Gold drops below $1,100/oz, hits one-month low

Otmane El Rhazi from The Bullion Desk.

Gold dropped below the psychologically important $1,100 per ounce level Friday afternoon in London as uncertainty over the timing of the Fed rate lift-off keeps weighing on the metal.

The spot gold price was last at $1,099.5/1,100.0, per ounce, down $12.40 on Thursday’s close, having dropped earlier to a low of $1,098.9 – its weakest since August 11.

The precious metal remains under pressure ahead of the crucial FOMC meeting next week.

The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.

Various FOMC members have turned increasingly hawkish over the past few months, with Fed chairwoman Janet Yellen expressing a desire to lift rates this year.

As well, upbeat US data this afternoon put pressure on the metal – PPI and core PPI came in at 0.0 percent and 0.3 percent respectively.

The dollar index was stronger at 95.55.

(Editing by Tom Jennemann)

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Gold edges down; US data and FOMC decision awaited

Otmane El Rhazi from The Bullion Desk.

Gold continued to consolidate around $1,110 for a third day on Friday morning in London, with investors maintaining a watching brief ahead of US data today and the Fed’s decision on interest rates next week.

The spot gold price was last at $1,107/1,107.30 per ounce, down $4.90 on Thursday’s close. Trade has ranged from $1,105.6 to $1,113.0 so far.

“The yellow metal should continue to see support broadly around the $1,100-1,105 level leading into tonight’s US PPI data and more importantly, next week’s FOMC meeting,” MKS said.

“Resistance wise, $1,115 has capped the metal over the past couple of sessions, while above this $1,120-1,125 should prove more difficult to breach,” it added.

Next week’s Federal Reserve meeting is expected to trigger a more definitive price movement, especially if it decides to raise the federal funds rate for the first time since 2006.

The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.

Various FOMC members have turned increasingly hawkish over the past few months, with Fed chairwoman Janet Yellen expressing a desire to raise rates sometime this year.

But inflation remains below the bank’s target of two percent – the CPI has been no higher than 0.4 percent for the past two years and dipped to -0.6 percent at the start of 2015.

US data releases today include the PPI, the core PPI, preliminary UoM consumer sentiment and inflation expectations as well as Federal budget balance.

Earlier, Chinese M2 money supply came in as expected at 13.3 percent, while new loans disappointed at 810 billion yuan. Over the weekend, industrial production, fixed asset investment and retail sales are scheduled for release and might give more clues on the state of the Chinese economy.

In the other precious metals, silver was little changed at $14.61/14.66 per ounce.

“A move towards $15 is still very much in play for the grey metal and we continue to see dips towards $14.60 and $14.50 well bought,” MKS said.

Platinum at $975/980 per ounce was down $6 and palladium fell $7 to $581/586.

According to data from the China Association of Automobile Manufacturers (CAAM), 1.42 million cars were sold in August, which down 3.4 percent year-on-year.

Unless sales recover considerably in the remainder of the year, 19.17 million cars in total will be sold this year – the first annual decline in more than a decade, Commerzbank noted.

(Editing by Mark Shaw)

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Gold prices quiet, but a weaker dollar may provide lift

Otmane El Rhazi from The Bullion Desk.

The metals put in a strong performance yesterday, reversing the weakness /indecision seen on Wednesday. The base metals closed up an average of 1.3 percent, zinc was the only one that moved lower after a large stock inflow and re-warranting of cancelled warrants – it closed down 0.2 percent.  Copper closed at $5,392. Palladium rallied 2.3 percent, silver was up 0.9 percent, while gold prices and platinum were up around 0.3 percent, with gold at $1,112.

This morning the precious metals are generally firmer, gold and silver prices are slightly firmer, palladium is stronger with a 0.9 percent gain to $593.30, while platinum is up 0.4 percent.

Base metals are mixed, tin and nickel are off 0.7 and 0.4 percent respectively, lead, zinc and aluminium are up an average of 0.3 percent and copper is up 0.1 percent at $5,396. Volume on the LME has been light at 2,647 lots, with nickel busier with 893 lots than aluminium and zinc, while copper traded 1,106 lots.

In Shanghai, nickel is up the most with a 1.8 percent gain, technical problems at China’s Jinchuan nickel smelter is likely to be causing that, along with short-covering. Lead and zinc are down 0.1 percent, tin is up 0.6 percent, aluminium is up 0.1 percent and copper is up 0.4 percent at Rmb 41,110.

Spot copper in Changjiang is up 0.7 percent at Rmb 41,100 to 41,200 so is fairly flat with the futures and the LME/Shanghai copper arb window is open with the ratio at 7.61.

