Metals find support for now, but remain vulnerable

Otmane El Rhazi from The Bullion Desk.

The rebounds in the base metals ran out of steam on Friday after initially rising an average of 0.7 percent on Friday morning, selling emerged pushing prices down an average of 1.4 percent with zinc and lead dropping around 2.1 percent, while tin was off the least with a 0.6 percent decline and copper fell 1.5 percent to $6,018. The revision of first quarter US GDP growth to -0.7 percent from 0.2 percent did nothing to help sentiment, even though an even larger downward revision whad been expected. Negative growth is still negative growth and not good for metal demand.

Precious metals ended the day down an average of 0.4 percent on Friday with the revised negative GDP data sapping broad market sentiment even though the poor data means it is likely that the Fed will be in no hurry to raise rates. Gold closed unchanged at $1,189.90, while the PGMs closed down around 0.8 percent.

This morning with no scares from China’s PMI data and some bullish Japanese capital spending data, the base metals have started on a firmer footing with the complex up an average of 0.3 percent with nickel and aluminium up 0.5 percent and copper up 0.4 percent at $6,041. Volume remains light with 3,880 lots traded, with nickel once again trading more than aluminium and zinc – see table below for more details.

The PGMs have recovered some of Friday’s lost ground, they are up an average of 0.5 percent this morning, while gold and silver are little changed with gold at $1,191.6.

In Shanghai, the base metals are down across the board with average losses of 0.8 percent – this is not particularly encouraging given the PMI data was as expected. Nickel leads on the downside with a 1.7 percent fall to Rmb 98,200, copper and zinc are down around one percent with copper at Rmb 43,700. Spot copper in Changjiang, is down 1.1 percent at Rmb 43,900-44,000, the backwardation with the August futures is around an equivalent of $48 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.24.

Precious metals in Shanghai are little changed with gold up 0.2 percent and silver up 0.1 percent.

Equities – on Friday the poor US GDP data and concerns over Greece were weighing on sentiment that saw the Euro Stoxx 50 and Dow close down 2.2 and 0.6 percent, respectively. This morning in Asia, the markets are mixed but China is upbeat with the CSI 300 up 3.3 percent, the Hang Seng is up 0.8 percent, the Nikkei is little changed and the Kospi is off 0.5 percent. Reports that China is considering extending its local government bond swap programme, which would help cash-strapped local governments continue with infrastructure projects, has boosted sentiment and the flattening out of the PMI data suggests the slide in growth may have halted, although it may be too early to say that with any confidence.

Currencies – the dollar index is at 97.08 so is holding up well after the rebound from May’s low of 93.13, the euro is mid-range at 1.0955, sterling is trending lower, last at 1.5293, as are the yen at 124.14, the aussie at 0.7650, the rouble is at 52.43 and the yuan is firmer at 6.1980.

The economic agenda is busy today with final PMI data out across all regions. China’s and Japan’s data were stable, Japan’s capital spending climbed 7.3 percent. Later, in addition to more PMI data, there is German CPI, US personal income, spending and prices, construction spending and FOMC Stanley Fischer is speaking – see table below for more details.

The base metals generally remain on a back footing – the attempts to rally on Wednesday/Thursday last week stalled on Friday, so prices are once again vulnerable. Whether developments in China, with the PMI stabilising and reports of potentially more support for local governments, are enough to underpin prices remains to be seen. For now, we feel the markets are well supplied so we would not be surprised to see prices trade sideways-to-lower, although the likes of aluminium and nickel that have already sold off heavily may manage to trade sideways as former bases provide support.

The precious metals have been under pressure again, especially the PGMs, while gold and silver have pulled back to find support above recent support levels. Given the likelihood that the Fed stays on hold for longer and the continuing uncertainty over Greece, we would expect bullion prices to remain well supported, but they lack upward drive as investors still seem focused on equities.   

 

Overnight Performance
BST	06:17	+/-	+/- %	Lots
Cu	6041	23	0.4%	2054
Al	1750	8.5	0.5%	578
Ni	12660	60	0.5%	727
Zn	2189	4.5	0.2%	461
Pb	1957	5	0.3%	60
Sn	15540	0	0.0%
Steel	300	0	0.0%	Total
	Average (BM ex-Steel)		0.3%	3,880
Gold	1191.6	1.7	0.1%
Silver	16.71	-0.01	-0.1%
Platinum	1112.9	7.9	0.7%
Palladium	776.2	2.2	0.3%
	Average PM		0.3%

 

SHFE Prices 06:37 BST		Change	% Change
Cu	43700	-460	-1.0%
AL	13180	-25	-0.2%
Zn	16640	-180	-1.1%
Pb	13280	-100	-0.7%
Ni	98200	-1660	-1.7%
Sn	116100	-220	-0.2%
Average change (base metals)			-0.8%
Rebar	2358	9	0.4%
Au	241.2	0.5	0.2%
Ag	3652	4	0.1%

 

Economic Agenda
BST	Country	Data	ACTUAL	Expected	Previous
12:50am	Japan	Capital Spending q/y	7.3%	-0.1%	2.8%
1:58am	China	Manufacturing PMI	50.2	50.2	50.1
2:00am	China	Non-Manufacturing PMI	53.2		53.4
2:35am	Japan	Final Manufacturing PMI	50.9	50.9	50.9
2:45am	China	HSBC Final Manufacturing PMI	49.2	49.2	49.1
All Day	Germany	German Prelim CPI m/m		0.0%	0.0%
8:15am	Spain	Spanish Manufacturing PMI		54.4	54.2
8:45am	Italy	Italian Manufacturing PMI		53.1	53.8
8:50am	France	French Final Manufacturing PMI		49.3	49.3
8:55am	Germany	German Final Manufacturing PMI		51.4	51.4
9:00am	EU	Final Manufacturing PMI		52.3	52.3
9:30am	UK	Manufacturing PMI		52.7	51.9
1:30pm	US	Core PCE Price Index m/m		0.2%	0.1%
1:30pm	US	Personal Spending m/m		0.2%	0.4%
1:30pm	US	Personal Income m/m		0.3%	0.0%
2:30pm	US	FOMC Member Fischer Speaks
2:45pm	US	Final Manufacturing PMI		54.2	53.8
3:00pm	US	ISM Manufacturing PMI		51.9	51.5
3:00pm	US	Construction Spending m/m		0.7%	-0.6%
3:00pm	US	ISM Manufacturing Prices		43	40.5

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Gold has muted response to slowing US economy

Otmane El Rhazi from The Bullion Desk.

Gold wobbled in a tight range on Friday as a weak US GDP reading was already priced into the market. 

Gold for August delivery on the Comex division of the New York Mercantile Exchange increased $1.00 or 0.1 percent to close at $1,189.8 per ounce. Trade ranged from $1,185.7 to $1,193.3

Gold was in consolidation mode this week as prices plummeted Tuesday by $17.10 after the holiday weekend, before closing higher yesterday and today.

“The gold market continues to be rather uninspiring as we remain within what can only be described as no man’s land, a clear break below $1,175 or above $1,225 is required before a clear direction is to be determined,” Triland Metals said.

The second estimate of US first-quarter GDP came in at -0.7 percent, slightly better than the -0.8 percent forecast but down significantly from 0.2 percent in the first reading. Revised University of Michigan consumer sentiment for May beat estimates at 90.7, but was the lowest reading since November.

