact will probably be smaller this time, Barclays Plc says. Prices are already in a bull market, the 17-nation euro area is contracting and China has slowed for six straight quarters. Europe and China represent about 60 percent of global copper demand and about 33 percent of crude-oil consumption. “The investment demand that might be driven by people’s changed perception after Fed action is not going to sustain a further long-term move of the commodity complex,” said Michael Aronstein, the president of Marketfield Asset Management in New York who correctly predicted the slump in prices in 2008 and the rebound in 2009. “The longer you keep prices in all of these sectors elevated, the more supply you recruit.”

Dollar Index:

The S&P GSCI (DXY) rose 1.8 percent this year, heading for a fourth consecutive annual advance. Soybeans and wheat led the gains after the worst U.S. drought since 1956. The MSCI All- Country World Index of equities jumped 12 percent and the U.S. Dollar Index, a measure against six major trading partners, dropped 0.9 percent. Treasuries returned 1.6 percent, a Bank of America Corp. index shows. Commodity assets under management reached $406 billion at the end of July, from $399 billion at the start of the year, based on Barclays’ estimates of money tied to exchange-traded products, medium-term notes and indexes. Assets reached a record $451 billion in April 2011. Open interest, or contracts outstanding, across the members of the S&P GSCI rose 16 percent this year, data compiled by Bloomberg show. Morgan Stanley is forecasting supply surpluses in aluminum, nickel, zinc and thermal coal in 2013 and Barclays expects a glut in lead for at least a third consecutive year. The rally in aluminum and zinc makes production cuts in China less likely, prolonging excessive production, Macquarie Group Ltd. said in a report Sept. 17.

Oil Inventories:

While the Paris-based International Energy Agency anticipates record demand for oil in 2013, it said in a monthly report Sept. 12 that inventories have become “more comfortable.” Natural-gas futures tumbled 27 percent in the past year in New York as production in the U.S., the biggest producer and consumer, advanced to a record. Gold will probably be among the biggest winners from quantitative easing, say JPMorgan Chase & Co., Standard Bank Group and Credit Suisse Group AG. Some investors buy bullion as a hedge against inflation and a weaker dollar. The metal, which reached a six-month high of $1,779.50 an ounce yesterday, will advance to a record $2,400 by the end of 2014, assuming the stimulus lasts until then, Bank of America Corp. said.

More Attractive:

We view owning commodities and gold in particular as more attractive post the QE3 announcement,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “While the QE is there, it does keep the bid under commodities prices and gives them an opportunity to continue to move higher even with a sluggish economy.” Central-bank action should boost prices across precious and industrial metals, JPMorgan said in a report Sept. 14, citing a probable decline in the dollar. Gold, silver, Brent crude oil and aluminum will probably rally more than other commodities, Standard Bank said in a Sept. 17 report. The Fed will buy $40 billion of mortgage debt a month and hold the benchmark interest rate near zero through at least mid-2015. The ECB held its benchmark rate at a record low of 0.75 percent and said its program will target government bonds with maturities of one to three years. The Bank of Japan unexpectedly expanded its asset-purchase fund by 10 trillion yen ($126 billion) on Sept. 19. More than two-dozen nations cut market interest rates this year, data compiled by Bloomberg show. The S&P GSCI in one year may be at 720 points, or about 10 percent higher than now, according to the Bloomberg survey. The International Monetary Fund expects global growth to accelerate to 3.9 percent next year, from 3.5 percent in 2012.

Hedge Funds:

Commodities also may rally because of supply cuts. Morgan Stanley expects copper demand to outpace supply for a fourth year in 2013. The U.S. Department of Agriculture is forecasting the smallest global corn stockpiles in six years and the lowest soybean inventories in two decades after drought across the U.S. and Europe parched crops. Sanctions against Iran are crimping oil exports from what was once the second-biggest producer in the Organization of Petroleum Exporting Countries. Hedge funds and other speculators remain bullish and held the biggest bet on rising prices in 16 months in the week ended Sept. 11, U.S. Commodity Futures Trading Commission data show. Holdings more than doubled since mid-June. That contrasts with a 95 percent reduction in the net-long position before the start of the first round of quantitative easing in December 2008.