In other metals in Shanghai, silver is up 0.4 percent, gold is unchanged, as is steel rebar, while iron ore continues to edge higher, last at $59.

Equities were mixed with the Euro Stoxx 50 off 1.5 percent as it followed the weaker US equities from Wednesday, but the Dow closed up 0.5 percent after a volatile day and the firmer tone has flowed into Asia with the Nikkei and CSI 300 both up 0.1 percent, the Hang Seng is up 1.1 percent but the Kospi is down 0.8 percent as the Bank of Korea kept rates unchanged. Trading is now likely to become increasing nervous ahead of next Thursday’s FOMC rate decision.

The dollar weakened again yesterday with the dollar index dropping to 95.44 and that has given currencies a lift with the euro at 1.1294, sterling at 1.5453, the aussie at 0.7062, the rouble at 66.89, while the yen is flat at 120.70. The PBoC intervened in the offshore yuan market with the yuan climbing to 6.3994, the rupiah, real, and rupee remain weak, while the rand is firmer.

The dollar is now likely to become increasing nervous over data, yesterday’s weakness was put down to a disappointing wholesale inventories number.  Today’s data includes German CPI, Italian industrial production, UK construction PMI and data out in the US includes PPI, University of Michigan consumer sentiment, inflations expectations and later the Federal budget balance There is an Ecofin meeting and UK’s Monetary Policy Committee member Kristin Forbes is speaking – see table below for more details.

The base metals are still trying higher, most are nudging up against recent resistance but the rebounds look well placed to continue and a weaker dollar may well help give them a push.  Production disruptions and cutback noise are underpinning the firmer tone, but we feel short-covering may well be the main driver. All markets are likely to get increasingly nervous ahead of next week’s Fed decision.

Gold prices pulled back on Wednesday and prices are consolidating around the $1,110 level, given the weaker dollar and the potential for further contagion from China, especially in emerging markets, we would not be surprised to see gold work higher.  Silver is watching gold, but is holding up relatively well. Platinum is holding up above support, while palladium is positioned just below resistance and looks well placed to push higher.

 

BST	06:12	+/-	+/- %	Lots
Cu	5,396	4	0.1%	1106
Al	1638	4	0.2%	235
Ni	10340	-45	-0.4%	893
Zn	1819	6.5	0.4%	365
Pb	1731	5	0.3%	26
Sn	15200	-100	-0.7%	22
Steel	300	0	0.0%	Total
	Average (BM ex-Steel)		0.0%	2,647
Gold	1112.5	0.6	0.1%
Silver	14.74	0.03	0.2%
Platinum	985.4	4.4	0.4%
Palladium	593.3	5.3	0.9%
	Average PM		0.4%

 

SHFE Prices 6:13 BST		Change	% Change
Cu	41110	160	0.4%
AL	12030	15	0.1%
Zn	14865	-10	-0.1%
Pb	13345	-10	-0.1%
Ni	79200	1410	1.8%
Sn	103150	590	0.6%
Average change (base metals)	236.5		0.5%
Rebar	1953	0	0.0%
Au	230.15	0.05	0.0%
Ag	3337	14	0.4%

 

Economic Agenda
BST	Country	Data	ACTUAL	Expected	Previous
12:50am	Japan	BSI Manufacturing Index	11	-1.9	-6
7:00am	Germany	German Final CPI m/m		0.0%	0.0%
7:00am	Germany	German WPI m/m		0.2%	0.1%
9:00am	Italy	Italian Industrial Production m/m		0.9%	-1.1%
9:30am	UK	Construction Output m/m		0.5%	0.9%
9:30am	UK	Consumer Inflation Expectations			2.2%
Day 1	EU	ECOFIN Meetings
12:30pm	UK	MPC Member Forbes Speaks
1:30pm	US	PPI m/m		-0.1%	0.2%
1:30pm	US	Core PPI m/m		0.1%	0.3%
3:00pm	US	Prelim UoM Consumer Sentiment		91.4	91.9
3:00pm	US	Prelim UoM Inflation Expectations			2.8%
7:00pm	US	Federal Budget Balance		-82.3B	-149.2B

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Gold rebounds in subdued trade

Otmane El Rhazi from The Bullion Desk.

Gold futures posted moderate gains Thursday amid some mild buying interest following the prior day’s sell-off.

Gold for December delivery on the Comex division of the New York Mercantile Exchange closed up $7.30 at $1,109.30 per ounce. Trade ranged from $1,102.50 to $1,114.10.

