Tag Archives: Ben Bernanke

Gold Heads for Biggest Weekly Gain in Two Years

12 Jul

Federal Reserve Chairman Ben Bernanke said on Wednesday that the overall message from the central bank was that a “highly accommodative policy is needed for the foreseeable future”.

mcx gold

Gold rose for a fifth session on Friday, on track for its biggest weekly gain in nearly two years on easing fears of an early end to US monetary stimulus that as boosted bullion’s appeal as a hedge against inflation.

Fundamentals

Spot gold had climbed 0.1 percent to USD 1,286.21 an ounce by 0016 GMT. It touched close to USD 1,300 on Thursday, its highest in three weeks.

Bullion has gained 5 percent so far this week, on course for its largest weekly climb since October 2011.

Comex gold and silver were also trading near multi-week highs hit on Thursday.

Federal Reserve Chairman Ben Bernanke said on Wednesday that the overall message from the central bank was that a “highly accommodative policy is needed for the foreseeable future”.

Financial markets, which had tumbled after Bernanke said last month that the Fed’s USD 85 billion in monthly bond purchases could be scaled back this year, jumped on Thursday with the Dow and S&P 500 indices hitting all-time closing highs.

Gold, still down nearly 25 percent this year, could face further headwinds as some investors jump to rallying stocks, dumping holdings in gold-backed exchange traded funds.

Investors pulled USD 998.8 million from commodities and precious metals funds, up from withdrawals of USD 92.6 million the prior week, data from Thomson Reuters’ Lipper service showed on Thursday.

Gold traders in India, the world’s biggest buyer of the metal, refrained from fresh purchases as prices climbed to their highest level in more than two weeks.

Market News

The US dollar fell to multi-week lows against the euro and yen on Thursday as traders scaled back expectations the Fed would slow its asset purchases in the coming months.

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Gold Inches up After Fed Officials’ Comments on Stimulus

3 Jul

Gold edged higher on Wednesday after a near 1 percent fall in the previous session, as two Federal Reserve officials said the U.S. central bank was likely to continue supporting the economy through asset purchases for some time.

GoldGold edged higher on Wednesday after a near 1 percent fall in the previous session, as two Federal Reserve officials said the US central bank was likely to continue supporting the economy through asset purchases for some time.

FUNDAMENTALS

* Spot gold rose 0.2 percent to USD 1,244.06 an ounce by 0014 GMT, while US gold was little changed at USD 1,243.5. Spot gold fell 0.9 percent on Tuesday as the dollar strengthened.

* Bullion, typically seen as a hedge against inflation, has taken a beating since Fed Chairman Ben Bernanke said last month the economy was recovering strongly enough for the central bank to begin tapering its stimulus in the next few months, and possibly end the programme in mid-2014.

* Gold posted its biggest ever quarterly loss of 23 percent for the April-June period, but began the third quarter on a positive note.

* Investors are awaiting US data this week to determine the strength of the economy and the exact timing of the Fed tapering.

* The Fed’s easy monetary policy will likely be warranted for “quite some time” as the US central bank drives down high unemployment while nudging low inflation back toward target, Fed Board Governor Jerome Powell said on Tuesday.

* The head of the Federal Reserve Bank of New York on Tuesday reiterated that the US central bank will likely continue to support the economic recovery for some time to come despite market worries that it was soon pulling back.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.37 percent to 964.69 tonnes on Tuesday.

* Gold traders in India, the world’s biggest buyer of the metal, stayed on the sidelines on Tuesday, and premiums continued to get support from lower supplies due to restrictions by the central bank.

* For the top stories on metals and other news, click, or

MARKET NEWS

* The US dollar hit its highest in a month against the yen and euro on Tuesday while a gauge of global equities fell as US stocks reversed course to end slightly lower.

 

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Gold tumbles again, could see worst week in 30 years

21 Jun

Gold fell to a three-year low on Friday and was in danger of recording its biggest weekly drop in 30 years after the US Federal Reserve said it would wind down its bullion-friendly stimulus later this year.

Spot gold – down nearly 9 percent this week – dropped for the fifth straight session, while Comex gold futures also declined over 1 percent to their lowest in three years.

Fed Chairman Ben Bernanke said on Wednesday the central bank would taper its USD 85 billion monthly bond buying programme as the US economy was recovering strongly, ending purchases around mid-2014 if economic growth held up.

“What the market is undergoing now is a state of normalisation, going back to pre-stimulus times,” said Joyce Liu, investment analyst at Phillip Futures in Singapore.

“Since the first stimulus programme in 2009, markets have jumped despite fundamentals not justifying such a spike.”

Gold was also hurt by CME Group Inc’s move to raise initial margins for Comex gold after prices plunged over 6 percent on Thursday.

The exchange operator raised Comex 100 Gold Futures initial margins for speculators by 25 percent to USD 8,800 per contract from USD 7,040.