Additionally, Chicago PMI for May was at 46.2, much lower than the 53.1 forecast.

The date kept a damper on US equities with the Dow Jones industrial average and S&P were each down 0.7 percent, while the euro was 0.3 percent stronger at $1.0984 against the dollar.

This low GDP reading could make Federal Reserve’s 2015 forecast for 2.5 to 3.0 percent growth difficult to achieve. The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

At its last meeting, the Fed removed all calendar references in its forward guidance and said that recent economic weakness might be “transitory” in nature. This means that bank is now entirely dependent on data so a rate increase could happen at any future meeting.

“Unlike 2014, when growth snapped backed after a dismal first quarter as well, the stronger dollar and spending cuts by energy companies remain a drag right now,” Edward Meir, analyst at INTL FCStone, said. “All this puts the Fed in a rather awkward position of going through with rate increases (or at least one) in what are sub-optimal growth conditions, but the central bank really has no choice at this point, but to proceed.”

In other data today, German retail sales at 1.7 percent bettered expectations as did the Spanish flash CPI at -0.2 percent and the Italian preliminary CPI at 0.2 percent, while French consumer spending dropped short at 0.1 percent. Italian GDP at 0.3 percent was the first quarter of growth since the autumn of 2013.

As for other precious metals, Comex silver for July delivery was rose more than three cents to close at $16.701 per ounce. Trade ranged from $16.640 to $16.850.

Platinum futures for July delivery on the Nymex fell $3.20 to $1,113.1 per ounce, while the most-actively traded palladium contract was at $788.10, down $6.70.

(Editing by Tom Jennemann)

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GOLD WEBCAST – Gold price continues to lack direction

Otmane El Rhazi from The Bullion Desk.

Gold prices climbed moderately after the release of US GDP data confirmed expectations from market participants that the economy contracted in the first 3 months of the year. Spot gold was last seen back around the $1,190 mark, having lacked direction for the most of the week in the face of a relatively stronger dollar and mixed messages from Greece on the state of negotiations. The market is also awaiting signals from Brussels where Greece is meeting with creditors again today to thrash out a deal to secure the funding it needs to service its debts In other metals, silver was last seen around $16.80 per ounce while platinum was at $1,120 and palladium around $780.

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Gold continues sideways, sluggish US data has no impact

Otmane El Rhazi from The Bullion Desk.

The gold price edged higher on Friday afternoon following the release of US GDP data that confirmed expectations that the economy contracted in the first three months of the year.

Spot gold was last at $1,191.80/1,192.60 per ounce, up $4 on Thursday’s close and having traded in an $8 intraday range so far.

The second estimate of US first-quarter GDP came in at -0.7 percent, slightly better than the forecast of -0.8 percent but down significantly from 0.2 percent in the first reading.

In other lacklustre readings, the Chicago PMI plunged in May to 46.2 from 52.3 in April, while University of Michigan consumer sentiment dropped to 90.7 from 95.9 in April – the biggest decline since the end of 2012.

As a result, the CME Group’s FedWatch put the odds of a rate increase in September at 25 percent, a small decrease from probability of 27 percent last Friday.

Likewise, the dollar also fairly unchanged at 1.0972 against the euro, suggesting that most of the action had already been priced in or that participants are  await a September increase.

The members of the Fed’s policy board – the FOMC – are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

The market is also awaiting signals from Brussels where Greece is meeting with creditors again today to thrash out a deal to secure the funding it needs to service its debts. But the country’s inability to implement the reforms on VAT rates, pensions and budget targets has seen negotiations falter for the last few weeks.

In other metals, silver was last at $16.73/16.78 per ounce, up six cents, while platinum gained $4 to $1,115/1,120 and palladium at $783/788 was also $4 higher.

 

(Additional reporting by Tom Jennemman, editing by Mark Shaw)

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September rate increase less likely after US weak data

Otmane El Rhazi from The Bullion Desk.

The string of soft US data this week has slightly lowered the probability that the Federal Reserve will raise interest rates in September.

The second estimate of US first-quarter GDP came in at -0.7 percent, slightly better than the forecast of -0.8 percent but down significantly from 0.2 percent in the first reading.

In other lacklustre readings, the Chicago PMI plunged in May to 46.2 from 52.3 in April, while University of Michigan consumer sentiment dropped to 90.7 from 95.9 in April – the biggest decline since the end of 2012.

The CME Group’s FedWatch put the odds of a rate increase in September at 25 percent, a small decrease from probability of 27 percent last Friday.

The odds that the Fed will raise interest rates in December has fallen to 58 percent from 61 percent last week but there is now an 88-percent chance that it will act by the end of first quarter of 2016, up from 83 percent.

The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

At its last meeting, the Fed removed all calendar references in its forward guidance and said that recent economic weakness might be “transitory” in nature. This means that bank is now entirely dependent on data so a rate increase could happen at any future meeting.

 

(Editing by Mark Shaw) 

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Gold rises as US GDP figure shows economic contraction

Otmane El Rhazi from The Bullion Desk.

Gold prices climbed after the release of US GDP data confirmed expectations from market participants that the economy constricted during the strong winter.

Gold for August delivery on the Comex division of the New York Mercantile Exchange increased $1.40 or 0.1 percent to $1,189.50 per ounce. Trade has ranged from $1,185.7 to $1,193.3

The second estimate of US first-quarter GDP came in at -0.7 percent, slightly better than the -0.8 percent forecast but down significantly from 0.2 percent in the first reading.

“These are the adjustments we were expecting,” Steve Liesman, CNBC’s senior economics reporter. “It was a lousy quarter and the debate now shifts to the strength of the second quarter snap back, which so far look to be modest at about 2.6 percent. This isn’t a 3 percent economy, it more like a 2-2.5 percent economy.”

This low GDP reading could make Federal Reserve’s 2015 forecast for 2.5 to 3.0 percent growth difficult to achieve. The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

At its last meeting, the Fed removed all calendar references in its forward guidance and said that recent economic weakness might be “transitory” in nature. This means that bank is now entirely dependent on data so a rate increase could happen at any future meeting.

“Unlike 2014, when growth snapped backed after a dismal first quarter as well, the stronger dollar and spending cuts by energy companies remain a drag right now,” Edward Meir, analyst at INTL FCStone, said. “All this puts the Fed in a rather awkward position of going through with rate increases (or at least one) in what are sub-optimal growth conditions, but the central bank really has no choice at this point, but to proceed.”

Meanwhile in equities, Germany’s DAX and France’s CAC-40 were each down 1.2 percent, while the euro was 0.2 percent stronger at $1.0970 against the dollar.

In other data today, German retail sales at 1.7 percent bettered expectations as did the Spanish flash CPI at -0.2 percent and the Italian preliminary CPI at 0.2 percent, while French consumer spending dropped short at 0.1 percent. Italian GDP at 0.3 percent was the first quarter of growth since the autumn of 2013.

Later today will see Chicago PMI, forecast at 53, and Michigan consumer sentiment readings, expected at 89.

As for other precious metals, Comex silver for July delivery was last up more than five cents to $16.725 per ounce. Trade has ranged from $16.640 to $16.850.