“Gold was subdued today following yesterday’s flush out back to the $1,100 level,” Triland Metals said. “August’s bounce from the recent $1,070 low was short lived and the theme of rally selling from the last four years seems to be continuing.”

In data today, China’s August CPI at two percent beat the expected 1.9 percent but its PPI fell 5.9 percent, its 42nd straight month of decline.

Elsewhere, French final non-farm payrolls came in as expected although the country’s industrial production disappointed. Here in the US, initial jobless claims last week fell 6,000 to a seasonally adjusted 275,000, marking the 27th straight week that claims remained below 300,000.

Meanwhile, next week’s Federal Reserve meeting is expected to trigger a more definitive price movement, especially if the it decides to raise the federal funds rate for the first time since 2006.

“Next week cannot come soon enough. The regular FOMC guessing game is a necessary but increasingly tiresome feature of our markets,” ICBC Standard Bank analyst Tom Kendall said.

“Technically, gold still looks vulnerable on a daily chart and the first line of resistance is now around $1,122; the near-term prospects of the metal getting back to the $1,155/65 area have diminished,” he added.

As for the other precious metals, Comex silver for December deliver ended up 6.9 cents at $14.645 per ounce. Trade ranged from $14.535 to $14.845.

Nymex platinum futures finished unchanged at $981.20 per ounce, while the most-actively traded palladium contract settled at $592.50 per ounce, up $14.55.

In the wider-markets, the euro was 0.63 percent stronger at 1.1279 against the dollar, while the Dow Jones industrial average and S&P 500 were last up 1.05 percent and 1.0.8 percent respectively.

Light sweet crude (WTI) oil futures for October delivery on the Nymex were up $1.43 at $45.58 per barrel, while the most-actively traded Comex copper contract was at $2.4470 per pound, up 1.55 cents.

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Gold posts moderate rebound in wake of sell-off

Otmane El Rhazi from The Bullion Desk.

Gold staged an very modest recovery in early US trading on Thursday although reversing the significant technical damage that was inflicted on Wednesday might prove difficult.

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $4.30 at $1,106.30 per ounce. On Wednesday, the yellow metal fell to a one-month low of $1,101.50.

“Gold took out technical support levels of $1,117, $1,110 and $1,105 yesterday. This is a bearish development. We would expect the market to sell at any bounce to $1,117 and we now expect another leg lower back toward July low of $1,078,” Scotiabank noted.

Meanwhile, the FOMC meeting on September 17 is expected to trigger a more definitive price movement, especially if the FOMC decides to raise the federal funds rate for the first time since 2006.

“We expect investors to further reduce net long positions in the wake of Fed rate hikes this year and next year [along with] a higher US dollar,” ABN AMRO said. “Gold weakness is not over yet and further price falls are likely.”

Elsewhere, China’s August CPI came in at two percent, which beat the expected 1.9 percent, but its PPI fell 5.9 percent, its 42nd straight month of decline. In equities, the Shanghai composite ended down 1.39 percent at 3,197.893.

“There is increased interest in speculation that the People’s Bank of China, having been an active seller of US Treasury securities in recent weeks, has been an active buyer of gold,” Dennis Gartman, editor of the Gartman Letter, said.

“We have not seen the conclusive proof of that buying, but we’ve no doubt but that the bank has indeed been in buying gold on weakness adding to its reserve position,” Gartman added.

In other data, French final non-farm payrolls came in as expected, while the country’s industrial production disappointed. Here in the US, initial jobless claims last week fell 6,000 to a seasonally adjusted 275,000, marking the the 27th straight week that claims remained below 300,000.

In wider markets, the dollar was 0.13 percent stronger at 1.1193 against the euro, while Germany’s DAX and France’s CAC-40 were down 1.03 percent and 1.22 percent respectively.

As for the other precious metals, Comex silver for December delivery was up 8.4 cents at $14.660 per ounce. Trade has ranged from $14.535 to $14.745.

Platinum for October delivery on the Nymex was up $6.30 at $987.40 per ounce, while the most-actively traded palladium contract was at $586.70, up $8.75.

 

(Editing by Mark Shaw)

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SGE to allow physical gold as collateral against its futures

Otmane El Rhazi from The Bullion Desk.

Shanghai Gold Exchange (SGE) will allow physical gold to be used as collateral against its futures contracts, it said.

From September 29, physical gold will be allowed to be used for up to 80 percent of margin value, the exchange said in a statement on Thursday.

“The new measure adds more financial functions to gold. It means that gold can be used as a sort of currency,” an analyst in Shanghai said.

The exchange will exempt members from gold collateral fees until the end of March next year, it said.

