WEEKLY BULLION REPORT-22 Dec To 27 Dec 2014

GOLD

Gold gained but held just under the $1200 price range with little real motivation today. The commodity is trading at 1199.10 up by $4.30 at this writing.  Gold traded little changed as it headed for the first weekly decline in three as higher equities and a stronger dollar curbed demand for the metal.  Gold edged up above $1,200 on Friday as buyers helped the metal hold up against rising equity markets, paring losses fuelled by worries over a looming hike in US interest rates.  A push in prices to above $1,230 an ounce last week from around $1,140 a week earlier has spurred caution among investors, said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo. “People are not overly bearish anymore. They have learned their lesson when gold rallied sharply, so they’re not bold enough to go short around these levels,” he said. A day earlier, the momentum caused by the Federal Reserve’s dovish policy push faded, leaving prices to close just fractionally higher. James Steel of HSBC said the rally on the major indexes was “choking off oxygen to gold,” though one might have expected bigger declines.

 

SILVER

Silver gained 54 points to trade at 15.988 having difficulty gaining above the $16 price level. Copper added 35 points as traders are hoping for some assistance from China in the next few days. Copper remains well below its trading range  at 2.888.  Copper rose on Friday on Beijing’s vow to build 7 million units of affordable housing in the coming year.  Copper edged higher on the possibility of a supply disruption in Africa and higher oil prices. Barrick Gold Corp said on Thursday it would suspend operations at its Lumwana copper mine in Zambia if legislation is passed to lift royalties on open-pit mining operations to 20% from 6% starting Jan. 1, 2015.  

COPPER

Copper added 16 points to trade at 3.036 climbing late in the North American session.  Newhome prices dropped in all but one city tracked by the government in October from the month before, according to the National Bureau of Statistics. Construction accounts for about 50% of China’s steel demand, Commonwealth Bank of Australia estimates, and the country is the largest ore buyer. China cut benchmark interest rates for the first time since July 2012 as leaders step up support for the world’s second-largest economy. The one-year deposit rate was lowered by 0.25 percentage point to 2.75%, while the one-year lending rate was reduced by 0.4 percentage points to 5.6%, effective tomorrow. Copper closed higher on Friday, paring earlier

gains as investors mulled whether lower interest rates in China would translate into a meaningful increase in demand for the industrial metal. 

CRUDE OIL

Crude Oil February may close higher on Friday, but the market is still set to finish the week severely depressed. Oversupply continued to make it hard for crude oil to find a bottom this week although technical analysis factors did manage to help halt the slide at $53.94 at least temporarily. The bottoming action was strong enough to take out the previous day’s high for the first time since November 21. This doesn’t mean much to the big picture, but prolonged short-covering rallies have started from this simple chart formation. The Saudi’s caused most of the volatility this week. On Thursday, they characterized the recent price plunge as “temporary” in published comments. They also added that crude demand would recover as the global economy improves. As fast as Saudi Arabia’s oil minister Ali al-Naimi triggered a technical bounce with his initial comments, he quickly fueled a break in prices by saying that OPEC would maintain output levels in an effort to hold on to market share. As long as the Saudi’s keep talking, there will be volatility.  

NATURAL GAS

Natural Gas lost 15 points to trade at 3.627 as traders evaluate yesterday inventory and a slight change in the long term forecast.  The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks decreased by 64 billion cubic feet for the week ending December 12. That compared with an expected decrease of around 60 billion cubic feet anticipated by analysts. Once again, moderate winter temperatures during the past week helped keep natural gas prices lower. In the coming days, a weather system will track through the Northeast with areas of rain and snow. Wintry weather will continue to impact California and the Southwest, eventually arriving into Texas late in the week with increasing showers. Temperatures with these systems are not expected to drop enough to have much impact on demand for heating. However, a trend toward much colder weather systems will begin early next week. 

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