Platinum futures for July delivery on the Nymex fell $0.20 to $1,116.1 per ounce, while the most-actively traded palladium contract was at $781.75, down $3.05.

(Editing by Tom Jennemann)

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Austria to repatriate around 140 tns of gold reserves from BoE

Otmane El Rhazi from The Bullion Desk.

The Austrian central bank plans to repatriate around 140 tonnes of its official gold reserves from the Bank of England, it said.

By 2020, the Oesterreichische Nationalbank (OeNB) would like to hold 50 percent of its official reserves of 280 tonnes in Austria, 30 percent in London and 20 percent in Switzerland.

Currently, the OeNB holds 80 percent of its reserves at the BoE, equal to around 224 tonnes and worth around $8.5 billion. It holds 17 percent in Austria and three percent in Switzerland.

The move will see around $5.4 billion or around 140 tonnes moving from vaults in London to Austria over the next few years.

“Starting from mid-2015, the new storage policy will be gradually implemented in keeping with security and logistical requirements,” the bank said in a statement. “The OeNB will regularly report on the progress in its upcoming annual reports.”

Austria is the 21st largest holder of gold in the world, holding 44.4 percent of its foreign exchange reserves in gold.

The 2020 plan is similar to plans announced by Germany’s Bundesbank, which is gradually repatriating its gold from the US – it intends to hold at least 50 percent of its 3,384 tonnes of the metal on German soil.

 

(Editing by Mark Shaw)

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Gold price locked sideways, market awaits US GDP

Otmane El Rhazi from The Bullion Desk.

The gold price was locked in a narrow sideways range in early-morning trading on Friday, with the market looking ahead to the US GDP reading due this afternoon.

Spot gold was last at $1,189.40/1,190.20 per ounce, up $1.50 on Thursday’s close but confined to a tight $3 intraday range so far.

The second estimate for first-quarter US growth is forecast at -0.8 percent, down significantly from 0.2 percent in the first reading, which missed the estimated reading of 1.0 percent.

While contraction is now largely priced into the dollar, a reading worse than -0.8 percent may well extend the greenback’s losses from 1.0972 against the euro.

“Although a lower reading is forecast, it might well prompt a correction in the dollar as the market expects the Fed to delay a rate rise,” FastMarkets analyst William Adams said.

Poor data could dissuade the US central bank from subsequent rate rises after initial normalising monetary policy some time later this year, INTL FCStone analyst Edward Meir said.

The market is also awaiting signals from Brussels where Greece is meeting with creditors again today to thrash out deal to secure the funding it needs to service its debts. But the country’s inability to implement the reforms on VAT rates, pensions and budget targets has seen negotiations falter for the last few weeks.

Greek officials have sounded optimism that it will be able to agree a deal by the end of the week, though International Monetary Fund Managing Director Christine Lagarde has warned Athens is unlikely to agree any deal in the next few days and that “a Greek exit is a possibility”.

The June 5 deadline for a 305-million-euro payment to the IMF is fast approaching – the country owes 1.6 billion euros to the IMF in total next month.

Worries about Greece pressured most European stock markets lower – while the FTSE 100 edged higher, the Dax and CAC 40 were both down more than 0.2 percent.

In other data today, German retail sales at 1.7 percent bettered expectations, while French consumer spending dropped short at 0.1 percent.

Italian GDP at 0.3 percent was the first quarter of growth since the autumn of 2013 but the strength of the Swiss franc pushed Switzerland into contraction in the first three months of the year at -0.2 percent.

As well as the GDP reading, the Chicago PMI and a revised University of Michigan report on consumer sentiment are also due from the US later.

Silver was five cents higher at $16.72/16.77 per ounce and platinum gained $5 at $1,115/1,120 per ounce while palladium slipped $1 to $778/783.

(Editing by Mark Shaw)

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Metals more upbeat – find dip buying, all eyes on US GDP

Otmane El Rhazi from The Bullion Desk.

The base metals were for the most part bullish yesterday – at the day’s highs prices were up an average of 1.4 percent and at the lows they were down an average of 0.3 percent – they closed up 0.8 percent on average, with nickel and tin in negative territory by around 0.5 percent, while lead, zinc and aluminium were up around two percent and copper closed up 0.2 percent at $6,108.

Precious metals had an interesting day – in mid-afternoon prices spiked lower with average losses of 0.6 percent that took the price of gold down to a low of $1,180.50, but it promptly rebounded to $1,188.20 – the $1,180 area therefore still seems to offer good dip-buying support.

This morning nickel remains under pressure, it is off a further 0.3 percent, while the rest of the base metals complex is up between 0.1 and 0.5 percent with aluminium and lead up the most at $1,780 and $2,001, while copper is up 0.2 percent at $6,123. Volume is low at 3,498 lots, with nickel showing the second largest turnover at 923 lots, after 1,269 lots on copper.

Bullion prices are little changed with gold at $1,189.50, silver at $16.74, palladium at $781 and platinum at $1,116.90 – so whereas gold rebounded platinum did not to the same extent and that has pushed platinum’s discount to gold to $72.

In Shanghai , the August base metals are split with nickel and tin lower by 2.3 and 0.4 percent respectively, while the other metals are up between 0.2 and 0.4 percent with copper up 0.2 percent at Rmb 44,220. Spot copper in Changjiang is also up 0.2 at Rmb 44,400-44,500, the spread between the spot and August contract is at an equivalent of around $45 per tonne and the LME/Shanghai copper arb ratio is 1 to 7.24 for the August date, although the arb for nearer dates may well be closer to being open with the ratio for the June date around 1 to 7.50.

Precious metals in Shanghai are little changed with the price of gold up 0.2 percent and silver up 0.1 percent.

Equities – the Euro Stoxx 50 closed off 0.9 percent and the Dow was off 0.2 percent, but the CSI 300 is consolidating Thursday’s 6.5 percent loss with a 1.5 percent rebound today. The Nikkei is up 0.3 percent, the Hang Seng is up 0.5 percent and the Kospi is up 0.1 percent. So no follow through weakness in China, at least for now.

Currencies – the yen at 123.83 remains in the limelight, while the dollar index consolidates at 96.97 after a high of 97.78 and the euro is edging higher at 1.0952. Sterling is trending lower again, last at 1.5330, as are the aussie at 0.7662, the rouble at 52.62 and the yuan is flat at 6.2000. 

The economic agenda is busy, earlier there was a host of data out of Japan including CPI, jobs, housing starts and industrial production, which was quite mixed-to-negative. Unemployment fell, but householding spending contracted 1.3 percent, worse than expected, but a big improvement on the previous month’s reading – see table below. Later we get German retail sales, French consumer spending, Spanish and Italian CPI, EU money supply, US GDP (preliminary/i.e. second reading), Chicago PMI and University of Michigan consumer sentiment and inflation expectations – see table below for more details.

The base metals for the most part seem to have encountered scale down buying, especially in aluminium, lead and zinc, but less so in nickel, tin and copper. With most of the cash to three month spreads not that tight, apart from zinc, it does not look as this latest strength is driven by short-covering, which suggests the pullbacks have prompted bargain hunting. For aluminium the combination of a steep drop to fresh 2015 lows and significantly lower physical premiums, that are less likely to fall too much further given the spread is back in contango, may well mean the low ‘all-in’ price is being seen as a bargain, especially for consumers. On balance, we are not that bullish, nor are we that bearish, so expect some rangebound trading as the market adjusts to recent gyrations.