 

(Editing by Mark Shaw)

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Gold price steadies around $1,105, equities rally pauses

Otmane El Rhazi from The Bullion Desk.

Gold was rangebound on Thursday morning after the previous session’s price slump when a rally in global equities paused, while investors remain cautious ahead of the Federal Open Market Committee meeting next week.

The spot gold price was last at $1,107.70/1,108 per ounce, little changed from the previous close. Trade has ranged from $1,104.0 to $1,108.6 so far. Gold slumped to $1,101.5 on Wednesday, the lowest level in a month.

The FOMC meeting on September 17 is expected to trigger a more definitive price movement, especially if the FOMC decides to raise the Federal Funds rate for the first time since 2006.

“We expect investors to further reduce net long positions in the wake of Fed rate hikes this year and next year [along with] a higher US dollar,” ABN AMRO said on Wednesday. “Gold weakness is not over yet and further price falls are likely.”

With $1,100 a key support level, $1,115-1,120 will provide resistance, according to MKS.

Forecast-beating US job openings data raise the chance of the Fed raising rates next week – Jolts jobs openings rose to 5.8 million, the biggest gain since April 2010.

“We do not think one piece of data should affect the Fed so we see the market’s reaction as it wanting an excuse to consolidate, which suggests the market may have been surprised by the extent of some of the rallies,” FastMarkets’ William Adams noted.

In equities, Asian and European stocks retreated this morning, taking direction from major US stork market indexes that closed 1.2-1.4 percent lower on Wednesday.

As well, lacklustre data from China weighed. The August CPI at two percent was up from 1.6 percent in July and slightly higher than the expected 1.9 percent but the PPI fell for the 42nd straight month – at 5.9 percent, it was below the drop of 5.4 percent in July and forecasts of 5.6 percent.

Elsewhere, the Indian cabinet has approved a gold monetisation scheme designed to mobilise private gold holdings and reduce the country’s reliance on imports by offering a deposit structure for those holding ‘idle’ gold, MKS noted.

The rate of interest to be paid still is yet to be determined but is likely to be around 2.0 percent. The costs of transacting, gold assays and vaulting also have to be considered and factored in.

In other data, French final non-farm payrolls came in as expected, while the country’s industrial production disappointed. From the US, initial jobless claims, import prices and wholesale inventories are due later.

Silver was last at a little-changed $14.73/14.78 per ounce while platinum at $984/994 was up $6 and palladium was $8 higher at $583/588.

“The industrial precious metals may have more room on the upside,” FastMarkets’ Adams noted, although Chinese car sales figures declined year-on-year in August for the third consecutive month, Commerzbank noted.

(Editing by Mark Shaw)

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Metals’ rallies pause as equities get jittery, but expect more on the upside

Otmane El Rhazi from The Bullion Desk.

After a strong performance on Tuesday and initial gains yesterday, the base metals went on to close mixed with only lead up strongly with a 1.4 percent gain to $1,713, while the rest were either side of unchanged with copper closing at $5,356 after a high of $5,434.50. Precious metals fell more uniformly, closing down an average of 1.8 percent, with gold down 1.4 percent at $1,107, while the PGMs fell around 2.2 percent.

Good US job openings data out of the US yesterday seems to have worried the market as it was seen as increasing the chance of the Fed raising rates at its September meeting, so much so that the seemly robust and broad based rally in equities was reversed and down with it came other asset classes – the Dow closed off 1.5 percent, while earlier the Euro Stoxx 50 had been up 1.1 percent. We do not think one piece of data should affect the Fed, so we see the market’s reaction as them wanting an excuse to consolidate, which perhaps suggests the the market may have been surprised by how far some of the rallies had gone.

This morning, the base metals are mixed with copper, aluminium and nickel off 0.3 percent, zinc and lead are down 0.6 percent, while tin, the recent laggard, is up one percent. Copper is last at $5,338, nickel at $9,970 and aluminium at $1,623. Volume in early trading has been light with 2,094 lots.

Precious metals are recouping some of yesterday’s losses with gains averaging 0.4 percent, with gold little changed at $1,107.90, silver up 0.3 percent, platinum up 0.4 percent and palladium up 0.6 percent. Given the jittery stock markets we are surprised gold fell the way it did.

In Shanghai, the base metals are down an average of 0.2 percent, led by nickel that is off 0.6 percent, tin is down 0.3 percent and aluminium is off 0.3 percent, while the rest are little changed, with copper up 0.1 percent at Rmb 40,850. Spot copper in Changjiang is by comparison off 1.3 percent, which has seen the backwardation with the futures shrink to around an equivalent of $10 per tonne. The LME/Shanghai copper arbitrage window remains open with the ratio at 7.63. Reports suggest copper stocks in bonded warehouse have fallen 540,000 tonnes, the lowest in 21 months – this suggests that the open arb window has encouraged metal imports from bonded warehouses into the market, which might be why spot prices have eased moe than futures.