“That is definitely affecting gold too. For those who cannot put out margin calls on time, they will be squeezed out even when they don’t want to get out,” said Liu.

Until recently, gold – seen as a hedge against inflation – had gained as the global economy took a hit and central banks acted to boost their economies. Gold touched an all-time high of USD 1,920.30 in 2011.

Spot gold was down 0.5 percent at USD 1,271.16 an ounce by 0121 GMT on Friday. The metal fell to USD 1,269.04 earlier – its lowest since September 2010 and a level which would mark the worst weekly decline in 30 years.

It has lost 24 percent of its value this year, after recording 12 years of gains.

Gold is on weak technical ground and will fall below USD 1,200 an ounce before finding support, technical analysts said.

UBS lowered its 2013 gold price outlook by 10 percent to USD 1,440 an ounce, and its 2014 forecast to USD 1,325 an ounce from USD 1,625.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.42 percent to 995.35 tonnes on Thursday – the lowest in more than four years.

But the drop in prices could see a spurt in physical demand in top consumers India and China, which have been quiet recently.

However, Liu said the demand would not be as strong as April when gold prices fell the most in 30 years over just two days.

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Bullion to remain under pressure, sell on rise: Emkay

19 Jun

In an interview to CNBC-TV18, Ashok Mittal, CEO of Emkay Commodities spoke about the current trend in commodities market.

Below is a verbatim transcript of the interview:

Q: How would you approach bullion going into that Federal Open Market Committee (FOMC) meet today?

A: We are expecting that there will be a lot of pressure on bullion prices , although they have moved up little bit in the last few sessions largely in India because of the weakening of rupee. We think that USD 1400 per ounce remains a strong resistance for gold. Hence we are recommending to sell it at any upside towards USD 1375-1385 per ounce. We expect gold to come back around USD 1320 per ounce or so. Once USD 1320 per ounce breaks then we can expect further downside.

In the Indian market, Rs 28,100-28,200 per 10gm is a selling level and we expect it to come back to Rs 27,500 per 10gm and maybe lower than that.

People will be looking at what Ben Bernanke says because although we do not expect them to say that this USD 85 billion bond buying will be stopped but they might put some kind of conditions on that. If there is any kind of condition then obviously there will be further pressure on bullion prices. So overall the prices will remain under pressure.

Similarly, for silver also we think that USD 22 per ounce is a resistance and we can sell there and we expect silver prices to fall back.

In rupee terms we expect silver prices to fall somewhere around Rs 42,500-42,800 per kilogram range. So we should sell both gold and silver on the uptick.

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Q: There seems to be reports that money is flowing back into crude now as an asset class, how would you trade that particular commodity and at what kind of targets?

A: We expect that the broader long-term range for nymex crude oil will be somewhere around USD 80-100 per barrel approximately. We are on the higher band on that technically. We expect that around USD 100 per barrel Nymex crude should get strong resistance .

Today the data will be out and we expect that inventories will be lesser, we cannot see some kind of uptick happening. But overall inventory levels are quite high and right now the tension in Syria is something which is driving the prices on the higher side. Economic outlook is changing drastically, where we see a lot of demand coming in. There is a lot of supply available and there is no such thing that Organization of Petroleum Exporting Countries (OPEC) will cut down on the production side as well.

So our idea is that for short-term we might see some uptick happening but we do expect that crude oil prices also will not be rising too much and we can sell them maybe at some uptick when we see today’s data and we expect that Nymex crude should come back to around USD 95-94 per barrel.

Gold marks time as investors await stimulus outlook

17 Jun

Gold held steady in Asian trading on Monday as investors awaited indications from a key US Federal Reserve meeting later this week on the outlook for the central bank’s bond buying programme.

The Fed meets on June 18-19 against a backdrop of stronger-than-expected data on US retail sales and the job market, with markets looking for clues to any tapering of its economic stimulus programme.

“The markets are a little bit fatigued at the moment,” said Victor Thianpiriya, commodities analyst at Australia and New Zealand Banking Group. “They are still looking for direction from the Fed meeting. That’s clearly the big driver this week.”

Spot gold rose 0.02 percent to $1,390.41 an ounce by 0319 GMT. Bullion closed up about 0.5 percent for the week on Friday helped by strong demand for coins and bars, a pullback in U.S. stocks and rising tensions in the Middle East.

US gold rose USD 2.40 to USD 1,390.

Markets have been volatile since Fed Chairman Ben Bernanke said last month the bank could scale back its stimulus measures if the economy improves. A cut in the Fed’s USD 85 billion monthly bond purchases could hurt gold, which has benefitted from its role as a hedge against inflation.

Thianpiriya said Bernanke was unlikely to deviate from what he has said before, as it was still too early to determine the timing of the tapering down of the bond purchases.

Most economists expect the Fed to scale back the size of its bond purchases by year end, and several expect reduced buying as early as September, a Reuters poll showed.

