Tag Archives: commodity tips

Oil Continues to Fall in Asia

25 Jul

Oil futures traded modestly lower during Thursday’s Asian session, extending losses incurred during U.S. traded Wednesday.

On the New York Mercantile Exchange, light, sweet crude futures for September delivery fell 0.29% to USD105.29 per barrel in Asian trading Thursday despite some encouraging U.S. real estate data.

In U.S. economic news out Wednesday, the National Association of Home Builders/Wells Fargo builder sentiment index climbed to 57 this month from 51 last month. The July reading reading is the highest since January 2006. Readings above 50 indicate builders view the market as good.

New home sales advanced 8.3%, the best rate in five years. The seasonally adjusted rate was 497,000 units. Economists expected 484,000. May’s sales rate was also revised up to 459,000.

Even solid weekly inventories could not help oil higher in Asian Thursday. On Wednesday, the U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.8 million barrels in the week ending July 19, exceeding expectations for a decline of 2.4 million barrels.

Total U.S. crude oil inventories stood at 364.2 million barrels as of last week.

Traders appear to still be concerned about economic data out of China last night that serves as further proof manufacturing activity in the world’s second-largest economy is slowing. China’s HSBC manufacturing PMI fell to an 11-month low of 47.7 in July, from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6.

The U.S. and China are the world’s two largest oil consumers.

Elsewhere, Brent futures for September delivery fell 0.14% to USD106.91 per barrel.

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Gold Eases After 4 Days of Gains as Dollar Firms

24 Jul

Gold slipped on Wednesday after hitting a fresh one-month high the session before as the dollar climbed off lows and investors took profits after four days of gains.

Fundamentals

* Spot gold had dropped 0.3 percent to USD 1,343.56 an ounce by 0022 GMT, after rising to a one-month peak on Tuesday as speculators bought back bearish bets ahead of an option expiry later this week.

* Comex gold gained USD 9 to USD 1,343.40, while silver and platinum tracked gold lower.

* Spot gold has gained over USD 160 an ounce from a three-year low hit in late June after Federal Reserve Chairman Ben Bernanke said the US central bank would only start phasing out its stimulus when it was sure the economy was strong enough to stand on its own.

* World stock markets rose to near five-year highs on Tuesday, boosted by views that China was moving to support its cooling economy, while the dollar fell to one-month lows.

* The markets is waiting for the latest reading on China’s manufacturing activity due at 0145 GMT for signs of economic growth in the world’s second-biggest bullion consumer.

* Wall Street’s multibillion-dollar commodity trading operations came under the political spotlight on Tuesday as a powerful US Senate committee questioned whether commercial banks should control oil pipelines, power plants and metals warehouses.

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Read more: http://bizcovering.com/investing/gold-eases-after-four-days-of-gains-as-dollar-firms/

Commodity hedge funds bear longest losing streak on record

19 Jul

Funds betting on commodity price moves have lost money every month since January, their joint longest losing streak on record, raising more doubts about their ability to make money at a time when the commodity “supercycle” may be over.

The average fund slid 3.58 percent in the first six months of the year, according to a widely watched Newedge commodity index. Funds have only suffered five consecutive losing months once before, in 2002-2003, the index shows.

Hedge funds market themselves as capable of making money in all markets, yet funds trading commodities as varied as gold, grains and gas, have failed to turn an annual profit in the last three years.

The weak performance will put more pressure on the industry to lower fees and introduce clawbacks, which enable investors to reclaim some performance perks paid to hedge fund managers in boom times if the returns they hope to achieve fail to continue.

Worries about cooling demand in key markets like China, and a huge shift in the supply-side from shortage to glut, has sent prices tumbling in recent years, and left many warning that the end of the commodity “supercycle” – the long period of rising commodity prices – is here.

“Historically most of these funds have been a levered beta play on the commodity cycle, or in some cases arbitrageurs of commodity spreads,” Michele Gesualdi, portfolio manager at hedge fund investor Kairos, said.

“The end of the supercycle has hurt the first area, while the volatility and discrepancies that have arisen in forward markets have made life difficult for the second.”