Other metals in China are mixed with gold and silver prices off around 1.3 percent, steel rebar is down 0.6 percent while iron ore is steady at $58.20.

Equities in Asia are down, taking their cue from Wall Street and from continued deflationary pressure from falling PPI that dropped 3.6 percent in Japan and 5.9 percent in China, while CPI in China was up 2 percent. The Nikkei is off 2.9 percent, but that is after a 7.7 percent gain yesterday, the Hang Seng is off 1.9 percent, the CSI is off 0.3 percent and the ASX 200 is down 2 percent.

Currencies – the dollar index is at 96.05, the slide earlier in the week seems to have been arrested and currencies for the most part are consolidating with the euro at 1.1200, sterling at 1.5354, the aussie at 0.7013, the yen at 120.83, the rouble at 68.46, the yuan is weak at 6.4700, the rupiah has weakened further while the rupee, real and rand are consolidating. Brazil’s credit rating has been cut to junk by Standard & Poor’s having been investment grade for seven years.

The economic agenda is busy, data still to come includes French industrial production, UK house prices, the Bank of England rate decisions, recent votes and rate statement, while US data includes initial jobless claims, import prices, wholesale inventories, natural gas and crude oil inventories – see table below for  more details.

The turn round in sentiment seems to have affected equities more than metals, but given metals have been rising off multi-year lows and equities rebounding after a correction from multi-year highs, perhaps that is not surprising and it just suggests consolidation. What it does highlight is that the market is likely to be increasingly nervous now ahead of the FOMC meeting on September 17, as well as remaining transfixed on China. On balance, with some supply responses now being seen, especially in copper, we would not be surprised to see the rallies edge high after a pause, we still feel the Fed is unlikely to move in September so yesterday’s afternoon jitters may be short-lived.

The pullback in gold and the industrial precious metals suggest a nervous market, we feel gold will remain supported in the medium term due to concerns over China and the contagion being felt in emerging markets, but in the short term it may struggle if the base metals continue with their rebounds. We feel the industrial precious metals may also have more room on the upside.

 

BST	06:13	+/-	+/- %	Lots
Cu	5,338	-18	-0.3%	1215
Al	1623	-5	-0.3%	253
Ni	9970	-30	-0.3%	208
Zn	1806.5	-10.5	-0.6%	388
Pb	1703.5	-9.5	-0.6%	26
Sn	15095	145	1.0%	4
Steel	300	0	0.0%	Total
	Average (BM ex-Steel)		-0.2%	2,094
Gold	1107.9	0.9	0.1%
Silver	14.63	0.05	0.3%
Platinum	981.9	3.9	0.4%
Palladium	578.5	3.5	0.6%
	Average PM		0.4%

 

SHFE Prices 6:13 BST		Change	% Change
Cu	40850	30	0.1%
AL	11970	-40	-0.3%
Zn	14860	5	0.0%
Pb	13340	15	0.1%
Ni	77490	-500	-0.6%
Sn	102390	-450	-0.4%
Average change (base metals)	236.5		-0.2%
Rebar	1951	-12	-0.6%
Au	229.85	-3.2	-1.4%
Ag	3319	-41	-1.2%

 

Economic Agenda
BST	Country	Data	ACTUAL	Expected	Previous
12:01am	UK	RICS House Price Balance	53.0%	46.0%	44.0%
12:50am	Japan	Core Machinery Orders m/m	-3.6%	3.4%	-7.9%
12:50am	Japan	PPI y/y	-3.6%	-3.2%	-3.1%
2:30am	China	CPI y/y	2.0%	1.9%	1.6%
2:30am	China	PPI y/y	-5.9%	-5.6%	-5.4%
6:30am	France	French Final Non-Farm Payrolls q/q	0.2%	0.2%	0.2%
7:45am	France	French Industrial Production m/m		0.3%	-0.1%
8:00am	UK	Halifax HPI m/m		0.5%	-0.6%
12:00pm	UK	MPC Official Bank Rate Votes		1-0-8	1-0-8
12:00pm	UK	Official Bank Rate		0.5%	0.5%
12:00pm	UK	Asset Purchase Facility		375B	375B
12:00pm	UK	MPC Asset Purchase Facility Votes		0-0-9	0-0-9
Tentative	UK	MPC Rate Statement
Tentative	UK	Monetary Policy Summary
1:30pm	US	Unemployment Claims		279K	282K
1:30pm	US	Import Prices m/m		-1.7%	-0.9%
3:00pm	US	Wholesale Inventories m/m		0.2%	0.9%
3:30pm	US	Natural Gas Storage		76B	94B
4:00pm	US	Crude Oil Inventories		0.9M	4.7M
6:01pm	US	30-y Bond Auction			2.88|2.3

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Gold flat in cautious trading

Otmane El Rhazi from The Bullion Desk.

