WEEKLY BULLION REPORT-8 Sep To 13 Sep 2014

PRECIOUS METALS

GOLD
Gold posts third weekly drop in four on Ceasefire in Ukraine dents safe-haven demand, Asian physical premium rises, SPDR ETF holdings down.Investment demand also looks weak with SPDR holdings witnessing the biggest outflow in almost two months. Holdings fell 4.78 tonnes to 785.73 tonnes. On the supply side, Russian gold production rose 23.7% YoY in the first seven months of 2014. Gold prices rose on Friday, recovering from their lowest in nearly three months hit earlier in the session, after disappointing U.S. payrolls data tempered speculation that the Federal Reserve will raise interest rates any time soon. Also, Gold ended lower this week as investors weighed the impact of the European Central Bank's more accommodative policy stance. Gold prices spent the day (Thursday) meandering between slight gains and losses as investors weighed the ECB's surprise decision to cut interest rates in addition to announcing two bond purchasing programs. The ECB cuts its benchmark refinancing rate and deposit rate by 0.10% to 0.05% and -0.2% resp. which sent the euro in a tailspin versus most currencies. The more aggressive policy move reflects that officials have grown increasingly concerned over the recent period of very low inflation and the threat it holds to the region's economic recovery.In addition, The US gold coin sales have witnessed a disappointing performance in the last few months. Gold coin sales stood at 25,000 ounces in August of this year, up substantially from the 11,500 ounces in sales reported for August 2013. However, year-to-date sales for 2014 amount to 331,500 gold ounces, a massive drop of 54% from comparable year sales of 691,000 ounces as the same time period of 2013. American Silver Eagle coin sales are also down significantly from last year, US Mint stated.

Gold was also under pressure after Thursday data showed that U.S.companies hired workers at a steady clip in August and services sector activity accelerated to 6-1/2-year high, assurances the economy was on track for sturdy growth in the third quarter.

SILVER
Silver for to be active December expiry contract at Comex too performed in a near similar passion as Gold commodity though the whitish metal remained a modest underperformer to Gold. Overall US economic cues for manufacturing, industrial and housing side continue to remain positive and thus making Bullion unattractive. Though silver as a commodity do gets some support from positive industrial growth as nearly 55-60% of its usage come from that segment, that too could not help silver against falling from its weekly high as gold too fell sharply. Also despite economic releases came positive in the US, EU region disappointed whereas the LMEX Index after rising by over 2.5% in previous week; fell 0.3% this week further inflicting silver performance. Overall looking at broader cues for the Bullion segment,
negativity remains in silver. Silver may get some support amidst extended optimism about global manufacturing sector.

ENERGY

CRUDE OIL
Finally, the WTI crude in the US gave more weight to its own fundamentals rather than just following the other major international benchmark, the ICE Brent wherein the commodity sliding down due to the broad weakness in fundamentals. As per the EIA report, crude supplies tumbled 905,000 barrels to 359.6 million for the week ended August 29, which was nearly in-line with markets anticipation of a drop in the range of 1.1 million. Product inventories,particularly the gasoline stocks produced a better decline of around 2.3 million barrels moving to its lowest level this year and finally recording moderate demand led by the long week holiday amidst Labour Day. Stocks for distillate fuel though added 605,000 barrels. Despite the good gasoline stock fall, broad bias in the commodity continue to be negative led by continued supply side increase in the global markets whereas in the US too, markets started focusing on the lean demand phase starting between September to early November. As per the latest data, Refineries utilization fell to 93.3% down 0.2% and likely that it would continue its broad decline in the coming months.

NATURAL GAS
Natural gas prices recorded huge slump in this week. Weather developments and last day’s EIA inventory number too supporting weakness.Commodity Weather Group LLC said, burst of heat in the Midwest and East over the next week will give way to seasonal readings from Sept second week through Sept. 16. The same aspect on a moderate note is getting reflected on the US CPC prediction over 6-10 days weather. Adding, EIA said NG storage rose by 79 BCF as against last week’s addition of 75 BCF and was modestly higher than expectations.

BASE METALS

U.S. Aug payrolls post smallest increase in 8 months. Nickel hits highestsince early July on supply worries. Tsingshan plans nickel pig iron output from
Jan.

COPPER
Copper edged up on Friday after lower-than-expected U.S. jobs data reassured investors that the Federal Reserve would not speed up plans to increase interest rates, though gains were capped by growing supplies. The metal, demand for which is seen by some as a broad gauge of economic health,was also underpinned by speculation that the European Central Bank's move to cut interest rates would help spur an economic revival in Europe. Copper demand has been lacklustre, and this was mainly due to the weak economic data out of Europe, China and Japan. However, given the recent announcements by (ECB president Mario) Draghi, I am optimistic that this should stimulate demand for industrial metals such as copper. Europe as a whole accounts for around 20 percent of the world's copper demand, the second-largest copper consuming region after China, which accounts for some 40 percent of copper demand.Still, any prospects for demand have been overshadowed by mounting supply, especially after Indonesian producers resumed shipments that had been halted since January over a tax and regulatory dispute.

NICKEL
Nickel prices edged to their highest since early July at $19,580 a tonne on worries over worsening ore shortages after a Philippine senator this week proposed banning exports to add more value in country. There was little clarity, however, over how likely the proposal was to pass or on any potential timescale.China's Tsingshan Group expects to start production at its Indonesian nickel pig iron smelter as soon as January, becoming the second plant to ramp up since new mineral processing laws came into force at the start of the year.

ALUMINIUM:
Two Japanese aluminium buyers have agreed to pay a producer a record premium of $420 per tonne for metal to be shipped in the October-December quarter, two sources directly involved in the quarterly pricing talks said on Friday.

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1 comment:

  1. Crudeoil gained as support seen due to rupee weakness after prices seen under pressure on weak demand and ample supplies as depicted by Epic research.

    ReplyDelete