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Market Nuggets: FOREX.com: FOMC Likely To Leave Monetary Policy On Hold At Upcoming Meeting

Friday April 20, 2012 01:59 PM

The Federal Open Market Committee will likely leave monetary policy on hold when it meets Tuesday and Wednesday, says Eric Viloria, senior currency analyst with FOREX.com. “We expect that the Fed will keep all options on the table as there is still a large amount of uncertainty with regards to the health of the U.S. labor market,” he says. “The four-week moving average in weekly initial jobless claims has ticked higher over the past couple readings and the March employment report was disappointing. One month’s worth of disappointing data is not enough to prompt action by the Fed and therefore we expect the bank to maintain its current stance.” Much focus will be on Chairman Ben Bernanke’s press conference and the bank’s updated interest-rate projections, Viloria adds. “We have seen a variety of viewpoints from various Fed officials and the projections will help to clarify the bank’s view and manage expectations,” Viloria says. “A shift in the timing of the next probable rate increase would impact markets broadly and any sign of tightening sooner than previously expected could have a positive impact on U.S. yields and the dollar with the possible for a knee-jerk reaction lower in risk sentiment, while prolonged low rates would have the opposite effect.”

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

 

Market Nuggets: RBC’s Gero: Gold Range-Bound But Industrial Metals Manage Gains

Friday April 20, 2012 01:50PM

“Push-pull” trading has left many market participants on the sidelines and Comex gold range-bound, but more industrially oriented metals got a boost ahead of the weekend, says George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures. Of the gold activity that did occur, he says, the predominant theme was traders covering short positions or squaring positions ahead of the weekend with the stock market upbeat. However, he says, copper, platinum and palladium drew buyers on economic hopes, particularly for the eurozone. Interest rates remain low and Group of 20 nations appeared ready to commit $400 billion sought by the International Monetary Fund to deal with any widening of Europe’s debt crisis. Around 1:25 p.m. p.m. EDT, Comex June gold was up $1.50 to $1,642.90 an ounce while May silver eased 11.9 cents to $31.66.  May copper was up 6.9 cents to $3.6965 a pound, July platinum was up $5.50 to $1,583.50 an ounce and June palladium surged $13.45 to $676.75 an ounce.

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

 

Market Nuggets: Triland: Gold Range-Bound Ahead Of Comex Options Expiry Next Week

Friday April 20, 2012 01:24PM

Comex gold remains range-bound ahead of an options expiry next week, says Triland Metals. “Gold continues to trade on low volume within the confines of 1,635-1,655,” Triland says. “Strength in base metals, oil and the euro has had no significant affect on the market. Comex option expiry next Wednesday seems to be keeping the market in check as open interest in 1,650 puts and calls is significant.” As of 1:05 p.m. EDT, June gold futures were $2.10 higher at $1,643.50 an ounce. “Physical demand remains muted and ETF buying has been quiet for the last few days,” Triland says. “The wider range is 1,630-1,665 and a break of either of these levels should call for 1,600 or 1,700 to be challenged.”

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

 

Market Nuggets: Deutsche Bank: Declines In Gold Spec Length May Mean ‘Firmer Footing’ For Market

Friday April 20, 2012 11:04AM

Deutsche Bank says past liquidation in speculative length in gold futures could mean a “substantially firmer footing” for the market. “We believe central-bank diversification and Fed rhetoric are the most likely triggers for a fresh revival in the gold price,” the bank says. Since July 2011, gold has been in a $1,600-$1,900 range 90% of the time, Deutsche Bank notes. “The euphoric nature of the gold market last summer has given way to a more somber assessment as the market has contemplated the implications of a termination in quantitative easing by the Fed, a slow appreciation in the U.S. dollar and broad deleveraging across a number of safe havens such as gold and the Swiss franc,” Deutsche Bank says. “However, we are still maintaining our bullish outlook for the gold price. In recent weeks, financial markets are once again suffering from a new wave of risk aversion. Periphery European CDS spreads have hit fresh record highs as concerns towards global growth are resurfacing and deflationary concerns are building. In the past this would be ordinarily negative for gold and beneficial to the U.S. Treasury market. However, this time round we expect gold prices will be better supported.”

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

 

Market Nuggets: Olympus’ Nedoss: Gold Sideways, Draws Only Modest Support From Softer Dollar

Friday April 20, 2012 10:37AM

Comex gold remains within its recent sideways consolidation range although it is getting modest support from the softer U.S. dollar, says Charles Nedoss, senior market strategist with Olympus Futures. As of mid-morning Friday, the June futures have been confined to a band of $1,631.20 to $1,659.60 so far this week. The contract was up $4.20 for the day to $1,645.60 an ounce. The dollar index is having trouble breaking back above its 10-day moving average and was down 0.432 point to 79.275 as of 10:25 a.m. EDT. A weaker greenback often encourages buying of gold as a currency hedge. “I think if the (gold) charts looked a little better, you’d see a lot better rally,” Nedoss says. “I think you still have people licking their wounds here.” Some “bottom fishing” is taking place after recent declines, Nedoss says. “But I don’t think you’re seeing any big buying coming in,” he says.