The gold price was flat and range-bound during Asian trading hours on Thursday as investors stayed cautious after Wednesday’s price fall and ahead of the US Federal Open Market Committee meeting next week.

Spot gold was last at $1,107/1,107.4 per ounce on Thursday, up just $0.2 on Wednesday’s close. Trading ranged from $1,104-1,108.5 so far.

Gold had slumped to $1,101.5 on Wednesday, the lowest level in a month, with stops triggered below important support levels between $1,115-1,116, said Commerzbank on Thursday morning. Market participants had continued to reduce their net longs in gold ahead of the next week’s critical US FOMC meeting, it said.

The FOMC meeting on September 17 is expected to spur a more definitive price movement, especially if the FOMC decides to raise the Federal Funds rate for the first time since 2006.

“We expect investors to further reduce net long positions in the wake of Fed rate hikes this year and next year…[along with] a higher US dollar,” ABN AMRO had said on Wednesday. “Gold weakness is not over yet and further price falls are likely.”

Gold would be capped at $1,115-1,120 with further downwards pressure in London and New York trading sessions once Chinese demand is removed, said MKS Group on Thursday morning.

In data, August CPI announced by China on Thursday was at two percent – up from 1.6 percent in July and slightly higher than expectations of 1.9 percent – on rising food costs in the country.

Chinese PPI in August fell for the 42nd straight month to 5.9 percent – compared with a drop of 5.4 percent in July and market forecasts of a 5.6 percent fall – amid low commodity prices, and overcapacity in many of its industries.

In US data announced on Wednesday, JOLTS job openings in July were 5.75 million, above the forecast of 5.3 million. Additionally, the previous month was revised up to 5.32 million from 5.25 million.

The market will look to other Chinese data set to be announced over the next few days, this including M2 money supply, new loans, industrial production, fixed asset investment and retail sales.

In equities, major US stock market indexes were down 1.2-1.4 percent at Wednesday’s close after early gains were reversed during afternoon trading.

The Chinese stock market took direction from US bourses on Thursday morning, with the Shanghai composite index falling 1.04 percent to 3,209.507 so far. This contrasted with its strong 2.29 percent rise to 3,243.089 at its Wednesday’s close.

In other precious metals, silver was up just $0.02 to $14.59/14.64 per ounce recently. Platinum was last at $979/984, up $3.5, while palladium rose $5 to $577/583 so far on Thursday morning.

“Silver will need to hold $14.50 and more importantly $14.40 if it is to once again make an attempt at $15.00. The grey metal may however catch a cold from gold’s weakness should the yellow metal be sent through $1,100,” said MKS.

On the Shanghai Futures Exchange, gold for December delivery was unmoved at 229.85 yuan per gram, while December silver was flat at 3,318 yuan per kilogram recently on Thursday morning.

(Additional reporting by Dalton Barker) 

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Gold slips, investors await FOMC decision

Otmane El Rhazi from The Bullion Desk.

Gold fell on Wednesday as uncertainty clouds sentiment just one week before the Federal Reserve holds its critical September meeting. 

Gold for December settlement on the Comex division of the New York Mercantile Exchange fell $19.00 to close at $1,102.0 per ounce. Trade ranged from $1,100.10 to $1,124.70.

The precious metal has been trading in a tight band over the past week as equity markets continued to recover from the equity downturn on August 24.

However, the Dow Jones industrial average and S&P were down 0.9 percent and 0.8 percent respectively, but the dollar was 0.1 percent stronger at $1.12 against the euro.

The dollar softened to $1.1620 during Black Monday, but has steadily recovered along with European and Asian equity markets.

Next week’s Federal Open Market Committee (FOMC) meeting could spur a more definitive price movement, especially if the FOMC decides to raise the Federal Funds rate for the first time since 2006.

“We expect investors to further reduce net long positions in the wake of Fed rate hikes this year and next year…[along with] a higher US dollar,” ABN AMRO said in a note today. “Gold weakness is not over yet and further price falls are likely.”