Tug of War:

This is not as much as a one-way ticket as it has been in the previous two instances,” said Sean Corrigan, the chief investment strategist at Diapason Commodities Management SA in Lausanne, Switzerland, which has about $7 billion invested in commodities. “The tug of war is between how much is already priced in and how much poorer is the underlying commodity demand because the world economy is in a much worse condition now.” China, the biggest consumer of everything from coal to cotton to copper, set an annual growth target of 7.5 percent in March. It cut interest rates for the second time in less than a month in July and lowered reserve requirements three times between November and May. The government approved plans this month for a $158 billion subways-to-roads construction plan. The economy of the euro area contracted 0.5 percent in the second quarter and probably won’t expand again until the second quarter of next year, according to the median of 24 economist estimates compiled by Bloomberg. The global economy is sliding into a “twilight zone,” caught between expansion and recession, and it “could go either way,” said Joachim Fels, the chief economist at Morgan Stanley in London.

Private Banking:

Equities and high-yield debt probably will give greater returns than commodities, said Ashish Misra, the head of investment strategy at Lloyds TSB Banking Group in London. Its private banking unit manages about 11 billion pounds ($17.8 billion) of assets. Commodities have risen about fourfold since the end of 2001, during which the MSCI All-Country World Index gained 41 percent and Treasuries returned 77 percent. “We’re heading for a period of underperformance in commodities after years of outperformance,” Misra said. “The effects of a slowdown in China and resumption of normal production trends in agriculture after this year’s drought- driven supply shocks should continue to pressure commodity prices downward.”

Courtesy: ForexPros

Copper futures tumble 2% in risk-off trade


Copper futures tumbled to the lowest level in almost a week during European morning hours on Thursday, as appetite for growth-linked assets weakened following a flurry of manufacturing and service sector activity reports from the euro zone and China. On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.7444 a pound during European morning trade, tumbling 1.85%. Earlier in the day, prices fell by as much as 2% to trade at a session low of USD3.741 a pound, the weakest level since September 14. Market sentiment remained on the back foot after data showed that Euro zone manufacturing activity improved modestly in September, but remained in contraction territory for the 13th consecutive month, while service sector activity slumped to the lowest level since July 2009. The euro zone’s manufacturing purchasing managers’ index rose to a seasonally adjusted 46.0 in September from a final reading of 45.1 in August, compared to expectations for a reading of 44.5. The services PMI fell to 46.0 from 47.2 in August. Analysts had expected the index to tick up to 47.4 in September. Manufacturing activity in France tumbled unexpectedly in September, dropping to a three-and-a-half year low. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Futures managed to come off the lowest levels of the session after data showed manufacturing activity in Germany in September contracted at the slowest rate in six months, while service sector activity grew modestly. Germany’s manufacturing PMI rose to 47.3 in September from a final reading of 44.7 in September. Analysts had expected the index to come in at 45.3. Service sector activity in Germany increased to a four-month high of 50.6 in September from a final reading of 48.3 in August. The data came after a report showed China’s HSBC flash purchasing managers' index ticked up to 47.8 in September from a nine-month low in August of 47.6, but remained below 50 for an 11th consecutive month in a row, showing the sector was still contracting. The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. The risk-off trade environment prompted investors to pile in to the relative safety of the U.S. dollar, with the euro dropping to a one-week low against the greenback. The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was up 0.55% to trade at 79.60, the strongest level since September 13. A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro. Also Thursday, Spain saw borrowing costs fall at an auction of ten-year government bonds on Thursday, amid ongoing uncertainty over whether Spain is about to ask for more financial aid, which would mean signing up to a permanent bailout fund. Spain’s Treasury sold EUR859 billion worth of 10-year government bonds at an average yield of 5.66%, down from 6.64% at a similar auction last month. Elsewhere on the Comex, gold for October delivery fell 0.45% to trade at USD1,760.75 a troy ounce, while silver for December delivery dropped 0.8% to trade at USD34.31 a troy ounce.