DEMAND EASING

Gold prices were supported by some buying in China, the No. 2 bullion consumer in the world after India. Shanghai gold futures were up 0.4 percent on Monday.

However, demand in Asia has cooled from peak levels seen after the mid-April sell-off in gold. Bullion is down 17 percent for the year after 12 years of annual gains.

Indian purchases of gold have fallen since an import duty hike earlier this month. The government is trying to narrow its current account deficit by reducing gold imports.

ANZ’s Thianpiriya said volumes to India have fallen significantly in the last two weeks, while those to China were little changed.

Hedge funds and money managers slashed their bullish bets in gold and silver futures and options in the week to June 11, a report by the Commodity Futures Trading Commission showed on Friday.

Gold output in Australia, the No. 2 producer behind China, fell 5 percent in the first quarter on weather-related disruption to 63.5 tonnes, according to the latest Gold Quarterly Review by Surbiton Associates.

Silver and gold lurch higher after early dive

21 May

Gold and silver prices gained nearly 3 percent on Monday after a roller-coaster session that opened with a gut-wrenching dive in silver to its lowest in 2-1/2 years before an abrupt midday turnaround.

After trading lower through most of the day, gold suddenly lurched more than USD 10 an ounce higher around noon US time, with traders citing a wave of pent-up short-covering after seven consecutive days of losses. Also, COMEX silver futures had plunged more than 9 percent after a big sell order at the open, triggering technical buy signals, they said.

The spot price of gold, which early in the day threatened to test a 1-1/2-year low touched last month, was up USD 36 an ounce or 2.6 percent by 2010 GMT, snapping a seven-session losing streak.

Silver’s most-active contract on COMEX, July, rose 2.3 percent to USD 22.86 an ounce in post-settlement trade, after closing the official session 1 percent higher at USD 22.582. That marked a sharp reversal for a market that just hours earlier fell to a September 2010 low of USD 20.25.

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The whipsaw session jolted traders and may signal new support for battered precious metals markets.

“A whole load of short-covering came in this morning as people got unnerved looking at the way some of the precious charts had tanked,” said Adrian Day at Adrian Day Asset Management in Annapolis, Maryland.

“I’m a buyer at these levels,” said Day, whose firm manages about USD 200 million in commodities, about a third of that in gold holdings.

Notwithstanding the rebound on the day, gold is down 17 percent for this year while silver has lost 25 percent as money rotated out of precious metals into equities and the US dollar amid an improving outlook for the US and global economies.

Hedge funds and other major speculators in commodities pulled USD 1.4 billion from the US gold futures market in the week to May 14, Reuters calculations of data released by the Commodity Futures Trading Commission showed.

The case for buying gold as an inflation hedge has also been weakened by speculation lately that the Federal Reserve may end sooner rather than later its ultra-low interest rates and bond-buying programs to stimulate the US economy.

The market will now focus on congressional testimony on the US economy by Federal Reserve Chairman Ben Bernanke and minutes of the US central bank’s April meeting, due later in the week.

Gold-backed exchange-traded funds have, in particular, seen massive outflows in recent months, although silver holdings have held up relatively better.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, hit their lowest in four years on Friday, declining 3 tonnes to 1,038.41 tonnes.

“The next leg for gold is still lower, and USD 1,200 is our target in the next few weeks,” BofA Merrill Lynch analyst Michael Widmer said.

AWAITING SILVER’S NEXT MOVE LOWER

Analysts had said it was only a matter of time before silver would give way, citing flagging industrial demand.

“I’m waiting for the next big wave down in silver that would take the market into the teens,” Frank McGhee, chief precious metals trader at Chicago’s Integrated Brokerage Services, said, referring to silver futures breaking below $20 an ounce.

Holdings of the largest silver ETF, the iShares Silver Trust, fell 187.7 tonnes last week to 10,253 tonnes, hitting their lowest level since mid-January.

In Monday’s session, more than 3,000 lots of silver were sold in just 20 minutes of early Asian trading, Reuters data showed.

Yuichi Ikemizu, a branch manager for Standard Bank in Tokyo, said an unidentified investor sold off a big chunk of silver holdings on Monday morning.

The gold-silver ratio is at its highest level since September 2010, with an ounce of gold currently buying 63 ounces of silver. That is twice as much as in April 2011, when silver was trading considerably higher.

“The latest move lower has been to some extent technical, but silver was the underperformer among precious metals during the mid-April fall,” Citigroup metals strategist David Wilson said.

“The metal had found some support from steady ETFs investment, but this has now started to come lower, showing that the retail sector is also becoming more bearish as well as professional investors.”

In other precious metals, platinum was up 2.6 percent at above USD 1,487 an ounce, recovering from a three-week low of around USD 1,426 earlier in the session. Palladium rose 1.4 percent to above USD 746 an ounce from a lower start at USD 736.97.