31 Jul 2014
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
28 Jul 2014
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
Gold prices are starting the week on a positive note but analysts are expecting prices to remain volatile with significant economic events looming on the horizon.
Comex August gold opened the Sunday North American evening/Monday Asian session at $1,307.60 an ounce, up from Friday’s pit close of $1,303.30 an ounce. As of 8:45p.m. EDT, August gold was trading at $1,305.30 an ounce, relatively unchanged from Friday’s close.
Electronic trading of Comex September silver futures opened Sunday evening/Monday morning at $20.715 an ounce, slightly up from Friday’s pit close of $20.636 an ounce; as of 8:15 p.m. EDT, September silver was at $20.740 an ounce.
Although gold prices are back above $1,300 after hitting a four-week low earlier last week, analysts at HSBC said they are expecting to see choppy markets during the week, with the scheduled FOMC and U.S. jobs numbers out on Friday.
“Gold price volatility is likely to pick-up next week with the Federal Open Market Committee meeting on 29-30 July and the July nonfarm payrolls data to be released on 1 August,” the analysts said in a report published late Friday.
Edward Meir, commodities consultant with INTL FCStone said in a research note published Sunday afternoon that gold could find some support early in the week as markets react to continued turmoil in the Middle East and Eastern Europe. He also said that a potential default by Argentina, which could come by Thursday, should keep investors on edge and boost gold demand.
However, he added strong economic data later in the week could help create some positive investor sentiment, which would be good for equity markets and bad for gold prices.
Analysts at ANZ Bank are expecting gold to struggle as geopolitical events have started to lose their impact on the gold market.
“We don't expect the latest Middle East tension to be a significant driver of prices over an extended period,” they said in their report published Sunday evening.
Physical demand, which has helped support gold prices in the last appears to be losing some momentum, Meir also noted in his report.
“In the physical markets, there was an outflow of 3.6 tons from the SPDR Gold Trust as of last Thursday,” he said. “China’s net overseas purchases of gold through Hong Kong fell to a 17-month low in June, sliding to 40.54 tons, from 52.60 tons in May and 104.6 tons in the year-ago period.” - kitco.com
25 Jul 2014
Gold is trading at 1292.60 adding $1.80 but remaining weak as the US dollar maintains its strength. Silver added 83 points to reach 20.498 and platinum is flat at 1472.10. Gold futures fell to the lowest in five weeks in New York as the outlook for an improving global economy reduced demand for a haven.
A preliminary China Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics rose to an 18-month high. U.S. jobless claims fell to the lowest since February 2006 last week, a government report today showed. The Standard & Poor’s 500 Index of stocks closed at a record yesterday. The decline extends losses this month for bullion after unrest in Ukraine and the Middle East helped prices rebound 10 percent in the first half of 2014. Goldman Sachs Group Inc. reiterated a call for gold to drop further by year-end with an accelerating U.S. recovery, even as the bank raised its long-term forecast on the metal.
Prices for the yellow metal fell 1 percent to below $1,300 an ounce as the dollar and stock markets rose on surprisingly low weekly jobless claims and robust corporate earnings out of the United States.
Data from Europe showed the services sector in the 18-member euro zone performing better than any forecast from 39 economists in a Reuter’s poll. All that diverted investor attention from the clashes in Gaza between Hamas and Israel, as well as the tensions in the Crimean region after the sanctions on Russia and the downing of a Malaysian passenger jet, that sent bullion rallying last week.
Goldman repeated a forecast for gold to drop to $1,050 by the end of 2014, analysts wrote in a report dated yesterday. The bank said it raised its long-term forecast 13 percent to $1,200 in 2014-dollar terms “to make it more in line with our marginal-cost support level.”
Data from the China Gold Association yesterday showed consumption in the country, which surpassed India as the largest user last year, fell 19 percent in the first half of 2014.
Copper gave up a few points this morning as traders booked profits after Thursday’s rally on Chinese data. Copper is trading at 3.255. Copper dropped for the first time this week as investors viewed a rally to the highest price since July 14 as excessive amid rising global supplies.
Copper is down 2.8 percent this year, the most among the six main metals on the LME. Global supply will exceed demand by 353,000 tons in 2014 and by 492,000 tons in 2015, according to Goldman Sachs Group Inc. Goldman cut its 12-month estimate for copper to $6,200 a ton from $6,600 due to rising output and exposure to a weak property market in China, the biggest user. Copper futures rose the most in three weeks as a gauge of manufacturing climbed to an 18-month high in China, the world’s top consumer of industrial metals.
China’s factory measure from HSBC Holdings Plc and Markit Economics showed a preliminary July reading of 52, compared with the 51 median estimates of analysts surveyed. A level above 50 indicates expansion. Copper inventories monitored by the London Metal Exchange extended a slump to the lowest since August 2008. - Fxempire
On Thursday the International Monetary Fund has lowered its 2014 global economic growth forecast, warning of “negative surprises” from the United States and China and geopolitical risks in Ukraine and the Middle East. The IMF projected global growth of 3.4 per cent for this year, down from its April estimate of 3.7 per cent. In 2013, the world economy grew 3.2 percent. The downgraded 2014 growth outlook reflects “both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets,” the IMF said, in an update of its semiannual World Economic Outlook.
The downgrade weighed on implied demand for energy products. The brief update showed the IMF increasingly concerned by escalating geopolitical tensions. “Geopolitical risks have risen relative to April: risks of an oil price spike are higher due to recent developments in the Middle East while those related to Ukraine are still present,” the report said. Despite the worse-than-expected global growth outlook for 2014, the IMF left its 2015 forecast unchanged at an annual rate of 4.0 per cent, the fastest pace since 2011.
The lower growth rates weigh on commodity demands, but at the same time the increase in geopolitical concerns pushes the price of crude oil on worries over supply and production disruption. WTI slipped $1.05, or 1 percent, to end at $102.07. The volume of all futures traded was 23 percent below the 100-day average for the time of day. Brentdeclined 96 cents, or 0.9 percent, to close at $107.07 a barrel
West Texas Intermediate crude declined with gasoline as U.S. inventories of the motor fuel expanded for a third week, threatening to depress refining margins. Gasoline stockpiles grew by 3.38 million barrels last week and supplies around New York Harbor, where futures contracts are delivered, were at the highest seasonal level since 2008, Energy Information Administration data showed. Gasoline futures ended at the lowest price in almost six months. Gasoline futures for August delivery dropped 2.33 cents to $2.8368 a gallon on the Nymex, the lowest settlement since Feb. 28. Ultra low sulfur diesel dropped 0.45 cent to $2.8709.
Natural gas gained after the release of the weekly EIA inventory report. Gas climbed to trade at 3.847 adding 8 points this morning. The report showed a net increase of 90 Bcf from the previous week. Stocks were 561 Bcf less than last year at this time and 683 Bcf below the 5-year average of 2,902 Bcf with the total working gas below the 5-year historical range. - fxempire