The spike down in gold yesterday and subsequent recovery suggests good scale down buying, but we wait to see if there is follow through buying – this is likely to depend on the dollar, Greece and whether equities continue to push ahead. Today’s second reading of US GDP data may well set the scene as it is expected to show a 0.8% fall, after the advance reading came in at 0.2 percent which at the time was well below expectations.  Although a lower reading is forecast, if it is actually seen then that might well prompt a correction in the dollar as the market expects the Fed to delay a rate rise. 

Overnight Performance
BST	06:30	+/-	+/- %	Lots
Cu	6123	15	0.2%	1269
Al	1780	9	0.5%	446
Ni	12760	-35	-0.3%	923
Zn	2238	5	0.2%	668
Pb	2001	9	0.5%	179
Sn	15460	20	0.1%	13
Steel	300	0	0.0%	Total
	Average (BM ex-Steel)		0.2%	3,498
Gold	1189.5	1.3	0.1%
Silver	16.74	0.04	0.2%
Platinum	1116.9	3.9	0.4%
Palladium	781	-1	-0.1%
	Average PM		0.1%

 

SHFE Prices 06:45 BST		Change	% Change
Cu	44220	90	0.2%
AL	13210	40	0.3%
Zn	16795	65	0.4%
Pb	13370	40	0.3%
Ni	97340	-2300	-2.3%
Sn	116630	-420	-0.4%
Average change (base metals)			-0.2%
Rebar	2349	-10	-0.4%
Au	241.4	0.45	0.2%
Ag	3659	3	0.1%

 

Economic Agenda
BST	Country	Data	ACTUAL	Expected	Previous
12:30am	Japan	Household Spending y/y	-1.3%	3.1%	-10.6%
12:30am	Japan	Tokyo Core CPI y/y	0.2%	0.2%	0.4%
12:30am	Japan	National Core CPI y/y	0.3%	0.2%	2.2%
12:30am	Japan	Unemployment Rate	3.3%	3.4%	3.4%
12:50am	Japan	Prelim Industrial Production m/m	1.0%	0.9%	-0.8%
6:00am	Japan	Housing Starts y/y	0.4%	0.3%	0.7%
7:00am	Germany	German Retail Sales m/m		1.1%	-2.3%
7:45am	France	French Consumer Spending m/m		0.4%	-0.6%
8:00am	Spain	Spanish Flash CPI y/y		-0.5%	-0.6%
9:00am	EU	M3 Money Supply y/y		4.9%	4.6%
9:00am	EU	Private Loans y/y		0.4%	0.1%
10:00am	Italy	Italian Prelim CPI m/m		0.1%	0.3%
Day 3	ALL	G7 Meetings
1:30pm	US	Prelim GDP q/q		-0.8%	0.2%
1:30pm	US	Prelim GDP Price Index q/q		-0.1%	-0.1%
2:45pm	US	Chicago PMI		53.1	52.3
3:00pm	US	Revised UoM Consumer Sentiment		90	88.6
3:00pm	US	Revised UoM Inflation Expectations			2.9%

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Palladium market to remain in deficit as Russian shipments decline – Barclays

Otmane El Rhazi from The Bullion Desk.

Russian palladium shipments to Switzerland hit a two-year low in April of just 36,000 ounces, which was down 59 percent year-on-year and signals tighter fundamentals and a building global deficit, according to Barclays Research.

The Russian government holds an unknown stockpile of palladium that it funnels through Switzerland. Traders and analysts closely watch Swiss trade data to glean information on exactly how much Russian palladium will be hitting the market to determine pricing.

“We maintain the view that palladium mined is sold into the market, and even though it appears there are stocks held by the government, outside of the state repository, we believe the palladium market will remain in deficit. Palladium holds the most constructive outlook across the precious metals,” said Barclays, which estimates a deficit of 537,000 ounces in 2015.

Russian palladium shipments were 1,610 ounces in April, in-line with the previous two months after a one-off January spike.

Shipments from Russia to China have fallen by a third through April, while they have increased into Hong Kong.

Swiss imports in April declined 48 percent from March and are down 17 percent year-over-year. Mostly due to fewer shipments from South Africa and slowing imports from the US.

(Editing by Tom Jennemann)

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Gold climbs as US job creation moderates, dollar dips

Otmane El Rhazi from The Bullion Desk.

Gold finished higher for the first time in a week as US unemployment numbers showed that there is still some slack in the labor market.

Gold for August delivery on the Comex division of the New York Mercantile Exchange rose $2.30 to close at $1,188.00 per ounce. Trade ranged from $1,179.60 to $1,192.00.

US pending home sales rose 3.4 percent month-on-month in April, the highest level in nine years, but weekly unemployment claims at 282,000 were above the forecast of 272,000

“The labor market continues to improve, but as [Federal Reserve] chair [Janet] Yellen noted in her comments last week, ‘we are not there yet,’” Lindsey Piegza, chief economist at Sterne Agee, said. “Job creation has moderated and there remains a significant amount of slack in the labor market exemplified by a still-heightened level of discouraged workers and those employed part-time for economic reasons.”

Market participants will now shift their focus to tomorrow’s release of first quarter US GDP, which is expected to be negative after a particularly harsh winter.

“Although growth revisions to the quarter could be considered ancient history by now, the release will still be significant, since if the number is revised downward, the economy will have much more ground to make up if it is to live up to the Fed’s somewhat ambitious growth target for 2105,” Edward Meir, an analyst at INTL FCStone said.

In US equities, the Dow Jones industrial average and S&P were each down 0.4 percent, while the euro was 0.3 percent stronger at $1.0936 against the dollar.

In Europe, the DAX, CAC 40 and FTSE 100 chalked up further losses on Thursday, falling between 0.2 and 0.7 percent on concerns that Greece remains some way from a bailout deal. The debt-ridden country must make the first of four payments due to the IMF next month on June 5.

As for the other precious metals, Comex silver for July delivery was last up more than four cents at $16.69 per ounce. Trade has ranged from $16.540 to $16.775.

Platinum futures for July delivery on the Nymex declined $1.00 at $1,118 per ounce, while the most-actively traded palladium contract was at $786.00 per ounce, up $1.00.

(Editing by Tom Jennemann)

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Gold price ekes out gains, market looks ahead to US GDP

Otmane El Rhazi from The Bullion Desk.

The gold price continued to range-trade on Thursday afternoon, making modest gains on a slightly weaker dollar and mixed messages out of Greece on the state of bailout negotiations.

Spot gold was last at $1,188.90/1,189.70 per ounce, up $1.70 on Wednesday’s close and having traded in an intraday range of $12 so far.

The dollar has pulled back from one-month highs hit earlier this week following weaker-than-expected US jobless claims at 282,000 against consensus at 271,000.

There are also mixed messages over the Greek debt crisis. German finance minister Wolfgang Schäuble and IMF chief Christine Lagarde have both said that more work needs to be done, following comments from Greek Prime Minister Alexis Tsipras who declared publicly that Greece is on the “final stretch” to secure the aid it needs.

