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Market Nuggets: Deutsche Bank: Precious Metals Leading Commodity Strength In 3Q

Monday August 26, 2013 10:15 AM

Commodity indices are up for the third quarter so far and the precious-metals complex has led the way, says Deutsche Bank. The commodity strength has included precious metals, energy and industrial metals, with the agricultural sector an exception, says the bank. "The precious-metals sector has been the star performer in the third quarter, posting positive returns of approximately 13%," Deutsche Bank says. "This has been despite showcasing maximum losses on a total returns basis. The strength in the precious-metals sector is attributed to the recent rally in gold. Even as the threats of tapering and fund outflows are weighing down on gold prices, this is partially offset by expectations of opportunistic demand from India."

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


Market Nuggets: Morgan Stanley: Copper Fundamentals Improving

Monday August 26, 2013 8:50 AM

Copper's supply/demand fundamentals are improving lately, says Morgan Stanley. The firm points out that the latest monthly data from the International Copper Study Group, covering the period through May, show the monthly supply/demand balance flipped to deficit for the first time since September 2012. May was around the time problems were peaking at the giant Grasberg mine in Indonesia, so there was likely a shortage of concentrate that may render this data an anomaly, Morgan Stanley says. "However, more near-term fundamentals also show signs of improvement, namely: 1) LME (London Metal Exchange) stocks have declined since June and are still falling; 2) Shanghai stocks have been declining since March; and 3) Chinese imports have increased every month since March," Morgan Stanley says.

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


Market Nuggets: Barclays Looks For U.S. 10-Year Yield Of 3.75% By 3Q14

Monday August 26, 2013 8:48 AM

Barclays upped its forecasts for U.S. 10-year Treasury yields, now looking for 3.1% by year-end and 3.75% by the third quarter of 2014. This is up from an earlier forecast of 2.9% by mid-2014. "In essence, we are maintaining the view that rates will continue (to) move higher, but now believe that the drift will be faster than the market expects as we get closer to normalization of monetary policy," Barclays says. The bank cites a "healthier backdrop," with growth in non-farm payrolls averaging 200,000 in the past six months and signs that core inflation may have bottomed. Barclays also points out that equity and credit markets in the U.S. "have held up fairly well" despite a sell-off in the Treasury market, preventing financial conditions from tightening too much. "Further, consensus expectations for GDP (gross domestic product) and payroll growth have not been revised lower, despite the move in rates so far, suggesting that most market participants still view the rate rise as benign," Barclays adds.

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


Market Nuggets: Barclays: Gold ETPs Post Largest Inflow Since Start Of Year

Monday August 26, 2013 8:18 AM

Global exchange-traded-product holdings of gold posted their largest daily inflow since the start of the year Friday at 5.8 metric tons, says Barclays. The largest, SPDR Gold Shares (GLD), had an increase of 6.6 tons. "Flows for the month to date remain negative at 17 tons but the pace of outflows has showed signs of slowing as equity markets have weakened and prices have risen, meaning fewer (positions in) ETPs are loss-making," Barclays says. "Given that we continue to expect tapering to be announced in September and that we expect the dollar to strengthen, ETP holdings are likely to remain fragile but flows will remain a key area to track."

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


Market Nuggets: Gartman: Gold-Mining Shares Outperforming Gold Lately

Monday August 26, 2013 8:16 AM

While gold has hit its strongest level since early summer, gold-mining shares have been even stronger lately, says Dennis Gartman, investor and publisher of The Gartman Letter. And, he says, "we need to see the miners gaining upon gold bullion to call this a true, unequivocal bull market." As gold fell back during a long stretch from its all-time high from two years ago, gold mining shares "lost relentlessly relative to gold," Gartman says. In autumn of 2011, he says, the ratio of the SPDR Gold Shares exchange-traded fund (GLD) to the Market Vectors Gold Miners ETF (GDX) stood near 3:1. This eventually soared to 5.35:1 as bullion gained upon mining shares to late June of this year, Gartman says. "Since then, it has fallen to 4.5:1 and is now preparing to break downward through its 200-day moving average, something it has not done since late last year and then only for a matter of a few weeks."

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


Market Nuggets: Morgan Stanley Looks For Gold Rally To Fade By Year-End

Monday August 26, 2013 8:14 AM

Morgan Stanley suspects the recent rally in gold will fade into year-end. The market Friday hit its strongest level since early June, then rallied further overnight. "We think the recent price strength has come off the back of strong physical support, namely less ETF (exchange-traded-fund) selling and robust Chinese and Indian imports," Morgan Stanley says. "Nevertheless, in our view, the recent gold price rally will likely fade as the headwinds facing gold throughout the year re-emerge, namely a strengthening U.S. currency, rising nominal and real bond yields and a continuing wane in investor faith."

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


Market Nuggets: INTL FCStone: Gold May Hit Mid To High $1,400s In September

Monday August 26, 2013 8:12 AM

Gold may well hit the mid-$1,400s or higher this month, says INTL FCStone. Among the factors cited by commodities consultant Edward Meir for gold's gains toward the end of last week include doubts about how quickly the Federal Reserve will start tapering its quantitative easing in the aftermath of a weak report on new U.S. home sales Friday, geopolitical fears surrounding Syria after reports that chemical weapons were used in the country last week and prospects for labor unrest in the South African mining sector. "We have been friendly to gold for some time now and suspect Fed easing uncertainties, geopolitical tensions and strike action in South Africa will all combine to keep the complex well bid," Meir says. "We see prices on track to hit the mid to high $1,400 mark over the course of September and silver could easily get to $25 in the meantime."

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


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