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Market Nuggets: Barclays: 109 Metric Tons Of Gold ETP Holdings Still Cash Negative

Friday May 24, 2013 11:14 AM

Barclays estimates that 109 metric tons of global gold exchange-traded-product holdings are still cash negative, meaning potential for future liquidation. Net redemptions have hit 94 metric tons so far in May, with year-to-date outflows in the 55 physically backed products tracked by Barclays at 443 tons. "As we have highlighted previously, net inflows above the $1,500/oz level are the most vulnerable in the near term; the build in holdings above that price point is sizeable but also represents the interest that is relatively new," Barclays says. "The minimum amount of cash negative holdings has now fallen to 109 tons; thus, in our view, prices continue to be exposed to downside risk in the near term. But once this metal is flushed out, we believe prices are more likely to stabilize."

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


Market Nuggets: Barclays: Copper Range-Bound Amid Supply Issues, Slower Chinese Manufacturing

Friday May 24, 2013 11:12 AM

The combination of weaker-than-expected Chinese manufacturing data and supply issues are likely to keep copper range-bound for now, says Barclays Capital. Data Thursday showing Chinese manufacturing activity contracted in May does not bode well for futures metals demand, the bank says. Meanwhile, Freeport McMoRan Copper & Gold’s Grasberg mine in Indonesia has been closed for more than a week now following tunnel collapse that killed 28, with the company planning to do a full safety check of all facilities before resuming production. “It is difficult to tell at this point how much production could be lost as a result,” Barclays says. “But the mine had been ramping up from 327Kt in 2012 to 535Kt in 2013; so for every week the mine does not produce, 5-7Kt of production could be lost. That the mine itself was not damaged means there is no operational reason for the production stoppage and things could be restarted quickly. That said, there is the potential for losses to be protracted given the upcoming negotiations with the unions. With global copper mine production losses now beginning to stack up, the run of strong y/y mine production growth could be threatened.”


Market Nuggets: Deutsche Bank: Base Metals 'Vulnerable' Due To Chinese Economic Concerns

Friday May 24, 2013 8:40 AM

Recently softer Chinese economic data are increasing concerns about deteriorating fundamentals for industrial base metals as the calendar approaches the mid-year summer slowdown, says Deutsche Bank. “While recent short covering in the metals complex has resulted in some recent strength, we expect this will be short-lived,” the bank says. “Copper in particular remains vulnerable to underperform versus the rest of the complex.” The bank points out that aluminum had a strong showing over the last week. “Despite this, we believe that industrial metals prices remain vulnerable in an environment where Chinese manufacturing sector activity has contracted to its lowest level in seven months,” Deutsche Bank says. “However, on our macro assumptions, the current weakness in Chinese real economy data will prove short-lived.”

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


Market Nuggets: UBS: Gold Diverged From Equities; Rotation Into Stocks May Moderate

Friday May 24, 2013 8:00 AM

Gold has diverged with equities over the last six months, a reversal of the positive correlation from much of 2012, says UBS. This was highlighted on Thursday when gold rose as Tokyo's Nikkei index plunged more than 7% and European equity indices flashed red, before a recovery in U.S. stocks capped gold's upside. "The strong rally in equities this year has presented an obstacle for gold," UBS says. "First, because this indicates an improvement in investor risk appetite, which makes safe havens like gold seemingly less relevant. And second, because this means gold will now have to compete with other assets for investor dollars." There are no clear signals when the trend will change, with the outlook for equities remaining positive, UBS says. Still, "some moderation of the trend of rotating out of gold in favor of equities may be in store," UBS says. "Much of this has already been done, particularly over the last five months, and the rally in equities and global growth surprise indices has somewhat stalled of late. And finally, gold's resilience in spite of very weak investor sentiment is encouraging, with recent price levels having acted as a good floor so far."

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


Market Nuggets: Societe Generale Looks For Short-Covering Rally In Gold

Friday May 24, 2013 7:58 AM

Societe Generale sees potential for a short-covering bounce in gold after the weakness that has occurred this spring. Short covering is buying by traders to exit, or cover, positions in which they previously sold. "Our current forecast for gold's annual price for 2013 is $1,500/ounce; on a marked to market basis this would require an average for the rest of the year of $1,454," Societe Generale says. "With the market in a dismal mood this may appear somewhat optimistic, but we must bear in mind that the outright short position on Comex, at almost 450 tons, is at a record level and we should expect the price to bounce from a heavily oversold position…We may modify our outlook for the price in our forthcoming commodities review, but it is certainly arguable that after such a heavy fall we must expect a short-covering rally."

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


Market Nuggets: SocGen: New Indian Gold Import Rules May Not Be As 'Draconian' As Feared

Friday May 24, 2013 7:56 AM

New Indian gold-import regulations may not be as "draconian' as headlines might imply, says Societe Generale. India is one of the world's largest gold consumers, but the government has been concerned for some time about the impact on gold imports on the country's trade deficit and has implemented a number of changes, including hiking tax rates on gold imports. More recently, local banks' gold imports on a consignment basis were restricted, resulting in a drop in import orders since jewelers are unclear about how to place orders and it may take time for the market to respond to the changes, says Societe Generale. However, certain agencies and private bullion dealers are continuing to import gold. "While press headlines may be suggesting that the tax changes have had a substantial impact on gold imports into India, there may be an element of exaggeration here," Societe Generale says. "Seasonal factors are also important, with Akshaya Tritiya now passed for the year. Recent (i.e. following the festival) conversations with jewelrs suggest that many are waiting for further price falls before they start replenishing their inventory levels."

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


Market Nuggets: LBMA: Anyang Yubei Gold and Lead Co. Added To Silver Good Delivery List

Friday May 24, 2013 7:54 AM

The Chinese silver refinery of Anyang Yubei Gold and Lead Co., Ltd. has been added to the London Bullion Market Association’s Good Delivery List, effective Friday. Anyang Yubei is located in Anyang City, Henan Province. Its primary sources of silver feedstocks are anode slimes recovered from its lead electrolysis production operations, the LBMA says in an announcement. Anyang Yubei’s refined silver output is mainly in the form of bars for investment, jewelry or other industrial purposes. The London Good Delivery List for gold and silver, copyrighted by the LBMA, includes refiners whose gold and silver bars have been found, when originally tested, to meet the required standard for acceptability in the London bullion market. The list now includes 65 gold and 75 silver refiners.

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


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