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LME Copper Price Levels May Reflect Global Inventory – Citi

Thursday February 20, 2014 12:48 PM

Copper inventory levels on the London Metal Exchange fell below 300,000 metric tons last week, the first time since December 2012, and cancelled warrants remain close to highs of 60%, but this stock tightness does not seem to be reflected in prices, says David Wilson, analyst at Citi. Wilson says LME three-month prices are trading at around $7,200 a metric ton, versus mid-December 2012 prices of over $8,050. “Given that today’s macro environment is slightly more positive than late 2012, with clear signs of developed world recovery, although China hard landing concerns still persist, we believe current LME price levels reflect growing mine supply, expected refined production growth, and more importantly global inventory. Indeed, the LME price level is not reflecting the LME stock position, but appears to be making implicit assumptions about copper inventory elsewhere,” he says.

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


Growth Concerns Hit 'Risky' Assets; Gold Weakens As Dollar Rises

Thursday February 20, 2014 8:13 AM

Worries about weaker economic growth are weighing on “risky” assets, with Asian, European and U.S. equities weaker. Gold is under pressure as the U.S. dollar is firmer against most major currencies, analysts say. “Growth concerns have reignited following weaker-than-expected flash PMIs (purchasing managers index) in Europe, a weak HSBC PMI print in China and soft housing data in the U.S.,” Barclays says. Edward Meir, commodities consultant at INTL FCStone, says the weaker Chinese data is hitting commodities across the board as the Chinese data fell to a seven-month low. Although some seasonal factors may have skewed the data, “nevertheless, the report does seem to validate our opinion that China's economy is slowing down, although the extent and duration is still subject to considerable debate,” Meir says. Barclays notes U.S. equities may be flagging as the Federal Open Market Committee minutes released late Wednesday were deemed hawkish and housing data was weak. BNP Paribas concurs, saying “the signals from the Fed are that the bar to moving away their tapering plan remains high, even after recent U.S. data disappointments.” Political turmoil in Thailand and the Ukraine are also hitting emerging market currencies, Barclays adds.

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


Gold Prices Fall In Early North American Dealings; Producer Selling Seen – HSBC

Thursday February 20, 2014 8:12 AM

Gold prices are weaker in early North American trading, building on the slight losses experienced in Wednesday’s action. HSBC says producer selling helped to put a cap on prices Wednesday, but further weakness is likely to be limited. “While gold is at risk of further consolidation, given nine days of consecutive price gains, we remain positive on bullion should it remain over the psychological $1,300/oz level and the 200-day moving average of $1,303/oz,” the bank says.

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


Watching Technical Support Levels For Gold's Next Move – MKS

Thursday February 20, 2014 8:12 AM

Gold is nearing some important technical-chart support levels, notes MKS (Switzerland). Like HSBC, MKS (Switzerland) also points to the 200-day moving average of around $1,303 an ounce for spot as the first level of defense, then the 23.6% Fibonacci retracement of the December-February rally, also nearby. “If these cannot be held then we will likely see some more confident bears emerge, re-establishing shorts. For the time being we prefer to buy dips towards these levels with a stop in around $1,290-95, looking for a move back toward $1,330-35,” the firm says. They also note “buyers waiting on the sidelines to purchase sub-$1,300 according to some of our (Hong Kong) customers.”

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

Reports Of Easing Indian Bullion Trade Restrictions May Support Gold – HSBC

Thursday February 20, 2014 8:11 AM

Gold could find support from reports that India may consider easing its bullion trade restrictions, says HSBC. Citing a story in the Wall Street Journal, India may cut its import tax by 2% to 4% before the end of February as the current-account deficit fell by nearly half to $45 billion for the fiscal year ending in March. “India has often cited bullion trade as the source for the country’s ballooning account deficit as the government hiked the duty on gold imports to 4% from 2% in 2012 and to 10% from 4% in 2013. Subsequently, India’s net gold imports fell to 860 (metric tons) in 2012 and 825 (metric tons) in 2013 from 969 in 2011, according to data from the World Gold Council,” HSBC says.

By Debbie Carlson of Kitco News; dcarlson@kitco.com
Follow me on Twitter @dcarlsonkitco


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