WEEKLY BULLION REPORT-15 Sep To 20 Sep 2014
PRECIOUS METALS
GOLD
Gold fell toward a three-month low as investors assessed the outlook for higher U.S. interest rates and a strengthening dollar amid easing tensions in Ukraine. Gold may continue to struggle until the Federal Reserve’s two-day policy meeting next week that could provide clues on when the US central bank would hike rates. Higher rates would dent demand for non-interest yielding assets such as gold. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, is holding 788.72 tonnes as per latest data available. Further, gold’s safe-haven demand was curbed after Ukraine’s president said on Wednesday that Russia had removed the bulk of its forces from his country, raising hopes for a peace drive now underway after five months of conflict in which more than 3,000 people have been killed. Gold prices tumbled to its lowest level in more than three months on bouts of heavy speculative unwinding against the backdrop of
fading demand.
SILVER
Retail consumption of silver fell mainly in China and India. Last month,the data from Indian Bullion & Jewellers Association (IBJA) showed, average silver imports in India between April 2014to July has come down to 70-80 MT.This sharply lower than around 330 Kg per month worth of imports which we did during the last fiscal year. Subdued demand and continued expectations that prices would become further cheaper over medium term has pushed traders and investors away for physical exposure. While expectations are healthy that major harvesting and festival season in and around Oct-Dec may boost some demand for the commodity. Overall silver commodity too continues to trade on a weaker note following above cues and also tracking the broader directional bearish trend in Gold.
ENERGY
Unsatisfied with a fragile cease-fire in Ukraine, the United States and the European Union levied new sanctions Friday against major Russian banks and defense companies, as well as penalties aimed at curtailing Russia's ability to develop oil and gas projects. But the restrictions on Russia's energy sector were carefully crafted to avoid impacting the country's current production of oil and gas, a move that would raise global energy prices at time of weak economic growth. Russia is the largest oil exporter outside of OPEC and the most important supplier of natural gas to Europe.
CRUDE OIL
Crude oil continues to trade down but has recovered from lows earlier this week. Crude is holding at 92.86 while Brent oil saw significant decline on Friday. The commodity fell to a 2014 low. WTI oil climbed 1 cent higher on Thursday rising on concerns that Western air strikes in Syria could lead to further confrontation with Russia. Syria said foreign intervention, including air raids,against Islamic State fighters without the approval of Damascus would be “an aggression against Syria” without a U.N. security mandate. Iran and six world powers face a “difficult road” to reach an agreement over Tehran’s nuclear program by a late November deadline. US President Barack Obama vowed to destroy jihadist militants in Syria and Iraq.Crude oil still weak due to comments in the International Energy Agency's (IEA) monthly report that weaker consumption in China and Europe had caused global oil demand growth to soften at a remarkable pace. The International Energy Agency (IEA) said in its monthly report on Thursday as it cut demand growth by 150,000 barrels per day for 2014 and 100,000 bpd for 2015. North America's shale oil boom has started to squeeze Saudi Arabian oil out of the U.S. market in the same way it did with West African crude, the West'senergy agency said on Thursday. The International Energy Agency also predicted a flood of U.S. gasoline exports to world market. The IEA projections showed that demand growth should slow while production continues to grow. They had Saudi exports at the lowest level in years, which is a sign of how weak demand is.”
NATURAL GAS
Natural Gas heavily declines on Thursday. U.S. natural-gas inventories rose 92 billion cubic feet on the week ended Sept. 5, the Energy Information Administration said Thursday. The increase was likely to pressure natural-gas futures prices, because it not only topped market expectations but also was 31 bcf more than the five-year average increases for the week, It has been a record pace for refilling storage, according to the EIA, and that has put pressure on prices in a mild summer.
BASE METALS
COPPER
Copper futures advanced, rebounding from a 12-week low, as a pickup in factory output in Europe and Japan eased concerns that global demand will slow. The metal dropped this past week on speculation that a decline in consumer inflation signaled lower demand in China. Reports in the U.S. showed gains in retail sales and consumer confidence, adding to signs that the nation’s economy is gaining traction.This was supposed to be a year of supply surplus for the copper market. The International Copper Study Group’s most recent monthly update assessed the global refined copper market as being in a 450,000-tonne deficit in the first five months of the year, or a 308,000-tonne deficit once movements in Shanghai bonded stocks are factored into the equation. Industrial production number from major consumers of metal in the world china showed 6.9% from forecast of 8.8%, down 2.1% from previous month. This data should affect all base metals heavily to trade down in this week.
ZINC
More refined zinc is likely to be shipped from bonded warehouses in China to warehouses approved by the London Metal Exchange in Asia in the fourth quarter as tight credit crimps domestic demand at a time of increased imports. Higher shipments from China, the world's top consumer and producer of refined zinc, to LME warehouses in Asia could cap LME zinc prices, which have risen more than 10 percent this year. Chinese importers had contracted more refined zinc for term shipments for delivery in 2014 and the bulk was set to be used as collateral for loans. But tight credit in China has slowed domestic demand this year, weighing on Chinese prices. Shanghai-based firm estimated there was more than 100,000 tonnes of refined zinc in bonded warehouses in Shanghai currently. China's refined zinc imports surged 39 percent to 421,130 tonnes in the first seven months of the year. Some bonded zinc stocks in Guangdong that have been used in financing deals with foreign banks have already been moved to LME warehouses in Asia after an alleged metals financing scam came to light in early June. The relocation was requested by foreign banks to secure the metal, even though it was alumina, aluminum and copper stocks in Qingdao port that were involved in the financing scam.