Adding to the sector’s woes, hedge funds which trade other asset classes such as equities have rebounded this year, including those that trade mining and energy shares.

The USD 1 billion fund of Clive Capital, a firm which trades oil and ran about USD 5 billion at its peak, is down 3.5 percent to June 28, performance data shows. Krom River’s Commodity Fund has lost 4.4 percent to end-June, while Brevan Howard’s Commodities Strategies Fund is off 2.5 percent to June 28.

Krom River’s chief executive Itay Simkin said that despite falling prices, commodities were still a very good investment due to production problems, urbanisation, decent economic growth rates and a lack of forward investment in mining.

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Other funds mentioned in this story either declined to comment or could not immediately be reached for comment.

Funds trading bullion are nursing some of the heaviest losses. Gold has tumbled this year on expectations the U.S. Federal Reserve will cut back on its money-printing programme, which had driven gold to record highs.

John Paulson, the billionaire U.S. investor, has seen his gold fund, his smallest with USD 300 million in assets, plunge 23 percent in June and is down 65 percent this year.

Despite the losses, most managers are not down as much as commodity prices this year – the 19-commodity Thomson Reuters-Jefferies CRB index fell 5.7 percent through end-June.

Some have also shone. After losing 30 percent in 2011 and 7.6 percent and a big chunk of his assets in 2012, Mike Coleman’s Merchant Commodity Fund is up 24.2 percent this year.

But the bigger concern for commodity funds is proving they can consistently make money amid a sustained downward trend in prices.

The problem, investors and managers say, is that the long, gradual trend of rising prices has been replaced with shorter, more uncertain trends, in which prices can plunge suddenly, making it difficult to profit from their slide.

Commodity prices, down 22 percent from a 2011 peak, have entered bear market territory, while volatility – which some funds thrive on – has also fallen, challenging managers further.

History Shows Gold Could Fall Another $500/oz

16 Jul

A slowdown in growth in China, as evidenced in data released on Monday which showed that growth had slowed to 7.5 percent, was one potential indicator of lower gold demand.

gold updatesThe price of gold could fall below USD 800 an ounce over a long-term horizon, a drop of some USD 500 from its current level of USD 1,294 an ounce, Duke University’s Campbell Harvey told CNBC on Monday.

Harvey, who works at Duke University’s Fuqua School of Business, said that over 2,500 years of history, the real price of gold (the nominal price adjusted for inflation) had remained roughly the same.

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“Right now we’re way above the mean,” Harvey said, suggesting that the price of gold would correct over the long-term to approximately USD 800 an ounce.

“If you look historically, it doesn’t just go down to the average and stay there. It actually goes through and falls below, then comes back up,” he said.

The price of gold could therefore potentially go even lower than USD 800, he said. “It has been lower in recent history.”

“It might not be tomorrow,” Campbell added, but “the cycles go in 10-15 years, and we’re well into one of these cycles.”

He said investors mulling the price of gold should focus on demand rather than supply, which he said was “amazingly constant”.

A slowdown in growth in China, as evidenced in data released on Monday which showed that growth had slowed to 7.5 percent, was one potential indicator of lower gold demand.

“China is a demander of gold, lower growth there means lower demand,” Campbell said.

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Gold Futures Continue Higher after Strong Week

15 Jul

mcx gold trading

Gold futures built on last week’s new found momentum to traded higher in the early part of Monday’s Asian session as traders continued to nibble at the yellow metal amid still deeply discounted prices.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery rose 0.86% to USD1,288.55 per troy ounce in Asian trading Monday after settling up 0.3% on Friday to settle the week at USD1,284.15 a troy ounce.

Gold futures were likely to find support at USD1,237.05 a troy ounce, the low from July 8 and resistance at USD1,301.75, the high from June 21. Last week, gold prices rallied 4.9%, the biggest weekly gain since October 2011.

In U.S. economic news published last Friday, a Labor Department report showed U.S. wholesale prices rose 0.8% last month, the biggest gain since September 2012. That follows a 0.5% increase in May. Economists expected a June increase of 0.5%.

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The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 83.9 in July from 84.1 in June. Economists expected an initial July reading of 84.7.