Once again on Thursday, Greek officials were optimistic about a prospective deal being completed by the end of the week, while those on the creditor side were more cautious.

With the data calendar quiet on Thursday, the market is looking ahead to the second revision of US GDP growth in the first quarter on Friday, which could be revised into negative territory.

The previous estimate significantly undershot expectations at growth of just 0.2 percent. Friday’s figure might be lowered to contraction of 0.7 percent.

“Although the prospect of a weaker dollar and higher gold prices does not seem to be in vogue now, we think that a worse-than-expected revision to first-quarter US GDP on Friday could start swinging the pendulum on both markets the other way,” INTL FCStone’s Ed Meir said.

In other metals, silver was last three cents higher at $16.68/16.73 per ounce while platinum was up $1 at $1,114/1,119 and palladium was unchanged at $781/786.

 

(Editing by Mark Shaw)

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Gold price to test $1,100/oz imminently – ANZ

Otmane El Rhazi from The Bullion Desk.

Gold lacks direction at present but could break lower to test $1,100 in the very near term, ANZ said

“The right signals might be just around the corner,” the bank said in a note on Thursday. “To us, a downside break of the $1,180-1,220 per ounce range looks imminent.”

Gold has predominantly traded in a $1,175-1,225 range this year and was last little changed from the start of 2015 at $1,189 per ounce.

But the US Federal Reserve is on course to raise interest rates this year or early in 2016, which would raise the opportunity cost of holding gold and push investors into more yield-bearing assets.

“For this reason we have viewed gold prices negatively, and continue to do so,” ANZ said. “We still expect gold to test $1,100 per ounce in the short term, and it looks like the way things are evolving, gold may be due for another crack at it.”

Gold has not traded below $1,100 since March 2010.

The dollar index has spent the best part of the past three months retracing the strong gains made since the start of the year but is still up nearly eight percent at 97.45.

US treasuries have also provided support – the 10-year yield has gained more than 30 basis points over the past month, the bank noted.

Although sluggish US growth in the first three months of the year has stemmed the dollar’s advance and levelled yields around 2.2 percent, “it feels like gold will test fresh lows in the near term if the dollar can manage to sustain its recent run”, it said.

And physical demand remains soft and is unlikely to provide strong support for gold in the short term.

“China’s onshore stocks have built up once more, and should see import demand pull back and the Shanghai Gold Exchange trade in line with the international price [no/weak premium],” it added.

The Chinese gold market looks oversupplied, with total gold supply in the first quarter exceeding demand by 150 tonnes after 200 tonnes were added in the fourth quarter of 2014.

“While some of the surplus is due to higher gold lending volumes, which will eventually be drawn down, and higher pipeline stocks, the softness in retail gold demand over the past few quarters is a little concerning,” ANZ said.

China and India are the two largest consumers of gold, according to the World Gold Council, accounting for more than half of annual consumption. But a seasonal lull in wedding and festival activity will last for the next few months.

(Editing by Mark Shaw)

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Gold remains mired in the ‘doldrums’

Otmane El Rhazi from The Bullion Desk.

Gold prices were flat in the morning US trading period as market participants await key US data points, which might provide a clearer direction.

Gold for July delivery on the Comex division of the New York Mercantile Exchange was last up $1.50 or 0.1 percent at $1,187.10. Trade has ranged from $1,184.50 to $1,192.00. The 50-day moving-average is at $1,198.37, with support at $1,180.00.

The dollar was 0.1 percent stronger at 1.0894 against the euro, resuming its climb after briefly consolidating Wednesday afternoon.

“Dollar strength was the main contributor as per usual [on yesterday's movement], but the range remains intact and I reiterate for the umpteenth time that we are stuck between broadly $1,175 and $1,225 and we continue to trade that range,” Marex Spectron’s David Govett said. “Precious metals remain stuck in the doldrums and show no signs of breaking out of recent ranges. “

In Europe, the FTSE and the DAX both ended lower on Wednesday on concerns that Greece remains some way from a bailout deal – German finance minister Wolfgang Schäuble and IMF chief Christine Lagarde both said that more work needs to be done.

The DAX, CAC-40 and FTSE 100 chalked up further losses on Thursday, falling between 0.2 and 0.7 percent.

But the Dow Jones finished more than 120 points higher on Wednesday, rebounding from Tuesday’s weakness, on hopes that a Grexit can be avoided.

In data, US weekly unemployment was 282,000, above the forecast of 272,000. Japanese retail sales year-over-year in May were up five percent – estimates projected a 5.3 percent increase.

US pending home sales and building consents will be released later today.

Market participants will the shift their focus to tomorrow’s release of first quarter US GDP, which is now expected to be negative after a particularly harsh winter.

“We don’t think much will be happening today as the markets will be waiting for the revision to first quarter US GDP data out tomorrow (now expected to be in negative territory),” Edward Meir, analyst at INTL FCStone, said.

“Although growth revisions to the quarter could be considered ancient history by now, the release will still be significant, since if the number is revised downward, the economy will have much more ground to make up if it is to live up to the Fed’s somewhat ambitious growth target for 2105,” he added. 

The poor data could prompt the Fed from subsequent rate hikes after initial normalising monetary policy sometime later this year, Meir said. 

As for the other precious metals, Comex silver for July delivery was last up more than two cents at $16.675 per ounce. Trade has ranged from $16.600 to $16.775.

Platinum futures for July delivery on the Nymex declined $2.70 at $1,116.30 per ounce, while the most-actively traded palladium contract was at $783.00 per ounce, down $2.00.

(Editing by Tom Jennemann)

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Swiss gold exports to China drop 67 pct in April, India down 28 pct

Otmane El Rhazi from The Bullion Desk.

Swiss exports of gold to China dropped by around 67 percent in April to just 15.1 tonnes, according to figures published this morning by the Swiss Federal Customs Administration.

The country’s overall exports of 143.9 tonnes of gold in April were down 36 percent on the March total, which UBS said in a note is in line with the recent slump in physical demand across the Asian markets in particular.

“The more subdued export number might suggest demand in key physical markets is tapering off for now. Indeed, this coincides with other indications of more muted activity in China and India: volumes on the Shanghai Gold Exchange in May are about 19 percent below the average over the previous two months, and premium in India has fallen off of late,” it said.

Exports to India from Switzerland of 51.8 tonnes were down 28 percent month-on-month. The discount on gold in Mumbai recently widened to its lowest this year, sources told FastMarkets last week, which is reflective of the downturn in demand after Akshaya Tritiya in April.

While direct exports to mainland China may have dropped, exports into Hong Kong were up 36 percent to 43.4 tonnes.

UBS attributed the easing in physical demand primarily to seasonal factors.

“Historical activity on the SGE suggests volumes are typically muted in the second quarter, and only tend to pick up again towards the end of the third quarter, heading into the fourth quarter, when local market participants start to build stocks for the Chinese New Year celebration in late January/early February of the following year,” it said.

“In India, seasonal strength has similarly tended to occur around Q3, on the back of wedding- and festival-related demand,” the bank added.

Switzerland imported 203.2 tonnes of gold in April, down 28 percent on March, but the country remains a net importer of gold at 59.3 tonnes.

