Tag Archives: commodity news

Copper drops 1% as dollar strengthens ahead of Bernanke

17 Jul

copper

Copper futures came under heavy selling pressure on Wednesday, as the U.S. dollar strengthened ahead testimony on monetary policy by Federal Reserve Chairman Ben Bernanke later in the day.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.139 a pound during European morning trade, down 1.4% on the day.

New York-traded copper prices fell by as much as 1.5% earlier in the day to hit a session low of USD3.137 a pound.

Copper prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 82.80.

Market participants looked ahead to Bernanke’s testimony on monetary policy amid speculation over the timing of a possible reduction to the bank’s USD85 billion-a-month bond buying program.

Copper prices advanced 2.7% last week after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future.

Investors also looked ahead to the release of key U.S. data on housing starts and building permits later in the day.

Any improvement in U.S. economic activity could scale back expectations for further easing, boosting the dollar and weighing on silver.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere on the Comex, gold for August delivery shed 0.5% to trade at USD1,284.05 a troy ounce, while silver for September delivery fell 0.9% to trade at USD19.74 a troy ounce.

Moves in gold and silver this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.

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Investors Flee Gold as Long Positions Hunker Their 2002 low

17 Jul

Although gold is perched near its highest levels in nearly three weeks, investors remain wary of buying it. BofA analysts note that market players have largely liquidated their bullish bets on gold: at USD 2.1 billion, bullion long positions are hunkered at their lowest levels since 2002, the bank said.

mcx gold tradingGold has fallen out of favor with large speculators, according to data from Bank of America/Merrill Lynch, with positioning sliding to its lowest spot in nearly a decade.

Although gold is perched near its highest levels in nearly three weeks, investors remain wary of buying it. BofA analysts note that market players have largely liquidated their bullish bets on gold: at USD 2.1 billion, bullion long positions are hunkered at their lowest levels since 2002, the bank said.

Meanwhile, “speculative shorts in gold are their largest ever,” BofA added.

Despite global central banks’ having no intention of removing their collective foot from the monetary throttle anytime soon, gold bulls have been chastened by a dizzying selloff that has shaved more than 25 percent from bullion’s value in 2013.

Hedge fund guru John Paulson’s flagship gold fund has plummeted by more than 65 percent this year, according to reports.

Over the last week, gold has staged a modest rebound. Still, it is far from the heady days of 2011, when the Federal Reserve’s loose monetary policy prompted gold bugs to bid bullion up to a record USD 1,900 an ounce.

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BofA called market signals on gold “extreme” and said that positioning “remains in the contrarian buy zone,” given that the metal has broken above a near-term resistance area at USD 1,270 an ounce. That creates a “near-term base and positioning-led squeeze higher,” the bank added.

—By CNBC’s Javier E. David

Gold Futures Poised to Rise Next Week: Survey

13 Jul

On the Comex, gold for delivery on August 13 was seen closing at $1,284.15/oz, a gain of $4.25 or 0.33% on Friday.The futures are closed for weekend. Silver on the Comex for delivery on September 13 closed Friday at $19.895/oz, registering a loss of $0.061 or 0.31%.

mcx gold

MUMBAI : If the survey results of Bloomberg are anything to go by, gold futures are poised to climb next week. Nineteen analysts surveyed by Bloomberg think that gold futures may rise next week even as nine analysts were bearish and three neutral.

Gold as of last quarter has lost 23% y/y and witnessed acceleration in declines as US Federal Reserve Chairman Ben Bernanke hinted that the Quantitative Easing measures announced by Fed would see a tapering starting second half of this year.

However, this week the Federal Open Market Committee minutes for June released has showed a bias towards continuing with QE measures. Ben Bernanke himself said that the monetary policy would remain accommodative for the foreseeable time as the revival in economy is fragile.

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This created a rally in futures as prices breached the $1280 mark, an area of significant resistance.

