Kitco Market Nuggets

Market Nuggets: Triland: Comex Gold Closes Sharply Lower On Reduced Prospects Of QE3

4 April 2012, 1:38 p.m.
By Kitco News
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(Kitco News) - Comex gold finished the pit session sharply lower after the Tuesday-afternoon release of minutes of a March Federal Open Market Committee meeting quashed hopes for a third round of quantitative easing, says Triland Metals. "The large army of QE3 addicts are now facing the prospect of a period of cold-turkey," Triland says. "The minutes of the latest FOMC meeting implied that the chances of QE3 are even further away than previously thought. Thus gold liquidation (and most commodities and stock markets) continued throughout the day, breaking the key support level at $1,627 and inducing more stop-loss selling. Bounces have been weak and as we approach the psychological $1,600 level, the pressure on the longs increases." Comex June gold fell below support around the two-month low of $1,629.80 from March 22, bottoming at $1,613, its weakest level since Jan. 9. Around the time the Comex pit was closing, the contract was down $57.50 to $1,614.50, with much of that loss occurring in after-hours electronic trading Tuesday afternoon.

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

Market Nuggets: Triland: Aluminum Slides For Sixth Straight Session After FOMC Minutes

4 April 2012, 1:38 p.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Aluminum posted its sixth straight session of losses. The tone turned negative early in Wednesday's London Metal Exchange session following the release of Federal Open Market Committee minutes late Tuesday that removed hopes of imminent U.S. monetary easing, Triland Metals says. "However the mood worsened in the afternoon following what was seen as a weak Spanish auction that ended up increasing the yields in most of southern European economies, a fresh blow for the euro," Triland says. "Even fair ADP job numbers from the U.S. did little…Activity could well pick up tomorrow as many will be looking to square their position ahead of the long (Easter) weekend." LME three-months aluminum closed down $32 to $2,087.50 an ounce. LME copper, nickel, zinc, lead and tin also finished lower.

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

Market Nuggets: DJ-UBS Commodity Index Falls 4.14% In March

4 April 2012, 10:34 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Weakness in natural gas, orange juice and coffee prices weighed on the Dow Jones-UBS Commodity Index, which fell 4.14% in March, managers of the index say. The returns for the single-commodity indexes for natural gas, orange juice and coffee fell 21.55%, 11.44%, and 10.23%, respectively. Those losses offset gains in the single-commodity indexes of soybean meal, soybean and cotton, which registered one month-returns of 10.14%, 6.29% and 3.41%, respectively. Through March, the Dow DJ-UBS Commodity Index is up 0.87%. The Dow Jones-UBS Commodity Index is composed of 20 futures contracts on physical commodities and was introduced in 1999.

 By Debbie Carlson of Kitco News; dcarlson@kitco.com

Market Nuggets: RBC's Gero: Payrolls, Sell Stops Add To Pressure In Gold After FOMC Minutes

4 April 2012, 9:10 a.m.
By Kitco News
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(Kitco News) - A rise in private-sector U.S. payrolls and technically oriented selling have added to the pressure in Comex gold, says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. Gold slid Tuesday afternoon after the release of Federal Open Market Committee minutes from the March meeting reduced prospects for a third round of quantitative easing. Gero says there has been “dramatic selling in gold as good news for the economy became bad news (for gold) yesterday as (the) FOMC dashed hopes of more easing and QE3 coming. Today’s added jobs also (makes it) look like easing may not be a longer-term prospect…” An ADP report says U.S. private-sector payrolls rose by 209,000 in March. Markets tend to monitor this for clues on what to expect from the government’s monthly non-farm payrolls report, scheduled for release on Friday. Gero reports that sell stops—pre-placed orders triggered when certain chart points are hit--were triggered in gold as it fell below the $1,650 and $1,625 areas. As of 9 a.m. EDT, Comex June gold was $48.50 lower to $1,623.50 an ounce. Much of that loss was in after-hours screen trading Tuesday, since the change for the day is based on the previous session’s pit close, which occurred half an hour ahead of the FOMC minutes.

