WEEKLY BULLION REPORT-29 Sep To 4 Oct 2014

GOLD

Gold remain flat climbing on safe haven trades after the US led coalition bombed ISIS troops in Syria. Political turmoil and military conflict in certain global hotspots has typically sent gold prices soaring. There’s plenty of that now, but gold is near its low for the year. Gold added to overnight gains on Wednesday as Asian shares retreated, but investors remained cautious amid a firmer dollar and upbeat US manufacturing data that kept prices near their lowest since January.US-led strikes against militants in Syria failed to spur follow-through safe-haven demand for gold after small gains on Tuesday. Gold is traditionally seen as a safer bet during times of political uncertainty.Indian traders said increased buying by jewelers and retailers to meet the coming festive and wedding season demand mainly kept precious metals higher. They said a firming global trend on signs of more physical demand amidst escalating tensions in the Middle East also bolstered the sentiment.

SILVER

Silver remain in a tug-of-war. Heightened geopolitical tensions continue to offer the alternative assets a source of support. Yet the resilience of the US Dollar has likely weighed on the precious metals. These opposing forces could keep the commodities in line for a period of consolidation. Indian traders said increased buying by jewelers and retailers to meet the coming festive and wedding season demand mainly kept precious metals higher. They said a firming global trend on signs of more physical demand amidst escalating tensions in the Middle East also bolstered the sentiment.

CRUDE OIL

Crude Oil gave up 12 cents to trade at 91.45 and Brent Oil tumbled by 39 cents to reach 96.46. The oil price was under a relatively strong pressure yesterday and after breaching a support at 97.5 USD/bbl, the price of the front-month contract on Brent (ICE) fell by about 1.5%. Although better than expected HSBC China’s PMI (preliminary estimate for September) provide some support, news about resumption of oil production at Libya’s El Sharara oil field should limit a room for stronger gains. The week-long disruption put a pause to returning supplies in Libya, a member of the OPEC cartel, after a nearly year-long blockade by rebels of oil terminals. The country remains mired in political turmoil due to inter-militia fighting.

NATURAL GAS

Natural Gas gained 9 points ahead of tomorrow’s EIA weekly inventory report.The commodity is trading at 3.878. Natural-gas prices have stayed fairly subdued in recent months as a mild summer has kept demand for air-conditioning low,reducing the need for gas-powered electricity. And winter demand for natural gas as a heating fuel has yet to kick in. Meanwhile, natural-gas production has been robust, calming some earlier fears that stockpiles would stay severely low after supplies were depleted by a frigid winter.

COPPER

Copper eased by 1 point to trade at 3.035. Copper rebounds from a three-month low on Tuesday as HSBC China’s manufacturing PMI instead of expected deterioration surprised slightly to the upside. Part of the market clearly feared that the headline index could drop below the 50 mark. copper is seen well below 6800 USD/t after it breached below a minor support at 6820 USD/t and as a China’s official said yesterday that the government would not overreact to disappointing data. The persisting high production of copper mines, the gradual elimination of the stocks of copper concentrates of the previous months, and a slower improvement of Chinese demand for the metal should drive the price of copper downwards late this year and next year.Other factors with the same impact include the likely continuation of the appreciation of the US dollar and lower financial demand for copper in China.The main risks to this scenario include, in particular, a slower launch of production at foundries, the final rate of economic growth, notably in China and the condition of China’s banking sector.

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