“With the Fed comments, with the increased cost of funding a short position and some recalibration in peoples’ thinking about the end of quantitative easing, the onus is really on the bears now,” said Ross Norman, chief executive officer of Sharps Pixley Ltd to Bloomberg.

“Physical demand is supporting the market very nicely,” he added.

On the Comex, gold for delivery on August 13 was seen closing at $1,284.15/oz, a gain of $4.25 or 0.33% on Friday.The futures are closed for weekend. Silver on the Comex for delivery on September 13 closed Friday at $19.895/oz, registering a loss of $0.061 or 0.31%.

Meanwhile, with the decline in prices, physical demand remained robust in China even as with import curbs in place, Indian merchants are seeking sales controls fearing a shortage.

In India H2, 2013 is marked by festivities like Diwali and Dhanteras, two Hindu festivals which would see enhanced gold buying.

“This is just a temporary measure, but if we don’t follow through with this, there may be a situation when jewellers don’t have any gold to sell. The government and the Reserve Bank of India have already restricted gold imports,” said Vikas Chudasama, director general, All India Gems and Jewellery Trade Federation to the Indian Express.

“This is a request from the federation to all our member jewellers as it will help bring down imports over the next few months and so ease pressure on the current account deficit (CAD),” he noted.

India recently hiked the import duty on gold to 8% and RBI too put in restrictions on import funding by banks. Indian Rupee has dipped substantially and to record lows even as widening CAD is giving sleepless nights to policy makers.

The gold curb measures ‘helped’ the gold imports by India to come down substantially as latest data say.

“Import of gold and silver is understood to have declined substantially to $2-2.5 billion in June, much below the $8.39 billion imported in May, and over $7 billion in April,” a senior government official said and was quoted recently by the Indian Express as saying.

June imports of Gold have dipped to a paltry 28 tons when compared to 162 tons in May. Data says that imports of gold to Gujarat, a major consuming centre, dipped to 3.73 tons in June against the 37.61 tons registered in May as per the air cargo complex data.

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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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India Coal regulator to bring relief to industries: India Ratings

10 Jul

Ind-Ra also expects it to establish yardsticks to determine quality or grades of coal supplies, ensure adherence to supply contracts, adjudicate on disputes between suppliers and consumers and oversee the progress of mining rights/licenses granted to private companies. Allocation of fresh coal mines will, however, continue to be the prerogative of the GoI.

MUMBAI : Government of India’s (GoI) recent decision to constitute an independent regulatory authority for the coal sector is a vital step for its much-needed overhaul. It can potentially bring considerable relief to industries which depend on coal as a critical input, most notably the beleaguered power sector, said India Ratings & Research (Ind-Ra) in its recent release.

Notwithstanding the reportedly large coal reserves in India, the sector is characterised by acute shortages, poor quality, inefficient mining practices and distorted pricing mechanisms.

These factors have had a crippling effect on power generation, a vital component of scaling up the country’s undernourished infrastructure sector. Many of these issues have been ascribed to the virtual monopoly enjoyed by the state-owned Coal India Limited.

It is yet unclear if price setting would also be included within the ambit of the proposed regulator. However, the proposed regulator is likely to determine the principles on the basis of which producers can price coal.

Ind-Ra also expects it to establish yardsticks to determine quality or grades of coal supplies, ensure adherence to supply contracts, adjudicate on disputes between suppliers and consumers and oversee the progress of mining rights/licenses granted to private companies. Allocation of fresh coal mines will, however, continue to be the prerogative of the GoI.

Although GoI’s recent announcement has brought in considerable optimism, Ind-Ra believes the mere constitution of a regulator in itself cannot act as a panacea for all the problems facing the sector.

The mandate given to the regulator and the resources provided to it for effective discharge of its duties in an independent and transparent manner, free from political interference, would be vital to realise GoI’s objectives.

Concurrently, other reform measures such as restructuring Coal India and significantly expanding private sector’s participation in coal mining would also need immediate attention.

The regulator is proposed to be set up through an executive fiat, demonstrating GoI’s urgency to address the problems plaguing the coal and power sectors.