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GOLD
Gold fell toward a three-month low as investors assessed the outlook for higher U.S. interest rates and a strengthening dollar amid easing tensions in Ukraine. Gold may continue to struggle until the Federal Reserve’s two-day policy meeting next week that could provide clues on when the US central bank would hike rates. Higher rates would dent demand for non-interest yielding assets such as gold. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, is holding 788.72 tonnes as per latest data available. Further, gold’s safe-haven demand was curbed after Ukraine’s president said on Wednesday that Russia had removed the bulk of its forces from his country, raising hopes for a peace drive now underway after five months of conflict in which more than 3,000 people have been killed. Gold prices tumbled to its lowest level in more than three months on bouts of heavy speculative unwinding against the backdrop of
fading demand.
SILVER
Retail consumption of silver fell mainly in China and India. Last month,the data from Indian Bullion & Jewellers Association (IBJA) showed, average silver imports in India between April 2014to July has come down to 70-80 MT.This sharply lower than around 330 Kg per month worth of imports which we did during the last fiscal year. Subdued demand and continued expectations that prices would become further cheaper over medium term has pushed traders and investors away for physical exposure. While expectations are healthy that major harvesting and festival season in and around Oct-Dec may boost some demand for the commodity. Overall silver commodity too continues to trade on a weaker note following above cues and also tracking the broader directional bearish trend in Gold.
ENERGY
Unsatisfied with a fragile cease-fire in Ukraine, the United States and the European Union levied new sanctions Friday against major Russian banks and defense companies, as well as penalties aimed at curtailing Russia's ability to develop oil and gas projects. But the restrictions on Russia's energy sector were carefully crafted to avoid impacting the country's current production of oil and gas, a move that would raise global energy prices at time of weak economic growth. Russia is the largest oil exporter outside of OPEC and the most important supplier of natural gas to Europe.
CRUDE OIL
Crude oil continues to trade down but has recovered from lows earlier this week. Crude is holding at 92.86 while Brent oil saw significant decline on Friday. The commodity fell to a 2014 low. WTI oil climbed 1 cent higher on Thursday rising on concerns that Western air strikes in Syria could lead to further confrontation with Russia. Syria said foreign intervention, including air raids,against Islamic State fighters without the approval of Damascus would be “an aggression against Syria” without a U.N. security mandate. Iran and six world powers face a “difficult road” to reach an agreement over Tehran’s nuclear program by a late November deadline. US President Barack Obama vowed to destroy jihadist militants in Syria and Iraq.Crude oil still weak due to comments in the International Energy Agency's (IEA) monthly report that weaker consumption in China and Europe had caused global oil demand growth to soften at a remarkable pace. The International Energy Agency (IEA) said in its monthly report on Thursday as it cut demand growth by 150,000 barrels per day for 2014 and 100,000 bpd for 2015. North America's shale oil boom has started to squeeze Saudi Arabian oil out of the U.S. market in the same way it did with West African crude, the West'senergy agency said on Thursday. The International Energy Agency also predicted a flood of U.S. gasoline exports to world market. The IEA projections showed that demand growth should slow while production continues to grow. They had Saudi exports at the lowest level in years, which is a sign of how weak demand is.”
NATURAL GAS
Natural Gas heavily declines on Thursday. U.S. natural-gas inventories rose 92 billion cubic feet on the week ended Sept. 5, the Energy Information Administration said Thursday. The increase was likely to pressure natural-gas futures prices, because it not only topped market expectations but also was 31 bcf more than the five-year average increases for the week, It has been a record pace for refilling storage, according to the EIA, and that has put pressure on prices in a mild summer.
BASE METALS
COPPER
Copper futures advanced, rebounding from a 12-week low, as a pickup in factory output in Europe and Japan eased concerns that global demand will slow. The metal dropped this past week on speculation that a decline in consumer inflation signaled lower demand in China. Reports in the U.S. showed gains in retail sales and consumer confidence, adding to signs that the nation’s economy is gaining traction.This was supposed to be a year of supply surplus for the copper market. The International Copper Study Group’s most recent monthly update assessed the global refined copper market as being in a 450,000-tonne deficit in the first five months of the year, or a 308,000-tonne deficit once movements in Shanghai bonded stocks are factored into the equation. Industrial production number from major consumers of metal in the world china showed 6.9% from forecast of 8.8%, down 2.1% from previous month. This data should affect all base metals heavily to trade down in this week.
ZINC
More refined zinc is likely to be shipped from bonded warehouses in China to warehouses approved by the London Metal Exchange in Asia in the fourth quarter as tight credit crimps domestic demand at a time of increased imports. Higher shipments from China, the world's top consumer and producer of refined zinc, to LME warehouses in Asia could cap LME zinc prices, which have risen more than 10 percent this year. Chinese importers had contracted more refined zinc for term shipments for delivery in 2014 and the bulk was set to be used as collateral for loans. But tight credit in China has slowed domestic demand this year, weighing on Chinese prices. Shanghai-based firm estimated there was more than 100,000 tonnes of refined zinc in bonded warehouses in Shanghai currently. China's refined zinc imports surged 39 percent to 421,130 tonnes in the first seven months of the year. Some bonded zinc stocks in Guangdong that have been used in financing deals with foreign banks have already been moved to LME warehouses in Asia after an alleged metals financing scam came to light in early June. The relocation was requested by foreign banks to secure the metal, even though it was alumina, aluminum and copper stocks in Qingdao port that were involved in the financing scam.
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