The country was a net exporter of PGMs, however, shipping out 1.06 more tonnes of platinum in April than it brought in, with most going to Hong Kong. Exports of a net 0.37 tonnes of palladium last month were the first shipments leaving the country since January.

 

(Editing by Mark Shaw)

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Gold price in state of flux on mixed messages on Greece

Otmane El Rhazi from The Bullion Desk.

Gold made modest gains on Thursday morning against a slightly weaker dollar and contradictory messages emerging from Greece on the state of bailout negotiations.

The spot gold price was last at $1,189.90/1,190.70 per ounce, up $2.50 on Wednesday’s close  and having traded within an intraday range of around $6 so far.

Silver was last five cents higher at $16.70/16.75 per ounce, while palladium was up $5 at $785/790 and platinum was $10 stronger at $1,121/1,131.

In Europe, the FTSE and the Dax both ended lower on Wednesday on concerns that Greece remains some way from a bailout deal – German finance minister Wolfgang Schäuble and IMF chief Christine Lagarde both said that more work needs to be done after Greek Prime Minister Alexis Tsipras declared publicly that Greece is on the “final stretch” to secure the aid it needs,

Greece must repay four loans to the International Monetary Fund in June totalling 1.6 billion euros.

“News out of Greece that the two sides are closing in on a deal helped weaken the greenback against the euro but we still do not know for sure which way the wind is blowing on these talks, since the Greek assessment of things is far more encouraging than the European one,” INTL FCStone’s Ed Meir said in a note.

In equities, the Dax, CAC 40 and FTSE 100 chalked up further losses on Thursday morning after ending lower on Wednesday – they were last down between 0.2 and 0.7 percent, reflecting the lack of progress in the Greek talks.

Comparatively, the Dow Jones finished more than 120 points higher on Wednesday, rebounding from Tuesday’s weakness, on hopes that a ‘Grexit’ can be avoided.

With Thursday’s calendar looking fairly quiet, despite the usual weekly unemployment claims figure out of the US, the market will be looking ahead to the second revision to US first-quarter GDP on Friday.

“[This] is now expected to have contracted by 0.7 percent [from growth of 0.2 percent previously],” Meir said. “The report carries with it the potential of impacting the credit and currency markets first, extending its reach to gold as well.”

A weaker dollar is providing upward impetus for precious metal – the market remains almost exclusively currency-driven.  The greenback was last seen at 1.0931 against the euro, having hit its highest in a month earlier this week.

(Editing by Mark Shaw)

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GOLD TODAY – Looking vulnerable again unless…

Otmane El Rhazi from The Bullion Desk.

Short Term: Medium Term: Long Term: Resistances: R1 1206 38.2% Fibo R2 1211 Inverse H&S neckline R3 1215 R4 1224.40 April peak R5 1225.40 50% Fibo R6 1232.50 Recent high R7 1255.40 Oct high R8 1292 Long term DTL R9 1307.90 Jan high R10 1323 Aug peak R11 1345.30 July peak R12 1388.70 March & 2014 peak Support: S1 1211 SL/neckline S2 1185 UTL S3 1170 May low S4 1167.50 Jan low S5 1146.80 Dec low S6 1131.60 Nov low Stochastics:Choppy but bearish Legend: R/SL= Resistance/support line UTL = Uptrend line BB = Bollinger band Fibo = Fibonacci retracement line Technical Comment Analysis Gold has pulled back from its bullish breakout two weeks ago. Prices seem to be finding some support from the UTL at $1,185 and below there is a band of support running down to $1,170 – the May low. Rebounds therefore still have a habit of stalling so prices seem in no hurry to rally; that said, they generally seem to be well supported in the $1,170-1,180 area.  The stochastics have become increasingly choppy recently so we cannot read too much into them. For now prices seem to be stuck in a $1,170-1,230 range. Macro Factors For a long time gold has been out of favour with mainstream investors while equities and bonds have been doing well – so continued equity strength remains a headwind for gold, as does the rebound in the dollar.  With other asset classes hogging the limelight, it may well take a correction in them before investors rotate into gold again – even if only for a parking place while the other markets sell off. There is a potential ‘W’- shaped bottom in place in gold, but as rallies continue to stall and with further outflows in gold ETFs, which are back below 1,600 tonnes again, investors do not seem to be looking to rotate into gold yet.   The market also seems to feel that the dollar has corrected enough so renewed dollar strength may be a headwind for longer; however, a stronger dollar may weigh on US growth and in turn that may well delay Fed action on interest rates. So the markets could be in limbo for a while – if so, gold could remain rangebound for longer; it could also suffer further bouts of long liquidation. The latest CFTC data showed the net long fund position climbed to 122,621 contracts fom 77,440 contracts on 22,933 contracts of fresh buying and 22,248 contracts of short-covering. But this data was up to May 19, which covered the period when gold broke higher – so we wait to see how the long and short positions have changed this week when the data is released on Friday. Conclusion The fact gold prices have stalled again so soon after breaking higher is a disappointment to the bulls. We wait to see if long liquidation has set in this week; if so, gold may well restest support again. The strong dollar is also likely to weigh on prices – it may well take a pick-up in safe-haven demand on an equity correction or over Greece to break gold out of its sideways trend. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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Gold price consolidate as safe haven status wanes

Otmane El Rhazi from The Bullion Desk.

The gold price was steady on Thursday, as dollar strength continued to cap gains and the yellow metal remained under the psychologically important $1,200 level.

Spot gold was last at $1,188.80/1,189.50 per ounce, a $1.10 increase on the previous day’s close, as the metal was content to tread in well-worn ranges.

“Overall, we feel that a long-term base is being formed here, paving the way for the next bull leg in the super-cycle; but current conditions favour a slip to the lower end of the range,” Triland said in a note.

Meanwhile, the metal’s status as a safe haven asset waned today amid renewed optimism over Greece staying in the eurozone.

“News out of Greece that the two sides are closing in on a deal helped weaken the greenback against the Euro, but we still do not know for sure which way the wind is blowing on these talks, since the Greek assessment of things is far more encouraging than the European one. In any event, Greece has an IMF payment due on June 5, which it said it can service, but time is of the essence, as two more payments are due later in the month and it is unlikely the Greeks will be able to make those without some aid,” INTL FCStone analyst Edward Meir said.

Dollar strength is capping notable moves higher. The greenback was off yesterday’s one-month highs, but remained firm -last trade at 1.0940 against the euro.

In data, German import prices were positive at 0.6 percent. The rest of the agenda is fairly light with only US unemployment claims, pending home sales and building consents of note.

“The precious metals have pulled back in the face of the weak dollar and as record setting equities provide too big a pull for investor money, but the gold price is holding up relatively well as are silver and palladium. Given uncertainty over Greece and some nervousness in equities, we would expect good underlying support for gold,” FastMarkets analyst William Adams said.

Silver at $16.69/16.74 was little changed from the previous day’s $16.67. Platinum at $1,121/q,126 was up $5 and palladium was unchanged at $783.  

In other news, it was reported that South Africa’s Impala Platinum – the world’s second largest platinum producer – has cancelled plans to sell its Marula mine and now seeks to increase output with a long-term aim to produce 850,000 ounces of platinum by 2019.