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

 

Market Nuggets: FCStone: IMF Fund-Raising Reports, German Sentiment Boost LME Base Metals

Friday April 20, 2012 9:44AM

Base metals are higher on news reports saying countries with major economies will pledge more money to boost the International Monetary Fund’s crisis-fighting coffers, says FCStsone. News reports suggest that the IMF so far has raised some $320 billion, with emerging nations are now trying to chip in an extra $100 billion, about in line with the $400 billon that the Fund has requested. “However, the money is not ‘in the bank’ just yet, and we suspect that these amounts will likely not be enough to prevent ‘euro jitters’ from dissipating entirely, best reflected in the fact that Spanish yields continue to remain high,” FCStone says. “Nevertheless, the IMF pledges, coupled with the release of strong German sentiment readings, have been enough to perk up the euro, which is now trading at just under $1.32.” Germany’s Ifo confidence index rose unexpectedly to 109.9 in April. As of 9:36 a.m. EDT, LME copper was $105 higher at $8,155 a metric ton, aluminum was $10 stronger at $2,084 and nickel was up $240 to $17,840. Zinc, lead and tin were also stronger.

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

 

Market Nuggets: IAI: Global Aluminum Production Rises From February To March

Friday April 20, 2012 9:03AM

Global aluminum production rose to 2.121 million metric tons in March from a revised 1.999 million in February, the International Aluminum Institute reports. However, the March total was down from 2.164 million in the same month a year ago, the IAI says. Daily output last month averaged 68,400 tons, down from 68,900 in February and 69,800 in March 2011. Production gains last month occurred in North America, South America, Asia, Western Europe, Eastern Europe, “Oceania” area including Australia and New Zealand, plus the “Gulf Region” that includes Bahrain, Oman, Qatar and United Arab Emirates.

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

 

Market Nuggets: UBS: Gold Investor Conviction Low In Either Direction, Leaving Prices Range-Bound

Friday April 20, 2012 8:47AM

Investors are showing little interest in taking significant gold positions in either direction at the moment, says UBS. “Gold's journey higher yesterday ran out of steam almost as quickly as the move in the opposite direction had earlier in the day, and in the absence of any significant developments in the macro space this week, it is understandable that investor conviction to either side remains low,” the bank says. “Gold continues to be trapped in this environment where dips are shallow and brief while rallies are similarly sharp and readily sold into, ultimately resulting in the inability to break the recent range on either side. The options market may explain the choppy trading--the largest OI (open interest) for May CME expiry on Wednesday is in $1,650 puts, with decent OI also observed for $1,550, $1,580 and $1,600 puts as well, and for calls decent pockets of OI are observable for $1,650, $1,675 and $1,700 calls.” Further, the bank adds, physical demand has been “underwhelming,” with appetite from India falling off from a stronger level earlier in the week.

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

 

Market Nuggets:UBS Outlines Potential Disruption Threat To Auto Production

Friday April 20, 2012 8:42AM

A potential major disruption is looming over the auto industry, says UBS. This has potential to impact demand for platinum group metals. An explosion occurred last month at a German factory that manufactures about 70% of the world’s cyclododecatriene (CDT), a key ingredient for flame-retardant coatings for brakes and fuel lines. “This explosion is estimated to shave off about 40% of global CDT supply and therefore raises significant concerns for the global auto-supply value chain,” UBS says. So far, there have been no signs of auto-production stoppages, as the industry typically holds one month’s worth of in-transit inventories. “The base-case scenario is for any lost production in Q2 to be recovered in the rest of the year, somewhat similar to last year’s experience following the earthquake and tsunami in Japan in Q1,” UBS says. Thus, the bank’s auto analysts have not revised full-year auto production estimates for now. Further, the auto industry may undertake substitution solutions. As for the potential impact on PGM demand, UBS points out that Japanese end-users continued to take metal from their supply contracts last year despite production interruptions. The current issue is most likely to impact U.S. and French production, UBS says. “Given the UBS base case of auto production holding up this year, PGMs have little to fear taking a multi-quarter perspective,” the bank says. Still, the threat to short-term auto production at a time of precarious European demand means potential downside risks if specs opt to reduce length or add to shorts. UBS says “we're inclined to take a short-term cautious view on PGMs here, but we still retain our overall preference for the complex, particularly that of palladium from a multi-month perspective.”

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

 

Market Nuggets: TD Securities: Commodities Having Tough Week; Better Days Ahead

Friday April 20, 2012 8:13AM

It has been another “difficult week” for commodities, but better days are ahead, says TD Securities. Most commodities have faced selling pressure amid renewed eurozone woes, easing geopolitical risks, weaker-than-expected U.S. data and concerns that China will not remain the global economic “workhorse” it has been, TDS says. Analysts say their outlook calls for the second quarter to be the low point for most commodities in 2012. “Looking beyond Q2, however, we continue to be cautiously optimistic, expecting supply/demand balances for many commodities to tighten in the latter half of the year, which should support prices,” TDS says. As of Thursday’s close, U.S. gold and crude oil futures were among the commodities softer so far for the week, while copper was nearly flat.

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

 

Market Nuggets: HSBC: Expected Easier Chinese Monetary Policy May Boost Gold Demand

Friday April 20, 2012 8:13AM

Easier Chinese monetary policies may hold positive implications for gold prices, says HSBC precious-metals analyst Jim Steel. He cites a report from Xinhua news saying a central-bank official indicated that China will increase liquidity through open-market operations and will cut required reserves. HSBC’s chief China economist, Qu Hongbin, expects China to cut its reserve-ratio requirement by 100 basis points and increase capital injections in open market operations in the second quarter of 2012. Furthermore, he looks steps to be taken for additional easing through tax breaks for small companies and fiscal spending in the public sector. “Gold historically has performed well in an easy monetary policy environment,” Steel says.

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

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