Gold traders finally got some good news last week when Federal Reserve Chairman Ben Bernanke, in remarks delivered Wednesday, implied a possible tapering of the Fed’s quantitative easing program is not as imminent as previously believed. That sent the U.S. dollar sliding and dollar-denominated commodities such as gold soaring.

Bernanke said last month the central bank could begin tapering its USD85 billion-a-month asset purchase program by the end of 2013 and wind it down completely by the middle of 2014 if the economy picks up as the central bank expects.

Elsewhere, Comex silver for September delivery jumped 0.90% to USD19.970 per ounce while copper for September deliver dropped 0.51% to USD3.138 an ounce.

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Charts Show Gold Sell-off Could Get A Lot Uglier

5 Jul

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

mcx goldFrom a technical perspective, the outlook for gold  is looking increasingly bearish, according to analysis by Australia New Zealand Bank (ANZ) , which says the recent sharp declines open the risk of much sharper corrections.

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

“Closing near the lows of the month [June] underscores the risk of much deeper corrective declines… Caution is therefore, key,” Thianpiriya said.

“Volatility remains high. At times like this, the market can ignore fundamentals, and the technical picture takes on greater importance,” he added.

Last week, gold fell to its lowest level since 2010 at USD 1,180, with losses in the precious metal amounting to 22 percent since the start of the aggressive selloff in mid-April.

The yellow metal posted its worst quarterly performance on record, down 23 percent over the April-June period.

Relentless selling by exchange traded funds (ETFs) has been behind the poor performance of the precious metal in the recent months, outweighing physical demand for jewelry, bars and coins.

Thianpiriya noted that a close above USD 1,272 could turn the negative bias in gold around, and allow for a period of rebounds.

However, some strategists believe gold has entered a long term bear market, pointing a tapering of the Federal Reserve`s unprecedented monetary stimulus alongside a benign global inflationary environment as major headwinds for the metal.

Many banks have slashed their forecasts for gold in the recent weeks, the most recent being HSBC, which predicts that the average gold price will be USD 1,396 in 2013, down from USD 1,542.

Among the most bearish, however, is UBS , which warns that gold is at risk of becoming “obsolete” as the Fed winds down its stimulus program . It believes prices could fall to USD 1,150 in the coming 3 months.

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– By CNBC`s Ansuya Harjani
Copyright 2011 cnbc.com

India fourth biggest in Crude Steel production for third year: Minister

13 Jun

Chairing the meeting of the Parliamentary Consultative Committee attached to his Ministry here on Wednesday, he said that the crude steel production in India has grown by 4.3% in 2012. He also said that capacity of steel production in the country has increased from 66 million tonnes in 2009 to about 90 million tonnes in 2012.

NEW DELHI: India’s Union Minister of Steel, Beni Prasad Verma has said that India continues to hold the 4th position in global crude steel production for the past 3 years.

Chairing the meeting of the Parliamentary Consultative Committee attached to his Ministry here on Wednesday, he said that the crude steel production in India has grown by 4.3% in 2012. He also said that capacity of steel production in the country has increased from 66 million tonnes in 2009 to about 90 million tonnes in 2012. The functioning of Steel Authority of India Limited (SAIL) was the agenda of the meeting.

Verma apprised the committee members that the per capita steel consumption has risen to 60 kg in 2011-12. The Minister stressed on the importance of conserving raw material resources in the country and elaborated on the measures taken by the Government.

SAIL, a Maharatna PSU under the Ministry of Steel, is today the 7th World Class Steel Maker as per World Steel Dynamics. SAIL’s production of saleable steel has been 12.4 million tonnes, which is 112% of rated capacity. SAIL has five integrated steel plants that are undergoing expansion and modernization, the expansion activities of Salem Steel Plant of SAIL have already been completed.

The members were briefed about the global and domestic steel scenario, functioning of SAIL and its performance on various parameters. Details of marketing initiatives and modernization and expansion plan were also discussed.

They were informed that the company achieved profit after tax of Rs. 2170 crore during the year 2012-13. Some of the members complimented SAIL on its working, while some expressed concern over the progress of expansion plan and profitability of the company.

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