“We do not attribute platinum’s dip to the Impala news but the market appears assured that despite long running deficits there is adequate material available to meet demand. That said we are of the view that any challenge of $1,100/oz is likely to trigger fresh trade and physical demand,” HSBC analyst James Steel said.

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Weaker gold price attracts dip buying, strong dollar a headwind

Otmane El Rhazi from The Bullion Desk.

The metals consolidated on Wednesday after the weakness seen on Tuesday, aluminium fell in morning trading to set a fresh low for the year at $1,731 and at the day’s lows the base metals complex was off an average of one percent – they went on to closed mixed with nickel up 1.2 percent, aluminium off 1.1 percent at $1,738, copper off 0.3 percent at $6,098, while the rest were up around 0.2 percent.

Precious metals were also mixed yesterday with palladium up 0.4 percent, the gold price unchanged at $1,187.70, while silver and platinum were off 0.2 and 0.5 percent respectively.

This morning the base metals are up an average of 0.3 percent, led by a 0.5 percent rise in zinc to $2,200, the rest are up between 0.1 and 0.4 percent with copper at $6,108 – volumes have been above average with 5,396 lots traded, which suggests good dip buying interest.

Precious metals are up an average of 0.3 percent this morning, with the PGMs up 0.4 percent, silver up 0.2 percent and the gold price up 0.1 percent at $1,189.20.

In Shanghai, base metals are mixed, with copper, aluminium and tin off by around 0.2 percent, with copper at Rmb 44,100, zinc is up 1.3 percent and lead and zinc are up around 0.7 percent.

Spot copper in Changjiang off 0.2 percent at Rmb 44,300-44,400, the spread with the futures is at an equivalent of $48/tonne, which is slightly higher than yesterday, while the LME/Shanghai copper arb ratio is at 1 to 7.22.

The gold price in Shanghai is little changed, while silver is off 0.2 percent.

Equities continued to push to the upside yesterday with the Euro Stoxx 50 climbing 1.8 percent and the Dow was up 0.7 percent, reversing a good deal of Tuesday’s weakness. The stronger tone has generally not seen follow through strength in Asia with the CSI off 2.1 percent and the Hang Seng off 1.8 percent as China tightened margin rules. The Nikkei is reacting positively to the weak yen, which against the dollar is at a 12 year low, it is up 0.2 percent and the Kospi is up 0.2 percent too.

Currencies – the yen is under pressure, last at 123.85, as Japan’s and the US’s monetary policy look set to diverge further in the months ahead; the dollar index is at 97.23, the euro is flat at 1.0905, sterling is weaker at 1.5360, as are the aussie at 0.7693, the rouble at 51.80, while the yuan is at 6.1985.

Data out already shows a strong pick-up in Japan’s retail sales that climbed five percent, but it is from a low base as a year ago sales had been hit hard by the sales tax increase. German import prices climbed 0.6 percent, later we a second estimate on UK GDP, UK business investment, mortgage approvals and index of services. US data includes initial jobless claims, pending home sales, natural gas and crude oil inventories. The G7 meeting also continues today – see table below.

Our view on the base metals is there is little to be bullish about given the gains seen of late and the corrections now underway. The likes of aluminium and nickel have been hit hard, which suggests their earlier rallies had jumped the gun and the likes of lead and zinc seemed to go too far too quickly, so a period of consolidation seems justified – the same goes for copper, especially as coppers fundamentals are likely to deteriorate as more supply comes on stream in the months ahead. The one with the best current fundamentals is probably tin as LME stocks continue to edge lower and have not been this low since December 2008.

The precious metals have pulled back in the face of the weak dollar and as record setting equities provide too big a pull for investor money, but the gold price is holding up relatively well as are silver and palladium. Given uncertainty over Greece and some nervousness in equities, we would expect good underlying support for gold.

 

Overnight Performance
BST	06:45	+/-	+/- %	Lots
Cu	6108	10	0.2%	1752
Al	1742.5	4.5	0.3%	1342
Ni	12925	55	0.4%	811
Zn	2200	11.5	0.5%	1391
Pb	1955	2	0.1%	97
Sn	15550	45	0.3%	3
Steel	300	0	0.0%	Total
	Average (BM ex-Steel)		0.3%	5,396
Gold	1189.2	1.5	0.1%
Silver	16.71	0.04	0.2%
Platinum	1120.4	4.4	0.4%
Palladium	785.8	2.8	0.4%
	Average PM		0.3%

 

SHFE Prices 06:52 BST		Change	% Change
Cu	44100	-90	-0.2%
AL	13180	-40	-0.3%
Zn	16815	210	1.3%
Pb	13360	85	0.6%
Ni	101190	720	0.7%
Sn	116510	-360	-0.3%
Average change (base metals)			0.3%
Rebar	2359	4	0.2%
Au	240.9	-0.1	0.0%
Ag	3651	-8	-0.2%

 

Economic Agenda
BST	Country	Data	ACTUAL	Expected	Previous
12:50am	Japan	Retail Sales y/y	5.0%	5.3%	-9.7%
7:00am	Germany	German Import Prices m/m		0.5%	1.0%
7:20am	US	FOMC Member Williams Speaks
9:30am	UK	Second Estimate GDP q/q		0.4%	0.3%
9:30am	UK	Prelim Business Investment q/q		1.2%	-0.9%
9:30am	UK	BBA Mortgage Approvals		39.2K	38.8K
9:30am	UK	Index of Services 3m/3m		0.5%	0.7%
Tentative	EUR	Italian 10-y Bond Auction			1.40|1.6
Day 2		G7 Meetings
1:30pm	US	Unemployment Claims		271K	274K
3:00pm	US	Pending Home Sales m/m		0.8%	1.1%
3:30pm	US	Natural Gas Storage		95B	92B
4:00pm	US	Crude Oil Inventories		-1.5M	-2.7M

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Gold losing streak extends to fifth day

Otmane El Rhazi from The Bullion Desk.

Gold prices finished lower for the fifth consecutive session as US equity markets reversed upwards, while a falling greenback didn’t provide much support.

Gold for June delivery on the Comex division of the New York Mercantile Exchange declined $1.30 to close at $1,185.60 per ounce. Trade ranged from $1,183.00 to $1,190.40, with support around $1,180.

“The selling pressure is likely to have been generated primarily by the futures market given that speculative financial investors have doubtless jettisoned further long positions,” Commerzbank said. “After all, the previous price rise had been speculatively driven to a large extent.”

Net longs in gold gained 5.71 million ounces or 69 percent as the price tested $1,230 per ounce in the week ending May 19, according to the Commodity Futures Trading Commission. But when the price dipped below the psychological $1,200 per ounce mark yesterday, weak-handed market participants likely shortened their positions.

In news, Greek officials and its creditors will again attempt to negotiate a bailout deal today; a lack of progress in recent talks pushed European equities lower yesterday, with the FTSE 100 falling 80 points. The Dow Jones also closed lower, falling more than 190 points.

Greece must repay four loans to the International Monetary Fund in June totalling 1.6 billion euros; Athens has so far indicated that it may not be able to make these payments without a deal in place.

Still, confidence in the European economy remains high – the GfK German consumer climate at 10.2 was better than expected, up from 10.1 previously and the highest reading since October 2011.

