Kitco Market Nuggets

Market Nuggets: BNP Paribas Technicians: PGMs In Rally Mode, Could Pull Gold, Silver Higher

12 January 2011, 01:40 p.m.
By Kitco News
http://www.kitco.com/

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(Kitco News) -- Rallying platinum has fully reversed last week’s decline and palladium has nearly done likewise, say technical-chart analysts with BNP Paribas in a research note. “Looks like we’re seeing some rotation, with platinum and palladium now leading silver and gold higher, with scope for extending the precious-metal rally for the next several weeks or longer,” BNP says. Technically, platinum may have the strongest case, poised to break above pivotal resistance from the March-April 2008 lows and the recent November high, BNP says. The bank cites accelerating weekly bullish momentum, yet notes the metal does not appear overbought, which favors a breakout above $1,800-08 an ounce soon, extending toward a swing target of $1,855-60, with a rise above there in turn targeting the 76.4% retracement of the 2008 price collapse at $1,934. The bank lists implications for the foreign-exchange market: “A medium-term platinum rally could drag gold and silver higher in its wake. This would limit selling pressure on the commodity currencies and spark a rally.”

 

 

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

Market Nuggets: Barclays: Gold ETP Holdings 'Stable;' Silver Holdings Fall; PGM Holdings At Record High

12 January 2011, 09:19 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Barclays Capital is describing holdings in global gold exchange-traded products as basically “stable” so far this year, but notes silver holdings have fallen to a five-week low. “Total metal held in trust across the 24 gold products we track fell by 1.1 (metric tons) yesterday to 2,134 tons; however, overall holdings remain stable with outflows of less than 10 tons so far this year despite the price volatility,” Barclays says. “In contrast, silver holdings suffered a fifth day of net redemptions, falling by 60 tons to their lowest level since 6 December at 15,036 tons. Total metal held is down 135 tons so far this year.” Meanwhile, longer-term investors remain “favorable” towards the platinum group metals, with ETP exposure rising less than 1,000 ounces Tuesday but nevertheless hitting fresh record highs, Barclays says.

 

 

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

Market Nuggets: Barclays: Power Issues Could Curtail Chinese Aluminum Output, Support Prices

12 January 2011, 09:00 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- There is a risk that cold weather in certain parts of China could mean sustained or increased power cuts for metal producers, potentially hampering aluminum output in the country, in particular, says a research note from Barclays Capital. The bank says the risk of power-related production cuts being sustained into the first quarter creates an upside risk to aluminum prices. Further short-term support for aluminum prices is likely to come from the impact of floods in Queensland, Australia, on thermal coal prices, Barclays says. Coal prices are already rising, and since Australian exports may take at least a couple of months to normalize, there could be further upward pressure on prices. “Given that 85% of Chinese aluminum production is coal-fired, using both domestic and imported coal, higher spot coal prices could put further upward pressure on already-high aluminum smelter production costs,” Barclays concludes.

 

 

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

Market Nuggets: Commerzbank: Gold Sought As 'Store Of Value;' Platinum Market Eyes South African Power

12 January 2011, 08:24 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Commerzbank looks for investors to keep seeking gold as a “store of value” and also cites potential for power-supply issues to affect South African platinum miners. Even with a good Portuguese bond auction Wednesday, there is the risk that the country will need a rescue package given the high refinancing costs, the bank says. “Gold should remain in strong demand as a store of value amid the persisting uncertainties,” Commerzbank says. Meanwhile, the bank points out that South African energy company Eskom has warned mine operators of possible supply bottlenecks. Heavy rains are disrupting coal supplies, which account for around 95% of South Africa’s power. Maintenance work is worsening the situation. Still, “the company hopes to avoid a repeat of the 2008 blackouts, when several of the country’s largest platinum mines had to be closed temporarily, pushing platinum prices above $2,200 a troy ounce,” Commerzbank says.

 

 

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

Market Nuggets: Gartman Remains Bullish On Gold In Non-Dollar Terms But Offers Some Caution

12 January 2011, 08:24 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Newsletter writer Dennis Gartman says he remains bullish on gold in non-U.S. dollar terms and “ambivalent” or “agnostic” in dollar terms. Still, he says in Wednesday’s The Gartman Letter,”for the first time in a very long while we shall inject a note of caution to owning gold in any form. We will not recommend new positions, and we shall recommend ‘shoring up’ stops to protect what we have gained over the past many months. Call it a dyspeptic stomach perhaps, or call it old age’s propensity to be cautious, but for the first time in quite some long while we shall be cautious rather than expansive when it comes to the precious metals.”

 

 

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

Market Nuggets: BBH: Portugal Bond Auction 'Successful' But European Problems Persist

12 January 2011, 08:17 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Currency analysts with Brown Brothers Harriman are describing a Portuguese bond auction Wednesday as “successful,” with peripheral bond yields mostly lower. The auction was one of the immediate focuses of global financial markets. Portugal sold EUR650 million of bonds due in 2014 at a yield of 5.396% (versus 4.041% in October) and a bid to cover of 2.63, and sold EUR599 million of bonds due 2020 at a yield of 6.716% (versus 6.806% in November) and a bid-to-cover ratio of 3.2. “The total came in larger than the indicative amount between EUR750 mln and EUR1 bln, and while borrowing costs fell slightly for the longer tenor, the rate paid remains unsustainable,” BBH says. Thursday, Spain plans to sell up to EUR3 billion bonds due in 2016, while Italy plans to sell up to EUR3 billion 3% bonds due in 2015 and up to EUR3 billion 4.5% bonds due in 2026.  “Despite the relative calm today, the market is viewing a Portuguese bailout as a done deal,” BBH says. “We note EU Economic and Monetary Affairs Commissioner Olli Rehn said they are discussing ‘several alternatives’ for expanding the EFSF (European Financial Stability Facility), including expanding ‘the size and the scope.’  Since European policy-makers have once again allowed market sentiment to spiral out of control, we do not think expanding the EFSF will do anything to stop the rot that is still spreading and intensifying. “ 

 

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