WEEKLY BULLION REPORT-4 Aug 2014 To 9 Aug 2014
GOLD
Gold recovered a few dollars after a lackluster jobs report in the US, but will most likely give back the gains on Monday as traders have no re-evaluated the results.The US created over 200k jobs and the three month average remained high with upward revision to the May and June reports. There were also worries about the ripple effects from Argentina, which again defaulted on its debt, and tensions between the West and Russia over that country’s support of Ukrainian rebels blamed for shooting down an airliner last month. On top of it all, cracks in stock markets are appearing at a time when indexes are close to all-time highs and the bull market has run practically non-stop for over five years. Nervous investors looking for safety pushed December gold up gained $12 to $1,294.80. Gold prices rose the most in a week after U.S. employers added fewer workers than forecast last month, increasing pressure on the Federal Reserve to maintain lower interest rates. Fed policy makers this week said they will keep their benchmark rate low until wages accelerate and more workers find jobs. This year, gold has climbed 7.7 %,partly on concern that the U.S. recovery would falter.
SILVER
Silver recovered a bit on Friday to trade at 20.473. Precious metals relative weakness at the end of the week was the result of easing fears over the political situation in Ukraine. Concerns reached a climax after the shooting down of a passenger jet on July 17 near the Russian border. The output and new orders components picked up showing strong domestic demand, while export orders, which had been lagging also improved, as encouraging recent U.S. economic indicators lessened the metal’s safe-haven appeal. Nervous investors looking for safety pushed December gold up gained $12 to $1,294.80. Gold prices rose the most in a week after U.S. employers added fewer workers than forecast last month, increasing pressure on the Federal Reserve to maintain lower interest rates. Fed policy makers this week said they will keep their benchmark rate low until wages accelerate and more workers find jobs. This year, gold has climbed 7.7%, partly on concern that the U.S. recovery would falter.
CRUDE OIL
Crude Oil continued to decline to trade at 97.32 while Brent Oil tumbled to 105.10 on Friday. Oil prices were mixed on Friday, coming under pressure following a sell-off on Wall Street and concerns about unplanned refinery shutdowns in the US Midwest. Analysts said oil prices were also pressured by reports that a number of oil refineries in the US Midwest were experiencing outages.The concern is that crude inventories will build at the closely-watched Cushing,Oklahoma oil-trading hub where WTI is priced, with the supply glut dampening prices. Another key factor was news of the outage of CVR Refining LP’s 115,000-barrel-a-day refinery in Coffeyville, Kan., which the company said could be off line for a month, following a fire earlier in the week. The refinery draws supply directly from the Cushing, Okla, delivery hub for the U.S. benchmark contract crude oil. The resulting loss of demand from the stoppage could arrest a month’s long trend of declining oil stocks at Cushing that has been a bullish driver in the market for most of this year.
NATURAL GAS
Natural Gas remained in a fairly tight range near the bottom of its 2014 prices as summer temperature never really developed in the US. Traders are hoping that August temperatures will raise and that they will see an Indian summer with temperatures remaining high through October. Producers added 88 billion cubic feet of gas to storage in the week ended July 25, the U.S. EIA Said. It was the second week in a row that the storage gain was less than expected. The U.S. is racing to rebuild stockpiles depleted by extraordinary heating demand during the recent severe winter. Though last week’s inventory increase was nearly twice the average for this time of year, stored supplies totaling 2.3 trillion cubic feet are still well below year-ago and average levels. Analysts believe the U.S.needs to reach a level of about 3.5 trillion cubic feet by the beginning of November to have adequate supplies for the fall and winter. Market prices have declined nearly 20% in the last six weeks as the threat of low inventories has receded amid a string of huge storage increases, and the weather has cooperated with a mild summer that has required limited demand for gas to power air conditioning. The most recent forecasts look for that trend to continue, though the unusual cool weather that has prevailed in recent weeks is expected to give way to warmer temperatures in the first half of August.
COPPER
Copper eased at the end of the week to close at 3.228. The latest jump came after the Chinese manufacturing purchasing managers’ index (PMI) indicated that the world’s second largest economy accelerated into the third quarter.The official manufacturing PMI for July came in at 51.7, up from 51.0 in June, the highest since May 2012. A reading above 50 indicates expansionary conditions for industry. The output and new orders components picked up showing strong domestic demand, while export orders, which had been lagging also improved.The HSBC/Markit manufacturing PMI which surveys smaller firms, increased to 51.7 compared to June’s 51 reading, also beating expectations and rising to an 18- month peak. Private industry in China appears to have caught up to large state-led companies as Beijing improves access to finance for small firms and stimulate activity through infrastructure spending including rebuilding shanty towns and upping investment in rail and power infrastructure. Defying market expectations,the copper price dug itself out of a near four-year low struck mid-March of $2.92a pound and has gained more than 7% since early June. The metal is now down only 4% in 2014. The copper price is highly correlated with economic growth thanks to the widespread use of the metal in the construction, transport and power industries, and the robustness of the red metal is prompting industry to switch to much cheaper aluminum for some applications.