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

Market Nuggets: Commerzbank, Barclays: U.S. Car-Sales Data Favorable For PGMs

4 April 2012, 8:23 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Commerzbank and Barclays Capital say U.S. auto-sales data for March, released during the course of Tuesday, bode well for demand for platinum group metals. These metals slid with gold Tuesday as Federal Open Market Committee minutes were construed to mean no more quantitative easing in the U.S.; however, Barclays points out that platinum and palladium fell less than rest of the precious complex. U.S. seasonally adjusted and annualized vehicle sales in March were up 9.6% year-on-year to 14.32 million units, Commerzbank notes. “Although the dynamism has abated somewhat month-on-month, the first three months of 2012 have been the strongest quarter since the first quarter of 2008, with a quarterly average of 14.49 million vehicles,” Commerzbank says. “This shows clearly that the recovery trend in U.S. vehicle sales is continuing. At the same time, this means the U.S. is likely to compensate for the weak car market in Western Europe and make a key contribution to moderate growth in global vehicle sales this year. This should impact positively on the prices for platinum and palladium, both of which are used primarily in the production of auto catalysts.” Barclays, while also acknowledging fragile car demand in Europe during 2012, said the U.S. sales figures supported the bank’s view of an overall “relatively healthy global demand picture” for the metals.

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

Market Nuggets: UBS Sees Significant Risk Of Gold Slipping Below $1,600 An Ounce

4 April 2012, 8:10 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - UBS says the risk of gold slipping below $1,600 an ounce “looms large” and the bank maintains its one-month forecast of $1,550. The metal has slid since March Federal Open Market Committee minutes released late Tuesday diminished hopes for further quantitative easing and also prompted ideas that there is potential for a change in the Fed’s previous guidance that interest rates would remain low until late 2014. Gold previously sold off on “less” dovish comments from Federal Reserve Chairman Ben Bernanke on Feb. 29, then bounced after “more” dovish comments from the Fed chief last week, UBS notes. However, the March minutes mean a “challenging stage is set for gold,” UBS says. The most recent weekly Commitments of Traders data showed an increase in Comex gold gross longs by the speculative community, and UBS says “this is the investor group that is most at risk of bailing right now.” Gold needs physical markets to increase demand, UBS says. “So far the response has been limited. The jewelers strike in India persists, overnight demand from that region was poor and the Chinese market is closed (for a holiday), but returning tomorrow.”

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

Market Nuggets: R.J. O'Brien: Gold, Copper Pressured As Dollar Rises Following Fed Minutes

4 April 2012, 7:42 a.m.
By Kitco News
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(Kitco News) - Gold, copper and other metals are on the defensive after minutes from the March 13 Federal Open Market Committee meeting, released late Tuesday, showed only two of the 10 voting members see a need for more monetary stimulus, says Janet Mirasola, managing director of R.J. O’Brien & Associates. The Fed minutes led to weakness in global equity markets but boosted the U.S. dollar. “A Fed-induced greenback rally, which sent the value of the euro back below $1.3200,  has had negative effect on the price of most dollar-based commodities with the Black One (oil) dipping back below $104, the Red One (copper) testing $8,500 and the Shiny One (gold) swooning as it breaks back down through $1,650…,” Mirasola says.  Around 7:30 a.m. EDT, the euro was down to $1.3149 after trading as high as $1.3368 on Tuesday. Nymex May crude oil was down $1.10 to $102.91 a barrel, LME copper was down $148.75 to $18,466.25 a metric ton and spot gold was $19.60 lower at $1,625.50 an ounce.  