Courtesy: ForexPros

Crude oil trades at 6-week low as global growth concerns weigh


Crude oil futures were lower for the fourth consecutive day during European morning hours on Thursday, as market sentiment was hit by global growth concerns following the release of weak manufacturing data from China and France. Prices have been under heavy selling pressure in recent sessions amid signs that top oil exporter Saudi Arabia was pumping more oil. The country’s output is near the highest level in more than three decades, according to a Persian Gulf official with knowledge. On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD91.42 a barrel during European morning trade, dropping 0.95%. Earlier in the session prices fell by as much as 1.1% to hit a daily low of USD90.97 a barrel, the weakest level since August 6. Fresh concerns over the outlook for growth in China were fueled by data earlier showing that the HSBC flash purchasing managers' index ticked up to 47.8 in September from a nine-month low in August of 47.6, but remained below 50 for an 11th consecutive month in a row, showing the sector was still contracting. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis. Separately, concerns over the worsening of the debt crisis in the euro zone resurfaced after preliminary data showed that manufacturing activity in France tumbled unexpectedly in September, dropping to a three-and-a-half year low. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Futures managed to come off the lowest levels of the session after data showed manufacturing activity in Germany in September contracted at the slowest rate in six months, while service sector activity grew modestly. Germany’s manufacturing PMI rose to 47.3 in September from a final reading of 44.7 in September. Analysts had expected the index to come in at 45.3. Service sector activity in Germany increased to a four-month high of 50.6 in September from a final reading of 48.3 in August. Oil traders often use manufacturing numbers as indicators for future fuel demand growth. Oil prices were also weighed by a surprise increase in U.S. oil stockpiles. Weekly data from the U.S. Energy Department on Wednesday showed that crude oil supplies rose by 8.5 million barrels last week, surging past expectations for a 1.0 million barrel increase. The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand. Meanwhile, uncertainty over whether Spain is about to ask for more financial aid continued to weigh on sentiment. Markets were eyeing an auction of 10-year Spanish government bonds later in the day, as it was expected to be an important test of investor appetite for the country’s debt. The risk-off trade environment prompted investors to pile in to the relative safety of the U.S. dollar, with the euro dropping to a one-week low against the greenback. The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was up 0.55% to trade at 79.60, the strongest level since September 13. A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro. Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery shed 0.5% to trade at USD107.69 a barrel, with the spread between the Brent and crude contracts standing at USD16.27 a barrel. Prices fell to as low as USD107.19 a barrel earlier in the session, the weakest level since August 3. London-traded Brent prices continued to come under pressure from recent comments made by Saudi Arabia, saying that the Kingdom was likely to keep output high in an effort to lower prices further weighed on the energy complex. Analysts said that the market is now balancing Saudi assurances that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran amid tighter Western sanctions on Tehran over its disputed nuclear program.

Courtesy: ForexPros

Gold futures extend losses after French PMI data


Gold futures were lower during European morning hours on Thursday, adding to losses as the U.S. dollar strengthened further after data showed that manufacturing activity in France tumbled to a three-and-a-half year low in September, fuelling concerns over the outlook global growth. Earlier in the session, preliminary data from China showed that manufacturing activity in Asia’s largest economy contracted for the 11th consecutive month in September. On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,760.45 a troy ounce during European morning trade, shedding 0.5%. Earlier in the session prices fell by as much as 0.65% to trade at a session low of USD1,758.45 a troy ounce. Gold futures rose to as high as USD1,779.25 a troy ounce on Wednesday, the strongest level since February 29. Gold prices were likely to find short-term support at USD1,751.95 a troy ounce, the low from September 18 and resistance at USD1,792.25, the high from February 29. Prices fell to the lowest levels of the session following the release of worse-than-forecast purchasing managers' survey from France, the euro zone’s second largest economy. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Meanwhile, fresh concerns over the outlook for growth in China were fueled by data showing that the nation’s HSBC Flash Purchasing Managers Index rose slightly to 47.8 in September from a final reading of 47.6 in August. Despite the modest uptick higher, manufacturing activity in China remained in contraction territory for the 11th consecutive month, adding to fears over a deeper-than-expected slowdown in the region’s largest economy. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis. Sentiment also remained vulnerable amid ongoing uncertainty over whether the Spanish will ask for help from the European Central Bank's new bond-purchasing program, which would mean signing up to a permanent bailout fund. Markets were eyeing an auction of 10-year Spanish government bonds later in the day, as it was expected to be an important test of investor appetite for the country’s debt. The risk-off trade environment prompted investors to pile in to the relative safety of the U.S. dollar, with the euro dropping to a one-week low against the greenback. The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was up 0.55% to trade at 79.60, the strongest level since September 13. A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. Elsewhere on the Comex, silver for December delivery retreated 0.8% to trade at USD34.31 a troy ounce, while copper for December delivery tumbled 1.75% to trade at USD3.748 a pound.

Courtesy: ForexPros