WEEKLY BULLION REPORT-27 Oct To 1 Nov 2014

Commodity Tips
PRECIOUS METAL

GOLD
Gold closed the week in the red at 1230.90 falling almost $20 for the week. A report from the US Commerce Department showed new home sales to have inched up 0.2% to an annualized rate of 467,000 in September from the revised August rate of 466,000. Economists expected new home sales to drop to a rate of 460,000 from the 504,000 originally reported for the previous month.

In economic news from eurozone, German consumer confidence index rose slightly to 8.5 in November, up from 8.4 in the preceding month, a report from market research group GfK showed. The score was forecast to fall to 8.Elsewhere in Europe, the UK economy grew at a slower pace in the third quarter in face of rising uncertainty stemming from global economic conditions, preliminary estimates from the Office for National Statistics Office showed Friday. Gross domestic product climbed 0.7% from the second quarter, when it grew 0.9%. The sequential growth rate was in line economists’ expectations.

Gold futures snapped a two-day loss to end higher Friday, on lingering concerns over the health of the eurozone economy, notwithstanding an unexpected improvement in German consumer sentiment in November. On Thursday, gold futures ended down 16.40 or 1.3% at USD1,229.10 an ounce, losing for a second straight session, as some upbeat corporate earnings reports and economic data from China and the eurozone prompted traders to go for riskier assets. A stronger greenback also weighed on the yellow metal.

SILVER
Silver ended the week at 17.197 close to its lowest this month taking cues from gold. next main market focus will be on the Federal Reserve’s meeting on Tuesday and Wednesday. The consensus view is that the US central bank will decide to wrap up asset purchases under its third round of quantitative easing. Markets will be looking for any clues on the timing of its first interest rate increase. Precious metals has benefited in the years after the 2008 financial crisis from low interest rates and increased central bank liquidity. The fall in Chinese home prices in September wiped out gains scored in the past year, raising expectations the government will have to implement more economic support measures to cushion the blow.

ENERGY

CRUDE OIL
Crude Oil ended the week on a low note at 81.30 down by 79 cents on Friday, while Brent Oil gave up 60 cents on Friday to end at 86.23. Global oil futures have posted a fifth weekly loss as concerns about high global supply continued to weigh on prices.Prices have tumbled for months as supply growth has outpaced demand. Market participants are waiting to see whether the Organization of the Petroleum Exporting Countries, and specifically Saudi Arabia, will cut production to raise prices. OPEC’s next meeting is November 27. Saudi Arabia sold less crude domestically and for export in September, but its production increased, an industry official familiar with the matter said on Thursday. According to reports Saudi Arabia shipped 9.36 million barrels a day last month, down 328,000 barrels a day from August. However, Saudi Arabia’s oil production was up slightly last month, at 9.70 million barrels a day.OPEC had earlier indicated the cartel will maintain its output without any cut in production,with some member countries preferring to slash prices in order to gain share of the market.Last week, US oil prices had tumbled to the lowest level in more than 2 years, amid concerns over excess supply globally, with OPEC member countries reportedly unwilling to cut crude production. Investors also were closely watching also the impact of the spreading Ebola virus outbreak on global economies. ‘Fresh concern over Ebola is really the last thing we like to see right now, which may have an overhang effect on oil demand,’ said Desmond Chua, market analyst at CMC Markets.

NATURAL GAS
Natural Gas recovered a few points on Friday after falling all week to touch 2014 lows.Natural gas is trading at 3.629. Natural gas continues to trade weak after the weekly inventory data released yesterday showed fourth-largest additions ever for a week in October.The Energy Information Agency data released yesterday showed an addition of 94 billion cubic feet of gas to storage for the week ended Oct. 17, compared to the expectation of 97 billion cubic feet. The commodity did recover from the low of USD 3.59 Thursday although it proved to be a dead-cat bounce since prices are back to the same level at the end of the week. Traders are keeping a close watch on the EIA’s updates to gauge how quickly stockpiles are filling up after increased demand last winter left them at an 11-year low. Prices have fallen in seven of the last eight trading days, weighed by record production. Demand, meanwhile, has been tempered by unusually warm weather in what is already typically a seasonal lull in natural-gas use.

BASE METALS

COPPER
Copper was flat on Friday but recovered from the weeks low at the 2.99 range to end at 3.039 on relief over Chinese data. Strong global economic data on Thursday calmed investor nerves after a recent sell-off, prompting many to pull out of precious metals and other assets perceived as safe. The next main market focus will be on the Federal Reserve’s meeting on Tuesday and Wednesday. The consensus view is that the US central bank will decide to wrap up asset purchases under its third round of quantitative easing. Markets will be looking for any clues on the timing of its first interest rate increase.

Copper, aluminium and other base metals lost ground on Friday after Chinese house prices fell for a fifth straight month, highlighting concerns about economic growth in the world’s biggest metals consumer. The fall in Chinese home prices in September wiped out gains scored in the past year, raising expectations the government will have to implement more economic support measures to cushion the blow.

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