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Market Nuggets: OptionsXpress: Some Potential Gold Buyers ‘Waiting In The Wings’ For Now

Tuesday January 8, 2013 11:25 AM

Gold traders have shown some indecisiveness so far in the New Year, with many still on the sidelines, says optionsXpress. Prices fell during the fiscal-cliff debate but have not improved since an agreement in Washington over taxes, with the new concern being potential for the Federal Reserve to end quantitative easing sooner than the market previously had expected. “This has kept potential gold buyers waiting in the wings for the time being,” optionsXpress says. “Equity markets may very well dictate whether or not gold stops its slide. Stock prices reached five-year highs, suggesting the market could be a bit top-heavy at the present time. This, combined with the U.S. dollar firming, could be a barrier to a price recovery. It is not all doom and gloom for metal traders, however. The Bank of Japan indicated that it plans to double its holdings of the yellow metal. Chinese demand for gold has also been on the rise.” Technically, a fall below $1,650 an ounce for Comex February gold may mean a further drift to the low $1,600s or mid-$1,500s, optionsXpress says. However, a rise above $1,700 could force shorts to exit and encouraging fresh speculative buying. The Relative Strength Index is at “oversold” levels, which may support prices in the near term, optionsXpress adds.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: BNP Paribas: 'Aluminum Locked In A Peculiar Loop'

Tuesday January 8, 2013 8:47 AM

Aluminum is "locked in a peculiar loop," says BNP Paribas, with strong demand yet "onerous" supply limiting the upside but finance deals helping to absorb surpluses. Aluminum ended 2012 up only 65% from the trough of late 2001, whereas the London Metals Exchange Metals Index was up 260%, says a report from Senior Metals Strategist Stephen Briggs. The "relatively weak price performance" cannot be blamed on demand, since this has grown faster than for other base metals, Briggs says. "The explanation lies instead on the supply side," he says. "Aluminum has experienced few of the supply constraints common among metals, and output and capacity have easily kept pace with demand through most of the past decade." BNP estimates demand rose 4.3% in 2012 and will rise 7% in 2013. Yet, this "should not be a big challenge for producers to meet," with the industry operating at just 85% of capacity in 2012, he says. "As things stand, it looks likely to us that the aluminum market will remain in physical as well as structural surplus in 2013, for the sixth year in a row," Briggs says. However, much of the surplus metal has been tied up in finance deals. "This leaves aluminum locked in a peculiar loop, with little independent direction for prices," Briggs says.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: Analysts: Record Volume On SGE Reflects 'Healthy' Chinese Demand For Gold

Tuesday January 8, 2013 8:32 AM

Heavy gold volume on the Shanghai Gold Exchange lately portends "healthy" demand for the metal in China, analysts say. The exchange reported record volume in its physical gold contract Monday, says Commerzbank. Nearly 19,505 kilograms were traded, more than four times last year's average trading volume, the bank reports. Furthermore, trading volumes Friday and Tuesday were also more than twice the average level, at around 9,300 kilograms of gold each, Commerzbank says. "In the first four trading days of this year, a total of 40,952 kilograms were thus traded in the physical gold contract on the Shanghai Gold Exchange, 8.3% up on the same period last year," Commerzbank says. "Market players have evidently been taking advantage of the lower prices recently to purchase gold." MKS Capital says the volume shows that China still has a "healthy appetite" for precious metals. "Further, with the encroaching Chinese New Year celebrations in mid-February, one would not be surprised to see some support from this region to help cushion selling from the macro/leveraged space elsewhere," MKS says.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: TDS Sees Reasons To Remain Upbeat On Gold For Later In 2013

Tuesday January 8, 2013 8:10 AM

TD Securities says gold may have over-reacted to minutes of the Federal Open Market Committee released last week and construed by markets to mean quantitative easing could wind down by year-end. Gold fell on the news. The market may not stage a meaningful recovery in the short term with little U.S. economic data on the calendar this week and the Fed speakers scheduled to speak tending to be hawkish, TDS says. However, the firm sees reasons to be bullish for later in 2013. "While we agree that the Fed will eventually unwind the monetary accommodation, it is too early to react to this possibility given current macro and political developments," TDS says. "The economic environment around the world and in the U.S. is still quite poor." The firm says it looks for the Fed to keep buying $85 billion worth of mortgage-backed and Treasury securities per month for the foreseeable future. Meanwhile, the U.S. faces some "very challenging negotiations" between President Obama and the House of Representatives over the debt ceiling, which could mean a fiscal drag in the coming months. This, and spending cuts demanded by Republicans, could mean an economy that underperforms expectations. "This should reduce the probability that the Fed will tighten sooner, rather than later—reducing yield and lifting gold," TDS says.

By Allen Sykora of Kitco News asykora@kitco.com


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