In US data, JOLTS job openings in July were 5.75 million, above the forecast of 5.3 million. Additionally, the previous month was revised up to 5.32 million from 5.25 million.

In supply news, Anglo American Platinum will sell its Rustenburg, South African operation to Sibanye Gold for at least 4.5 billion rand ($330 million), it said on Wednesday.

As for other precious metals, Comex silver for December delivery fell 18.5 cents or 1.3 percent to $14.570 per ounce. Trade ranged from $14.560 to $14.930.

Platinum for October settlement slumped $20.0 to $982.90 per ounce, while the most-actively traded palladium contract was at $577.95 per ounce, down $8.60.

(Editing by Tom Jennemann)

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US WEBCAST: Copper touches fresh highs, Gold rangebound

Otmane El Rhazi from The Bullion Desk.

Copper hit the highest price since mid-July as major producers start to cut production In gold, equity stability in the three major global regions have weighed on the precious metals as investors continue to recover from Black Monday. On Monday, Glencore announced it was suspending mining operations in two African mines due to low copper prices. The cutback will remove an estimated 400,000 tonnes from the market.

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Gold rangebound as equities continue recovery

Otmane El Rhazi from The Bullion Desk.

Gold prices languished in negative territory on Wednesday amid another tick higher in global equity markets.

Gold for December settlement on the Comex division of the New York Mercantile Exchange was last down $4.20 or 0.4 percent to $1,116.80 per ounce. Trade has ranged from $1,124.70 to $1,115.50.

Equity markets have steadily recovered from the major selloff on August 24. Overnight, the Shanghai Composite Index rose 2.3 percent, while Germany’s DAX and France’s CAC-40 were up 1.8 percent and 2.6 percent respectively.

Additionally, the US indexes finished up over two percent during Tuesday’s sessions, while the dollar was 0.6 percent stronger at $1.1136 against the euro.

“Gold has not been doing much of anything over the past five days, with prices barely exceeding a $10 an ounce trading range,” Edward Meir, an analyst at INTL FCStone, said. “We suspect that part of gold’s lethargic tone is due to the snap-back we have been seeing in a number of equity complexes, led primarily by both the Chinese and US equity markets.”

A potential catalyst to break the current range is next week’s Federal Open Market Committee (FOMC) meeting.

The FOMC is locked in a battle whether to raise interest rates or not – which have remained at near-zero levels since December 2008.

The CME Group FedWatch – a tool to gauge the market’s expectation of a change in the Fed Funds rate – was currently at 24 percent, up from 19 percent on Tuesday.

“In the run-up to the Fed’s meeting next week, market participants are likely to be exercising restraint, so we are unlikely to see any pronounced price fluctuations in one direction or another,” Commerzbank noted.

In a light data day, the US Jolts job figure is due for release later in the trading session.

In supply news, Anglo American Platinum will sell its Rustenburg, South African operation to Sibanye Gold for at least 4.5 billion rand ($330 million), it said on Wednesday.

As for other precious metals, Comex silver for December delivery fell four cents or 0.3 percent to $14.715 per ounce. Trade has ranged from $14.650 to $14.930.

Platinum for October settlement dipped $7.10 to $995.80 per ounce, while the most-actively traded palladium contract was at $584.60 per ounce, down $1.95.

(Editing by Tom Jennemann)

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ICE sets launch date for delayed Singapore gold contract

Otmane El Rhazi from The Bullion Desk.

Intercontinental Exchange’s (ICE) gold kilobar futures will launch on November 17 this year, it confirmed – it initially planned to roll out the contract in March.

Alongside the gold contract, it will introduce a mini ICE Brent Crude futures contract, mini Gasoil futures and Chinese offshore and onshore Renminbi futures, subject to final approval by the Monetary Authority of Singapore (MAS).

The delay to the launch was due to Zhengzhou Commodity Exchange threatening legal action as well as customers not finishing regulatory paperwork in time, the Financial Times reported earlier this year.

The Chinese exchange was reportedly angered by the similarity of the white sugar and cotton contracts that the exchange had also planned to introduce.

The gold futures contract, which will be physically settled with delivery in Singapore, complements the exchange’s mini gold contract. It will service the region’s demand for four nine (99.99 percent) purity gold kilobars, denominated in the dollar.

ICE bought the Singapore Mercantile Exchange for $150 million in November 2013.

 

(Editing by Mark Shaw)

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Gold set to hold in tight range ahead of FOMC meeting

Otmane El Rhazi from The Bullion Desk.

Gold was little changed once again on Wednesday morning – it has traded either side of $1,120 in recent sessions and is likely to remain there before next week’s FOMC meeting, market participants said.