Gold recovered a few dollars after a lackluster jobs report in the US, but will most likely give back the gains on Monday as traders have no re-evaluated the results.The US created over 200k jobs and the three month average remained high with upward revision to the May and June reports. There were also worries about the ripple effects from Argentina, which again defaulted on its debt, and tensions between the West and Russia over that country’s support of Ukrainian rebels blamed for shooting down an airliner last month. On top of it all, cracks in stock markets are appearing at a time when indexes are close to all-time highs and the bull market has run practically non-stop for over five years. Nervous investors looking for safety pushed December gold up gained $12 to $1,294.80. Gold prices rose the most in a week after U.S. employers added fewer workers than forecast last month, increasing pressure on the Federal Reserve to maintain lower interest rates. Fed policy makers this week said they will keep their benchmark rate low until wages accelerate and more workers find jobs. This year, gold has climbed 7.7 %,partly on concern that the U.S. recovery would falter.
SILVER
Silver recovered a bit on Friday to trade at 20.473. Precious metals relative weakness at the end of the week was the result of easing fears over the political situation in Ukraine. Concerns reached a climax after the shooting down of a passenger jet on July 17 near the Russian border. The output and new orders components picked up showing strong domestic demand, while export orders, which had been lagging also improved, as encouraging recent U.S. economic indicators lessened the metal’s safe-haven appeal. Nervous investors looking for safety pushed December gold up gained $12 to $1,294.80. Gold prices rose the most in a week after U.S. employers added fewer workers than forecast last month, increasing pressure on the Federal Reserve to maintain lower interest rates. Fed policy makers this week said they will keep their benchmark rate low until wages accelerate and more workers find jobs. This year, gold has climbed 7.7%, partly on concern that the U.S. recovery would falter.
CRUDE OIL
Crude Oil continued to decline to trade at 97.32 while Brent Oil tumbled to 105.10 on Friday. Oil prices were mixed on Friday, coming under pressure following a sell-off on Wall Street and concerns about unplanned refinery shutdowns in the US Midwest. Analysts said oil prices were also pressured by reports that a number of oil refineries in the US Midwest were experiencing outages.The concern is that crude inventories will build at the closely-watched Cushing,Oklahoma oil-trading hub where WTI is priced, with the supply glut dampening prices. Another key factor was news of the outage of CVR Refining LP’s 115,000-barrel-a-day refinery in Coffeyville, Kan., which the company said could be off line for a month, following a fire earlier in the week. The refinery draws supply directly from the Cushing, Okla, delivery hub for the U.S. benchmark contract crude oil. The resulting loss of demand from the stoppage could arrest a month’s long trend of declining oil stocks at Cushing that has been a bullish driver in the market for most of this year.
NATURAL GAS
Natural Gas remained in a fairly tight range near the bottom of its 2014 prices as summer temperature never really developed in the US. Traders are hoping that August temperatures will raise and that they will see an Indian summer with temperatures remaining high through October. Producers added 88 billion cubic feet of gas to storage in the week ended July 25, the U.S. EIA Said. It was the second week in a row that the storage gain was less than expected. The U.S. is racing to rebuild stockpiles depleted by extraordinary heating demand during the recent severe winter. Though last week’s inventory increase was nearly twice the average for this time of year, stored supplies totaling 2.3 trillion cubic feet are still well below year-ago and average levels. Analysts believe the U.S.needs to reach a level of about 3.5 trillion cubic feet by the beginning of November to have adequate supplies for the fall and winter. Market prices have declined nearly 20% in the last six weeks as the threat of low inventories has receded amid a string of huge storage increases, and the weather has cooperated with a mild summer that has required limited demand for gas to power air conditioning. The most recent forecasts look for that trend to continue, though the unusual cool weather that has prevailed in recent weeks is expected to give way to warmer temperatures in the first half of August.
COPPER
Copper eased at the end of the week to close at 3.228. The latest jump came after the Chinese manufacturing purchasing managers’ index (PMI) indicated that the world’s second largest economy accelerated into the third quarter.The official manufacturing PMI for July came in at 51.7, up from 51.0 in June, the highest since May 2012. A reading above 50 indicates expansionary conditions for industry. The output and new orders components picked up showing strong domestic demand, while export orders, which had been lagging also improved.The HSBC/Markit manufacturing PMI which surveys smaller firms, increased to 51.7 compared to June’s 51 reading, also beating expectations and rising to an 18- month peak. Private industry in China appears to have caught up to large state-led companies as Beijing improves access to finance for small firms and stimulate activity through infrastructure spending including rebuilding shanty towns and upping investment in rail and power infrastructure. Defying market expectations,the copper price dug itself out of a near four-year low struck mid-March of $2.92a pound and has gained more than 7% since early June. The metal is now down only 4% in 2014. The copper price is highly correlated with economic growth thanks to the widespread use of the metal in the construction, transport and power industries, and the robustness of the red metal is prompting industry to switch to much cheaper aluminum for some applications.
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