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Market Nuggets: Bullish Undercurrents Support Silver, Gold, But Gains Likely Temporary – SocGen

Monday February 4, 2013 12:51 PM

The recent price action in gold and silver, along with underlying investor activity suggest that bullish undercurrents in the metals are starting to support the metals, with silver leading, says Robin Bhar of Societe Generale. Gold is in the process of forming a triangular pattern, which usually precedes a sharp move, while silver is above the short-term down-trending line of resistance defined by falling highs, he notes. The Federal Reserve's continued ultra-loose monetary policy, plus renewed confidence in economic activity “when (if) Congress successfully addresses cost-cutting measures in the March vote. The debt ceiling has been suspended until mid-May, which should give some leeway for legislators to find a measure of agreement,” he says. However, the rise will be short-lived, he says. “Silver is expected to generate a surplus this year equivalent to more than seven weeks' global industrial demand and we do not expect investors to take up all of this metal, especially as gold investors become more cautious as we move towards mid-year after the festival seasons are all finished, and as inflationary expectations become more or less fully hedged. We continue to expect gold and silver prices to peak in the second quarter of this year,” Bhar says.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: CME Group: Open Interest in PGMs Hits Record High For Fifth Day In Row

Monday February 4, 2013 12:10 PM

Combined futures and options open interest in the platinum group metals has now hit a record high for the fifth day in a row, says CME Group. Open interest refers to the number of open positions at the end of the business day. As of Friday, platinum open interest stood at 101,023 for futures and options. The tally climbed steadily from a record that had stood at 96,967 as of Jan. 28. Meanwhile, open interest for palladium futures and options combined stood at 55,239 as of Friday. This had hit a record of 50,359 contracts as of Jan. 28 and then continued to climb for each day for the rest of last week.

By Allen Sykora of Kitco News asykora@kitco.com

 

Market Nuggets: CME Group: Copper Open Interest Hits Record For Three Straight Days

Monday February 4, 2013 12:00 PM

Open interest for CME Group copper futures and options combined hit a record high for the third day in a row, the exchange operator says. Open interest refers to the number of open positions at the end of the business day. The combined futures and options open interest as of Friday stands at 182,662 contracts, CME Group reports. This tops the previous records of 178,470 and 173,518 that were set Thursday and Wednesday.

By Allen Sykora of Kitco News asykora@kitco.com

 

Market Nuggets: R.J. O’Brien: Copper May Attract Buying On Price Pullbacks

Monday February 4, 2013 11:00 AM

Copper may well be bought on price dips, with all eyes on China, says R.J. O’Brien & Associates. The metal surged last week on macro fund and commodity-trader-adviser buying on the back of the improving Chinese and U.S. Purchasing Managers Indexes and technical buy signals, the firm says. “We would expect to see good price dips to be well bought as more and more traders are looking for upside targets of $8,400 and $8,500 per (metric) ton basis three months,” R.J. O’Brien says. “Longer term, everyone is still waiting to see what the Chinese will do after their New Year holidays is over…The holiday is normally followed by a new round of commodity buying and inventory replenishment in the months following the New Year.” As of 10:53 a.m. EST, three-months copper was $26 higher at $8,316 a ton.

By Allen Sykora of Kitco News asykora@kitco.com

 

Market Nuggets: R.J. O’Brien: Tin May Be Topping ‘For Time Being’ But Shorting ‘Is Inviting Trouble’

Monday February 4, 2013 11:00 AM

Tin prices appear to be topping “for the time being,” said R.J. O’Brien & Associates, yet the firm also cautions about taking out short positions. Strong resistance for LME three-months tin appears to be emerging around $25,000 at metric ton, with prices meandering on both sides of this over the last few sessions. This may be due to a rise in LME warehouse stocks, which increased 430 metric tons last week to 13,625. Still, R.J. O’Brien says, “Shorting tin is inviting trouble. The market could easily flare into a backwardation without any warning.” In 2013, Indonesia is likely to export this year the smallest amount of tin in at least the last 10 years, and this will extend the deficit supply situation into a fourth year, R.J. O’Brien adds. As of 10:53 a.m. EST, three-months tin was $5 higher at $24,905 on the London Metal Exchange.

By Allen Sykora of Kitco News asykora@kitco.com

 

Market Nuggets: Base Metals May Perform Well In February – INTL FCStone

Monday February 4, 2013 9:10 AM

Base metals may perform well during February, says Edward Meir, commodities consultant at INTL FCStone. His preferred picks, in order, are lead, tin, copper and zinc. On the other hand, nickel and aluminum will likely be relative laggards going into 2013 given their fundamentals, Meir says. “Although we are constructive on base metals over the short-term, we do not see a return to any bull market type of conditions, as most complexes (apart from lead and tin) are expected to be in surplus. Moreover, stock levels in most of the metals continue to increase and none of the six metal complexes we follow are in backwardation. Most importantly, Chinese metals demand will be steady but not strong, as there is much surplus metal being stockpiled locally as well as little indication that local production is being scaled back even if it is running at a loss,” he says.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: Safe-Haven Markets Like Gold Could Struggle In Feb; PGMs Likely To Rise –INTL FCStone

