WEEKLY BULLION REPORT-25 Aug To 30 Aug 2014

GOLD

Gold climbed $6.70 as trades bought up the cheap commodity ahead of Janet Yellen’s speech later today at Jackson Hole. Gold is holding at 1282.10 after falling from the 1302 price on Thursday. The dollar was just below its 2014 peak against a basket of major currencies on Friday boosted by upbeat U.S. manufacturing data, a strong U.S. jobs market recovery and hints from the U.S. Federal Reserve that interest rates could rise sooner than expected. Investors waited for a speech by Federal Reserve Chair Janet Yellen later on Friday at the central bankers’meeting in Jackson Hole. Gold plunged to its lowest price in two months after the US Federal Reserve’s minutes sparked fear of an earlier-than-thought interest rate rise in the US. Analysts say the precious metal it could plunge further in reaction to any signs of hawkish movement at the Jackson Hole central bankers’ meeting over the weekend. The price was hit hard by the minutes from the Federal Reserve’s meeting on Thursday morning (Australian time) showing members debated the possibility of an earlier interest rate rise, leading tospeculation the rate could rise as early as March next year.

SILVER

Silver gained 98 points but remained in its tight trading range at 19.513. Data released on Thursday showing US home resales raced to a 10-month high in July and a fall in the number of Americans filing new claims for jobless benefits last week signaled strength in the economy, dulling the metals appeal as a safe haven. Investors fear strong data will prompt the Fed to raise interest rates soon. Higher rates would hurt noninterest bearing assets such as silver. Markets are eyeing Fed chairwoman Janet Yellen’s speech at the annual gathering of central bankers in Jackson Hole, Wyoming, later on Friday.

CRUDE OIL

Crude Oil fell 42 cents to trade at 93.54 while Brent Oil dipped 28 cents to exchange at 102.35 on a quiet trading day. Traders and speculators are sitting tight looking for some fundamental or geopolitical reason to push prices up. Oil and metal prices backed off as the preliminary version of HSBC’s manufacturing index for China fell to a three-month low of 50.3 from 51.7 in July, indicating that manufacturing businesses are barely growing. The HSBC report adds to other recent indicators that the recovery is still shaky. Earlier this month, data showed that China’s exports accelerated but imports sagged, which may reflect weakening domestic demand. Also, the purchasing managers’ index for the eurozone published by Markit Economics fell to 52.8 from 53.8 in July. The report followed other data earlier this month that showed the 18-country eurozone grew at only a slow pace in August, a sign it remains sluggish after a disappointing second quarter in which it did not expand at all. Analysts said the market appeared to be pausing after hefty sell offs which have driven Brent to its lowest level since June 2013. A contango describes a market structure where prompt barrels trade more cheaply than those for delivery at future dates. ICE Brent futures reflect this, with the October contract trading at a 74 cent discount to the November contract. Libya’s oil production, although still below the year-ago levels of about 1.4 million barrels per day (bpd), has risen to 612,000 bpd. This is well above the lows of 100,000 bpd seen earlier this year. Plentiful supplies mean that physical crude cargoes have been changing hands at multi-year lows in recent weeks as sellers struggle to offload unwanted barrels in the face of weak refinery demand. This has prompted a large liquidation of positions in the futures market.

NATURAL GAS

Natural Gas gave up 38 points after Thursdays EIA official inventory to trade at 3.851. Forecasts called for above-normal temperatures to sweep across the Midwest to the Southeast over the next five days, according to Commodity Weather Group. The forecast was warmer for the regions than yesterday’s models showed. Gas inventories have rebounded at a record pace since March as unusually mild weather in the eastern and central states reduced air-conditioning demand.

COPPER

Copper edged up 18 points on strong US data. Copper is trading just below the 3.20 level. The dollar hovered just below its 2014 peak against a basket of major currencies early on Friday. Data released on Thursday showing US home resaled raced to a 10-month high in July and a fall in the number of Americans filing new claims for jobless benefits last week signaled strength in the economy, dulling the metals appeal as a safe haven. Investors fear strong data will prompt the Fed to raise interest rates soon. Copper in London rose to a two-week high, heading for the first weekly advance in a month on stronger-than-expected U.S. homes sales and before a speech by Federal Reserve Chair Janet Yellen. Existing home sales last month climbed to a 5.15 million annual pace, the highest since September, the National Association of Realtors reported yesterday. The median forecast in a Bloomberg survey called for 5.02 million. Builders are the biggest users of copper.

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