This is another milestone in the GoI’s reforms agenda that it has been pursuing fairly systematically in the last 12 months or so to fix many of the ills plaguing the stressed infrastructure sector.

Parliament would need to pass a legislation constituting the authority and thereby ratifying the Government action – a bill to this effect is likely to be introduced in the ensuing session.

Earlier this year, a Group of Ministers had approved this proposal and recommended a revised draft bill for consideration of the Cabinet.

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What will Greet Gold in H2, 2013: India Festival Demand or India Import Curbs?

8 Jul

While one cannot ascertain if gold imports by India would be met with added curbs, the Finance Ministry here is sure to lose sleep over the matter as festivities kick in and Rupee rout continues.

free gold trading tips

The second half of 2013 is marked by festivities in India and thereby enhanced gold demand. From Ramadan to Diwali to Dusserah to Dhanteras, Indians would go on a spiritual and materialistic binge bringing cheers to the markets and dating optimism.

But will that be the case this time around too as Current Account Deficit is still the Guerrilla in the room contributing substantially to Rupee weakness which has fallen to a record 60.22 against Dollar as of writing this. Will there be additional curbs on imports by India government?

A recent Reuters’ report quoting unidentified official suggests that this is unlikely as there are threats of enhanced smuggling activities in gold.

India recently hiked the import duty on gold to 8% and RBI too put in restrictions on import funding by banks.

These measures helped the gold imports by India to come down substantially as latest data say.

“Import of gold and silver is understood to have declined substantially to $2-2.5 billion in June, much below the $8.39 billion imported in May, and over $7 billion in April,” a senior government official said and was quoted by the Indian Express as saying.

June imports of Gold have dipped to a paltry 28 tons when compared to 162 tons in May. Data says that imports of gold to Gujarat, a major consuming centre, dipped to 3.73 tons in June against the 37.61 tons registered in May as per the air cargo complex data.

Trend seasonal

“The physical trend has always been very seasonal,” said Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA to Bloomberg on gold physical demand.

“Physical players are a different breed. They are always buying on the dip. Physical support will continue to be present and it will definitely trigger interest,” he added.

It has to be noted that while ETF demand has waned considerably, gold physical demand went up substantially in the past months.

While one cannot ascertain if gold imports by India would be met with added curbs, the Finance Ministry here is sure to lose sleep over the matter as festivities kick in and Rupee rout continues.

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Gold Falls as Dollar Jumps to Three-Year High on U.S. Jobs Data

6 Jul

gold-updatesGold futures fell to a one-week low as the dollar surged to the highest in almost three years after U.S. payrolls rose more than forecast in June, fueling speculation that the Federal Reserve will scale back stimulus.

The greenback climbed as much as 1.6 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment. Payrolls rose by 195,000 workers for a second straight month, the government said today. The median forecast in a Bloomberg survey projected a 165,000 gain. Standard & Poor’s 500 Index futures jumped after the jobs data.

“A better jobs report means there’s less flight to safety,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “The initial reaction to the report was a push higher in the dollar and a rise in stocks, and for as long as that continues, gold will struggle.”

Gold futures for August delivery slumped 3.1 percent to settle at $1,212.70 an ounce at 1:46 p.m. on the Comex in New York. Earlier, the price touched $1,206.90, the lowest for a most-active contract since June 28. Trading was 25 percent above the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, the Comex floor was closed for the Independence Day holiday, and spot gold dropped 0.2 percent. Today, the Dollar Index, a gauge against six currencies, rose to the highest since July 13, 2010.

Silver futures for September delivery tumbled 4.9 percent to $18.736 an ounce on the Comex, the biggest decline since June 20. The metal has dropped 38 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.

On the New York Mercantile Exchange, platinum futures for October delivery retreated 1.5 percent to $1,326.40 an ounce, the third straight loss. Palladium futures for September delivery slid 1.2 percent to $677.55 an ounce.

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