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INTL FCStone: Gold Likely To ‘Do Well’ In February; PGMs ‘Vulnerable’

Tuesday February 4, 2014 3:59 PM

Gold may fare well in February but platinum group metals could be “vulnerable,” says INTL FCStone in a monthly outlook. “We think gold will likely continue to do well over the course of February, as we do not think that the correction in the equity markets is over just yet,” the firm says. “Once the dust settles and equities start to stabilize, we could see a renewed assault on the precious metal, but this will likely not take place until later in the month. Platinum and palladium look somewhat vulnerable to us given that they do not seem to be responding to the ongoing South African mine strikes. In fact, once these actions are over -- the various sides have resumed negotiations this week -- both complexes could sell off some more from here.” For gold, the firm sees a February range of $1,210 to $1,285 an ounce.

By Allen Sykora of Kitco News; asykora@kitco.com

 

INTL FCStone Looks For Copper Weakness During February

Tuesday February 4, 2014 3:59 PM

INTL FCStone sees weakness for copper during February. The metal slumped during January, hurt by the turmoil in emerging markets and signs of a deceleration of China’s economy, the firm says. “Many have pointed to the decline in LME (London Metal Exchange) stocks as a reason to be bullish, but we would tread carefully here; if prices are unable to climb higher on falling stocks, they likely will fall when stocks start to move up,” INTL FCStone says. “The odds of this happening are good, since from all accounts, we are seeing steadily rising output from both the refined and mine side of the picture.” The firm anticipates a February range of $6,920 to $7,250 per metric ton. “We also expect the 2013 low of $6,602 to be retested at one point in 2014,” INTL FCStone adds.

By Allen Sykora of Kitco News; asykora@kitco.com

 

S&P 500’s ‘Ray Of Hope’ For Bulls Is For 1738 To Hold – United ICAP

Tuesday February 4, 2014 8:47 AM

The break below 1770 in the Standard & Poor’s 500 on Monday was a tough blow for stock market bulls, says United ICAP, but there’s a “ray of hope” for the bulls. “With the (S&P) down 40 points on the day, it may seem like I am taunting the bulls. But I am not. There is actually still a ray of hope for another new high above the 1850.00 level. However that ray is extinguished by a decisive close below 1738,” they say, based on a daily chart. What if it doesn’t hold? “The next step down from here is a doozy,” they say. Looking at a weekly chart, the next support are doesn’t come in until 1640 this week. That support line is drawn from the 1074.77 low made in October 2012 as the support line from the October 2013 low of 1343.35 broke Monday. If the 1640 area is broken, which rises to 1655 by the end of February if prices hold above that level, United-ICAP “strongly (suggests) treating a break below this lower line as an evacuation signal for those holding length.”

By Debbie Carlson of Kitco News; dcarlson@kitco.com

 

CME Group January Average Metals Volume Down From Year Ago

Tuesday February 4, 2014 8:18 AM

CME Group average daily metals volume in January fell from the same month a year ago but was up from December, the exchange operator says. Volume last month averaged 331,000 contracts per day, down 14% from 384,000 in January 2013. However, volume was up 20% from 276,000 in December. The average volume for the three-month period ending with January was 328,000. This is up from the average daily volume of 317,000 for the three-month period ending in December, but down from 334,000 for each of the three-month periods ending in November and October.

By Allen Sykora of Kitco News; asykora@kitco.com

 

UBS: Most Unwinding Of Gold ETF Positions Likely Already Taken Place

Tuesday February 4, 2014 8:18 AM

A slowdown in the pace of selling from the SPDR Gold Shares, the world’s largest gold exchange-traded fund, suggests that much of the unwinding in these products has already taken place, says UBS. In fact, the ETF has an small inflow over the last week. “The bulk of those who have wanted to reduce or exit gold ETF investments made around five years ago as a hedge against U.S. economic weakness and inflationary implications of QE (quantitative easing) have likely already done so,” UBS says. “The bulk of gold ETF buying occurred when prices were above $1,200, and between $800 and $1,000. Those who entered at $1,200 and above and are still invested are either in it for the long haul and willing to be flat/underwater for now, or are just waiting for better levels to exit. Meanwhile, those who got in around $800-$1,000 are still sitting quite comfortably given current prices and will only start to feel queasy if gold moves another $150 south from here.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

MKS: Gold Remains Range-Bound Despite Monday’s Surge Higher

Tuesday February 4, 2014 8:18 AM

Gold prices eased back after Monday’s sharp rally that followed a weak U.S. manufacturing Purchasing Managers Index. “Despite the move…gold does seem to be stuck in a range, capped on the topside by the 100 dma (day moving average) at $1,271, with a base at the recent low of $1,238,” says Alex Thorndike, senior trader for precious metals and foreign exchange with MKS (Switzerland) SA. “Flows indicated that macros, real money and retail names were happy to sell on the rally, and for the meantime would expect this to continue as we move towards Friday's U.S. nonfarm payrolls. Emerging-market developments will be key to gold's performance short term and along with FOMC (Federal Open Market Committee) policy (is) perhaps the biggest influence on the metal at present. If it looks as if the situation is worsening in these economies, gold will be supported, and vice-versa.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

TDS: Recent Gold Bounce Feels Like Short-Covering Rally

Tuesday February 4, 2014 8:18 AM

TD Securities suggests recent strength in gold may be little more than a short-covering bounce unless stock market weakness and soft U.S. economic data continue. The yellow metal has been boosted lately by a loss of risk appetite from emerging-market worries, then got another lift Monday from a weak U.S. manufacturing survey. However, TDS also points out that favorable U.S. consumer sentiment report last week prompted profit-taking. “This still feels to us like a short-covering rally, which is likely to unwind once we see better U.S. data,” TDS says. “So far, institutional investors continue to stay clear, while hedge funds are only engaging on a relatively small scale on the long side. However, a continued stock market selloff and poor U.S. data could keep gold strong for a while yet..”

By Allen Sykora of Kitco News; asykora@kitco.com

 

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