The spot gold price was last at $1,121.7/1,122.2 per ounce. Trade has ranged narrowly from $1,120.8 to $1,125.5 so far.

Members of the US Federal Open Market Committee will contemplate whether to raise the Federal Funds rate for the first time since 2006 at its next meeting on September 17.

“In the run-up to the Fed’s meeting next week, market participants are likely to be exercising restraint, so we are unlikely to see any pronounced price fluctuations in one direction or another,” Commerzbank noted.

But although gold continues to trade largely unchanged, this means at least that it is successfully resisting the firmer dollar and rising equity markets, Commerzbank noted.

In currencies, the dollar index is slightly higher at 95.98.

In equities, major US bourses closed 2.4-2.7 percent higher yesterday, boosted by a strong close on the Chinese stock market. The Shanghai composite index rose 2.29 percent to 3,243.089 on Wednesday.

The economic agenda is fairly light today – data already out of Japan showed some improvement with M2 money stock and consumer confidence rising. Later US data includes the Jolts job data.

Elsewhere, according to Metals Focus, global gold miners’ total cash costs of production averaged $664 per ounce in the second quarter of 2015, a drop of eight percent on the same period of last year.

In paper gold, although ETF investors bought some metal in the second half of August after holdings reached a 2015 low, partly reflecting renewed interest in safe-have assets due to the turmoil in the financial markets, outflows have picked up again since the start of September.

This most probably reflects and easing in investor fears, FastMarkets analyst Boris Mikanikrezai noted, which “leads us to think that any potential rally in gold prices may only be brief”, he said.

In the funds tracked by FastMarkets, holdings now stand at 1,530.58 tonnes.

As for the other precious metals, silver was little changed at $14.75/14.80 per ounce as was platinum at $1,001/1,006 while palladium at $585/590 was down $3.

“Although platinum has gained some ground since its lowest level of around $943 beginning of August the metal is still considered to be cheap,” Commerzbank noted.

In supply news, Anglo American Platinum will sell its Rustenburg operations to Sibanye Gold for at least 4.5 billion rand ($330 million), it said on Wednesday.

(Editing by Mark Shaw)

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SILVER TODAY – Correcting higher but making hard work of it

Otmane El Rhazi from The Bullion Desk.

Short Term: Medium Term: Long Term: Resistances: R1 14.38 Former lows R2 14.65 Former HSL R3 14.85 20 DMA R4 15.62-15.69 Resistance R5 15.68 38.2% Fibo R6 15.87 R7 16.00 Support: S1 14.65 December low S2 14.51 UTL S3 14.38 Early August low S4 13.98 August 26 low S5 13.51 Long term SL Stochastics:Bullish Legend: BB - Bollinger band MACD - Moving average convergence divergence U/DTL - Up/down trend line SL = Support line Technical Comment Analysis Having built a bit of a base around $14.38 in late July/early August, silver rebounded well but this was followed by another stall to fresh lows at $13.98, a level not seen since August 2009 when prices were rebounding off the 2008 low at $8.49. Prices have once again rebounded but are finding resistance around the 20 DMA. Can silver now build on its recent gains? It is trying to do so but lacks staying power – there has been limited follow-through buying after yesterday’s show of strength. It would take a move back above $15 to look less vulnerable. The stochastics have been choppy but remain bullish. The gold/silver ratio was last around 75.80 after a recent high of 79.84, which suggests silver is correcting after becoming oversold. But its rally seems to lack confidence so the market looks both nervous and vulnerable on the downside. Macro view Silver has struggled to keep up with gold – the weakness of late in the gold/silver ratio attests to that – but this may now be being unwound, albeit slowly.  The CFTC commitment of traders position from last week showed 2,735 contracts of short-covering that was slightly countered by 821 contracts of long liquidation. Although the gross short position in silver has fallen significantly after six weeks of short-covering, this has had little impact on the price, which suggests there is plenty of metal available. The shorts are not struggling to cover, which is probably because the longs are also liquidating at the same time. Reports suggest strong demand for silver for jewellery and silverware but the escalation in short selling between June and August seems to have countered the pick-up in physical demand. We also imagine that recent currency weakness in Asian economies has hurt retail demand for silver from both a price perspective as well as well as hitting household spending on luxury items. Conclusion Silver’s plunge to fresh lows recently makes it look even more oversold. ETF holdings remain steady and short-covering has been strong so it seems odd that prices have been as weak as they have. We would have thought that these price levels would start to attract industrial demand; a firmer tone might prompt this. We think prices are well placed to rally back above $15 given strength in other industrial metals. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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