In a light data day, Belgian NBB Business Climate in May was down 4.9 percent, above estimates of a 5.7 percent decline. There is currently no data scheduled to be released today in the US, with weekly jobless claims and pending home sales due for release on Thursday.

In equity markets, the Dow Jones industrial average and S&P were up 0.7 percent and 0.9 percent respectively, while the euro was 0.2 percent stronger at 1.0890 against the dollar.

“The market had little in the way of economic data to influence direction, but equity markets bounced back after the sharp falls seen yesterday,” Sucden Financial said. “European markets are hopeful of a Greek debt agreement and corporate earnings supported the US market.

As for the other precious metals, Comex silver for July delivery was down less than one cent to close at $16.647 per ounce. Trade ranged from $16.580 to $16.810.

Platinum futures for July delivery on the Nymex were down $4.70 at $1,119.40 per ounce, while the most-actively traded palladium contract was at $785.20 per ounce, up $4.80.

(Editing by Tom Jennemann)

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Gold price unchanged, capped by dollar hitting fresh 1-mth high

Otmane El Rhazi from The Bullion Desk.

The gold price was effectively unchanged on Wednesday, with the stronger dollar once again capping any intraday gains.

Spot gold was last at $1,186.80/1,187.50 per ounce, down just 20 cents for the session, having hit a fresh two-week low earlier in the day at $1,183.80.

Similarly, silver was unchanged at $16.68/16.73 per ounce while platinum was $1 lower at $1,119/1,124 and palladium was up $6 at $783/789.

The dollar again built on the gains made earlier in the week, hitting another fresh one-month high against the euro at 1.0819.

While there is no resolution to the Greek debt saga yet, Prime Minister Alexis Tsipras claimed this afternoon that the country might be on the brink of an agreement with its creditors.

Tsipras declared publicly following talks today that Greece is on the “final stretch” to secure the aid it needs and that it is “close to an agreement”. Greece must repay four loans to the International Monetary Fund in June totalling 1.6 billion euros.

European stock markets have all jumped on the news, with the DAX up 1.26 percent, the Stoxx 1.72 percent and the Cac 40 almost two percent.

Confidence in the European economy remains high – earlier, the GfK German consumer climate at 10.2 came in better than expected, up from 10.1 previously and the highest reading since October 2011.

 

(Editing by Mark Shaw)

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Gold holding near lower boundary of well established range

Otmane El Rhazi from The Bullion Desk.

Gold futures were near unchanged on Wednesday as the post holiday sell-off failed to inflict too much technical damage.

Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down $1.50 at $1,185.40 per ounce. Trade has ranged from $1,183.50 to $1,190.40.

“Gold had been hovering just above $1,200 for a while, with the market still long from the previous week’s rally and once the magical number broke, in came the selling,” Marex Spectron’s David Govett, said.

“Dollar strength was the main contributor as per usual, but the range remains intact and I reiterate for the umpteenth time that we are stuck between broadly $1,175 and $1,225 and we continue to trade that range. Again as I have said before, when it looks good sell it, when it looks bad buy it,” he added.

Despite Tuesday’s sharp sell-off, gold still seems to be in a trading range and has not deteriorated much, technically speaking, INTL FCStone’s Edward Meir agreed.

“We suspect that the next flash point could come on Friday when first quarter US GDP readings are possibly revised to show negative growth,” Meir added. “This is, in turn, should jolt the markets into realizing just how much more the US economy needs to improve in order to get anywhere close to Janet Yellen’s optimistic growth projections and possibly weaken the dollar in the process.”

In news, Greek officials and its creditors will again attempt to negotiate a bailout deal today; a lack of progress in recent talks pushed European equities lower yesterday, with the FTSE 100 falling 80 points. The Dow Jones also closed lower, falling more than 190 points.

Greece must repay four loans to the International Monetary Fund in June totalling 1.6 billion euros; Athens has so far indicated that it may not be able to make these payments without a deal in place.

“In the end Greece and the Brussels Group will find a way at the 11th hour, 50 minute to accommodate the debt repayment problems that are so much at the centre stage these days,” Dennis Gartman, editor of the Gartman Letter, said.

“As we have said, the problem is not between Greece and Germany, as many would have us believe, but is instead between Greece and the other so-called PIIGS nations: Portugal; Italy; Ireland and Spain, for the latter countries have all gone through the process of austerity and economic reform and are, as they say, ‘coming out of the other side’ in much better shape economically and politically,” Gartman added.

Still, confidence in the European economy remains high – the GfK German consumer climate at 10.2 was better than expected, up from 10.1 previously and the highest reading since October 2011.

In the wider-markets this morning, the euro was slightly weaker at 1.0866 against the dollar, while Germany’s DAX and France’s CAC-40 were up 0.17 percent and 0.53 percent respectively.

As for the other precious metals, Comex silver for July delivery was last down 10.6 cents at $16.640 per ounce. Trade has ranged from $16.630 to $16.810.

Platinum futures for July delivery on the Nymex were down 40 cents at $1,123.70 per ounce, while the most-actively traded palladium contract was at $781.10 per ounce, up 70 cents.

(Additional reporting by Ian Walker) 

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WPIC reaffirms aim to work with IMF to make platinum a reserve asset

Otmane El Rhazi from The Bullion Desk.

The World Platinum Investment Council (WPIC) has reaffirmed that it would like to work with the International Monetary Fund (IMF) to try to make platinum a reserve asset.

“We’re starting to talk to governments about holding platinum in their reserves,” CEO Paul Wilson said at the Bloomberg and CME precious metals forum on Friday.

“Currently, it is not recognised as an official reserve asset, but if some countries could start to do that we could take that to the IMF and start to work with the IMF to try to change their mind,” he added.

Reserve assets are external assets that are readily available to and controlled by monetary authorities for meeting balance of payments financing needs, for intervention in exchange markets to affect the currency exchange rate and for other related purposes such as maintaining confidence in the currency and the economy, serving as a basis for foreign borrowing, according to the IMF.

The WPIC admits that platinum’s consideration as a reserve asset is a long-term prospect requiring a large number of central banks to get on board.

Its susceptibility to volatility may deter some central banks though supply-side issues may well play into its hands. The metal tends to fluctuate slightly more than gold although it has been largely stagnant for some time.

Platinum traded between $324 and $1,020 from 1991 to 2006 but from 2006 onwards it became proportionally more volatile, hitting highs of $2,300 and lows of $737.91 before settling around $1,120.

In contrast, gold, alongside typical reserve assets such as special drawing rights (SDRs), has been internationally recognised as a reserve asset for some time. At the end of 2014, central banks held around 30,900 tonnes of gold in their reserves, according to the World Gold Council – it is seen as portfolio insurance since it is a tangible store of value that protects against inflation and currency devaluations.

More specifically, gold – unlike many reserve assets – has almost no correlation to any other reserve asset and is thus favoured as a form of balance sheet diversification.

The six largest platinum miners in South Africa are backers of the WPIC, which formed last year. It aims not to sell the concept of platinum but to make investors better informed about the credentials of platinum as a form of investment.

The organisation revised its predicted deficit for this year to 190,000 ounces, which is 72 percent below its estimated 2014 shortfall of 670,000 ounces and well below other analysts’ estimates for this year nearer the 700,000-ounce mark.



(Editing by Mark Shaw)

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