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

Market Nuggets: HSBC: Still-Accommodative Fed Policy Should 'Help Put A Floor Under Gold Prices'

4 April 2012, 7:36 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - U.S. monetary policy remains accommodative and should offer at some support for gold even if the Federal Reserve does not undertake a third round of quantitative easing, says HSBC. Gold prices tumbled late Tuesday and remained on the defensive overnight after minutes from the March Federal Open Market Committee showed policy-makers less keen to undertake further stimulus, triggering long liquidation in bullion markets. This comes after a string of stronger U.S. economic reports in recent months.  “Although monetary policy might not be eased much, it is still historically accommodative,” HSBC says. “This should help put a floor under gold prices. The elimination of QE3 or other form of additional easing does not by itself mean the gold rally has been reversed.” Further price declines may entice price-sensitive buyers back into the market, although HSBC says it does not expect Indian demand to recover fully until jewelers reopen shops currently closed to protest higher duties on gold imports. “Market chatter continues to circulate that the Indian government will make some revision to the rules that increased the excise duty on unbranded gold jewelry,” HSBC says.

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

Market Nuggets: FCStone: Current Factors Impacting Precious Metals Not 'Particularly Constructive'

4 April 2012, 7:35 a.m.
By Kitco News
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(Kitco News) - A combination of factors affecting the precious-metals complex at the moment is “not a particularly con­structive one,” says FCStone. Gold tumbled in after-hours trading Tuesday when minutes of the March Federal Open Market Committee meeting were construed to mean officials were less than eager to launch additional stimulus measures unless recent economic improvement falters. “Apart from platinum and palladium, which may benefit somewhat given their industrial status, the odds of further declines in both gold and silver are high,” FCStone says. “For one thing, charts in both these complexes have deteriorated, with prices again nearing their recent lows.” Further, the firm says, the U.S. economy is growing just as Europe nears recession and China’s growth remains “suspect” despite this weekend’s stronger Purchasing Managers Index. “This means that the dollar will likely push higher from here, not necessarily a fer­tile backdrop for either metal,” FCStone says. “We also have to suspect that the Indian (jewelry-shop) strike situation will prove detrimental to the local physical market the longer it drags on, as a combination of reduced sales and falling gold prices will make it all the more harder for demand to pick up where it left off.”

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

Market Nuggets: Rosland's Nichols: Gold Has Supportive Influences Despite FOMC Minutes

4 April 2012, 7:34 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Gold’s multi-year bull market may not be permanently thwarted just because Federal Open Market Committee minutes released late Tuesday were construed to mean no more quantitative easing due to economic improvement, says Jeffrey Nichols, senior economic advisor to Rosland Capital. The minutes prompted a late-day price decline. Nichols doubts that the U.S. economy is as strong as recent data reflect. Further, he says, “the American economy must still pay its dues for many years of excessive and imprudent spending” in both the private and public sectors. “America’s inability to get its fiscal house in order will continue to compel the Fed to pursue an aggressive accommodative monetary policy,” Nichols says. This will mean a continued long-term downtrend in the dollar that benefits gold. But, Nichols says, even if he’s wrong about Fed policy, other factors are supportive for gold. These include growth in Chinese gold demand for jewelry and investment, central-bank demand, European political and euro-currency disintegration, Mideast unrest, high prices for oil and other commodities and “insufficient growth” in gold-mine production.    

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

Market Nuggets: FCStone Looks For Copper Prices To Remain In 'Tug-Of-War' During April

4 April 2012, 7:34 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - FCStone looks for London Metal Exchange copper to remain in its range of roughly $8,100 to $8,800 per metric ton from February and March as a “tug-of-war” continues. Copper lost some ground last month, although it gained 11% for the first quarter. “The complex has been locked within a relatively tight trading range for two months now, with prices fluctuating roughly between $8,100-$8,800,” FCStone says in a monthly commodities outlook. “A deceleration in macro trends, particularly out of China, is preventing prices from pushing substantially above the top end of the range, while on the downside, prices are being supported by a steady decline in LME inventories and the fact that the global supply/demand picture is pointing to yet another deficit in 2012. In addition, Chinese refined copper cathode imports are running at a brisk pace, this despite the fact that much of this metal seems to be brought in on account of previously negotiated contracts, or more likely, as collateral to circumvent lending requirements.”

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