Monday February 4, 2013 9:10 AM

Markets in general have a few positive trends going for them in February, says Edward Meir, commodities consultant at INTL FCStone. As such, safe-haven markets like gold, and even perhaps silver,  may struggle, while more growth-oriented markets like the platinum group metals may rise, he says. “We do not think the political decisions facing the politicians in Washington will weigh as heavily on the markets given the new political realities that seem to be emerging. Moreover, U.S. growth seems to be accelerating, at least judging from manufacturing, housing and labor data (and leaving aside for the moment the GDP aberration we saw in Q4). Chinese growth also seems to be improving moderately, and we suspect that this is being driven mainly by government spending as opposed to either consumption or exports. Japan could be on the verge of a major turnaround by virtue of its currency strategy, while Europe seems to be stabilizing, although it has yet to make the leap into positive growth territory,” Meir says. Stronger auto sales will support palladium and platinum, but of the two, palladium will likely outperform platinum given that it is more sensitive to the stronger U.S. and Chinese automobile markets, he adds.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: CME Group Total January Volume Falls Vs Year Ago, Up Vs Month Ago

Monday February 4, 2013 9:00 AM

CME Group says its total January 2013 volume averaged 11.4 million contracts per day, down 2% from January 2012, but up 18% from December 2012. Total volume for January 2013 was more than 240 million contracts, of which 87% was traded electronically. Volume for interest rates, foreign exchange and metals rose, while volume for energy, agriculture and equity indexes fell. The average daily volume for metals was 384,000 contracts in January 2013 versus 365,000 contracts in January 2012, a rise of 5%.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: Current Investing Environment Favors Industrial Metals – TD Securities

Monday February 4, 2013 8:50 AM

Stock markets in the world's developed nations posted the best start to the year in two decades: the Dow Jones Industrial Average Index closed above 14,000 on Friday for the first time since October 2007 and the MSCI World Index rose 5% in January, the most since 1994, says TD Securities. "The current environment seems to favor the industrial metal complex as signs of global economic recovery continue to improve," they say. The white metals rose in January, with silver up 3.6%, palladium up 6.06% and platinum up 8.89%. This environment isn't positive for gold, they say. "Gold seems to be having difficulty rallying in this environment where other opportunities … abound. It is the worst performer of the precious complex for the year as it closed the month down 0.73%. Gold perhaps suffering from the rally in both equity and yield, the latter rising some 25 bps (basis points) on the U.S. 10 year Treasury barometer," they note.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: ECB Meeting Important, But No Cut In Rates Are Expected - BBH

Monday February 4, 2013 8:19 AM

The European Central Bank meets on Thursday, and analysts at Brown Brothers Harriman say the meeting is important. They say there are some calls for the ECB to cut interest rates as there has been passive tightening of monetary conditions in the euro area. "We do not think it will. The first line of defense is moral suasion. The reduction in the ECB's balance sheet, which is now the smallest in about a year, is a symptom not of undesirable developments, but of the improved access to private sector funding. (ECB President Mario) Draghi is likely to calm market anxiety," they say.

By Debbie Carlson of Kitco News dcarlson@kitco.com

 

Market Nuggets: Barclays: Outflows From ETPs Moderate; Holdings Down 23 MT For 2013

Monday February 4, 2013 7:52 AM

Net exchange-traded-product outflows moderated last week with a modest increase of 0.7 metric tons, taking total holdings to 2,630 tons, says Barclays Capital. "Outflows for the year to date are now at 23 tons with most net redemptions stemming from U.S. listed products," Barclays says. "Negative ETP flows is a key downside risk for prices, thus the volume and pace of outflows will be key over the forthcoming weeks."

By Allen Sykora of Kitco News asykora@kitco.com

 

Market Nuggets: TD Securities: Chinese Economic Data Suggest More Gains For Industrial Metals

Monday February 4, 2013 7:52 AM

Base and precious industrial metals should get a boost from apparent Chinese demand, restocking and the fact that supply is relatively price inelastic, says TD Securities. The Chinese economy is the biggest contributor of new demand for metals generally and has been strengthening, TDS says. The January HSBC and official Chinese manufacturing Purchasing Managers Indexes were mixed relative to expectations last week, but both were over the 50 level that signals economic expansion and the HSBC reading hit a two-year high of 52.3. "As such, any correction that takes prices lower in the relative near term should be seen as a buying opportunity for the longer term," the firm says. "We see palladium and zinc as the likely biggest winners from a stronger China into 2013." TDS says it looks for industrial metals to get a lift from development policies likely to be introduced by the new leadership, with rail and affordable housing the most prominent demand drivers. "We would also not be surprised to see a new drive to control pollution, which implies more auto catalyst demand for metals like palladium," TDS says.

By Allen Sykora of Kitco News asykora@kitco.com

 

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