Thursday July 10, 2014 2:05 PM

Weakness in European equities helped send gold to its highest level since mid-March, says Triland Metals. “Stocks in Europe were heavily sold today on the back of fears for the health of Portugal’s largest bank, Banco Espirito Santo,” Triland says. The firm adds that gold “flourished on the back of the downbeat news.” Other traders also cited Mideast geopolitical tensions and a technical breakout as gold moved up through chart resistance, triggering buy stops. Triland adds, however, that “many traders and analysts are worried about the increasing longs entering the market and therefore see a flush-out down to $1,300 in the short term.” Comex August gold finished the pit session with a gain of $14.90 to $1,339.20 an ounce.

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

 

Ira Epstein: U.S. Dollar May Be Next Key Catalyst For Gold

Thursday July 10, 2014 10:50 AM

The performance of the U.S. dollar may be the next key catalyst for gold, says Ira Epstein, director of the Ira Epstein division of The Linn Group. “Simply put, as long as the dollar stays under selling pressure, I favor looking for gold to try to maintain an overall bullish stance,” he says. “If the dollar breaks out of its current trading range to the upside, look for gold to lose value. If the dollar breaks out the downside, look for gold prices to increase.” Anticipation that the Federal Open Market Committee would not change its interest rate stance yet “saved the day” for gold Wednesday when minutes from a June meeting capped a rally in the dollar, he adds.  As of late Wednesday, he says, a resistance point for Comex gold is the upper Bollinger band that has a value of $1,350.60. So far Thursday, August gold has broken as high as $1,346.80 an ounce.

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

 

INTL FCStone: Chinese Copper Imports Fall On Scaled-Back Bank Lending

Thursday July 10, 2014 10:50 AM

Chinese data overnight showed that copper imports into the country fell to their lowest level since April 2013. This is “presumably on the back of initial signs of a retrenchment in bank lending,” says Edward Meir, commodities consultant with INTL FCStone. “We should see more evidence of tighter lending standards being imposed over the course of July and August, meaning that copper imports may very well continue to sag. However, we don't think the financing game is ‘over,’ as establishing clean title should be a fairly easy procedure -- even in China -- and banks and their affiliated warehouse operators will have to get their act together to insure that there are no cracks in the ownership chain going forward.” Chinese copper imports fell 7.9% month-on-month in June to 350,000 metric tons.

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

 

BNP Paribas: Data Shows Impact Of PGM Strike Became 'More Acute' In May

Thursday July 10, 2014 7:48 AM

The impact of the now-settled five-month strike against the three major South African producers of platinum group metals became “more acute” in May and will be felt for a while yet, says BNP Paribas. Government data show overall mining production of all metals fell 6.5% year-on-year. On a seasonally adjusted month-on-month basis, production slipped 3.1% in May and was driven by an 18.9% contraction in platinum production, the bank points out, along with a 4.3% fall in coal production and a 2.1% drop in gold production. Iron ore output climbed, however. PGM production fell 48.5% year-on-year. ““Today’s poor mining production figures come as little surprise to us given the negative impact of the more than five-month-long strike in the PGM sector, which became more acute as producer inventory levels wore thin from the middle of April,” BNP Paribas says. “While the end to the strike in the platinum sector towards the end of June suggests that this sector is likely past the worst, it will still take a couple of months for local PGM producers to get back on their feet. Therefore, we are not expecting to see a dramatic improvement in mining activity in the near term. In our view, production will only return back to ‘normalized’ levels from early Q4.”

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

 

Citi Research: Chinese Copper Imports Fall To Lowest Level Since April 2013

Thursday July 10, 2014 7:46 AM

Chinese copper imports fell for the second straight month in June to around 350,000 metric tons, the lowest level since April 2013, points out Citi Research. This was down from around 380,000 in May and 450,000 in April. Pressure on imports came from “extremely tight credit conditions,” particularly for Chinese traders; weak import arbitrage and physical premiums in  April, as copper shipped via agreements often take one to two months to arrive in China; and low physical premiums in Shanghai bonded warehouses, Citi says. The bank notes conditions now “are somewhat better,” however, with physical premiums having rebounded so that imports into bonded warehouses now attract around ‘$110, up from the $60 lows. “Financing activity is the key variable going forward,” the bank adds. China is the world’s largest copper-consuming nation.

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