Posts Tagged ‘oil & gold report’
Gold Tumbles as China is Uninterested in IMF’s Sales
Crude oil price continues sliding in European morning with the front-month contract extending weakness to 78.3, after a -1.8% Tuesday. Investors remain worried about the unexpected decline in US consumer confidence.
After of Bernanke’s Testimony, the data in focus is Eurozone’s industrial new orders which rose +0.8% m/m in December, compared with a contraction of -1% as forecast by the market. On annual basis, the reading expanded +9.5% following a -0.6% decline in November. In Germany, Gfk consumer confidence slid to 3.2 (consensus: 3) in March from an upwardly revised 3.3 in February.
The slightly stronger-than-expected data help recouping some of the losses the European stock markets incurred earlier in the day. Given the strong direct correlation between stock market and oil, we expect this should give some support to oil price.
The euro also recovers modestly against USD, although it stays at a 9-month low. The rebound is probably due to market expectation that Fed Chairman Ben Bernanke will reiterate the central bank’s accommodative monetary stance in the congressional testimony. Bernanke will likely restate that the Fed will keep the policy rate at 0-0.25% for an ‘extended period’.
A newspaper in China reported that an official from the China Gold Association said the county is unlikely to buy gold from IMF. ‘It’s not feasible for China buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility’. Rather, the official stated China will increase gold reserves by acquiring gold mines abroad.
The news is disappointing as the market had hoped some central banks or official sectors will absorb IMF’s remaining gold sales of 191.3 metric tons.
Gold price plunges with the benchmark contract breaking below near-term support at 1100. Currently trading at 1190.5, the yellow metal has fallen for a 3th consecutive day.
Source: Oil n Gold Report
Crude Rebounds as Strong European PMIs Halt USD’s Rally
Crude oil rebounds to 73.2 in European morning in tandem with the equity market as strong manufacturing PMI readings in European countries boosted sentiment and buying interest in the Euro. The White House’s spending plan which will increase the country’s deficit to $1.6 trillion made investors worry about USD. Moreover, cancellation in ceasefire in Nigeria raised concerns about supply disruption in the region. However, we believe these triggers will only have short-term impact.
Major European countries reported better-than-expected PMI for January. In Switzerland, the SVME-PMI improved to 56 in January (consensus: 55.4) from 53.7 a month ago. In the Eurozone, the PMI is revised up to 52.4 in January from flashing reading of 52. Both the euro and the Swiss franc rebound against USD after tumbling last week. Unfortunately, the pound’s slump continue despite an unexpected improvement in PMI to 56.7. The market had anticipated a retreat to 53.9 from 54.6 in December. Sterling dives to a 1-month low of 1.585 against the dollar as the market forecasts the BOE will announce to pause the asset purchase program even the UK economy remains fragile.
Today, the US will release the budget plan which likely shows the nation’s budget deficit will reach a record of $1.6 trillion in the fiscal year ending September 30 before reducing to $1.3 trillion in fiscal year 2011. In order to stimulus economic growth and create job opportunities, the government will be spending $3.8 trillion.
In 2009, USD was under heavy selling pressure because the country printed money as a means to stimulate growth. Investors even speculated the euro or a basket of currencies would be replacing the dollar as the dominant reserve currency. However, such speculation diminished recently, especially the Greek fiscal problem caused dumping in the euro.
Last week, MEND, the main militant group in Niger River delta declared to end ceasefire and resume attack in the region’s oil facilities as the government failed consider the group’s demand for ‘the control of its resources and land’. The Niger delta has been facing militant attacks since 2006. Between 2006 and 2009, the country’s oil production has been reduced -25%.
Gold price changes little in European morning although USD halts its rally. Within the precious metal complex, gold has probably lost its appeal to platinum and palladium. For gold price to rally strongly, we may need to see more news about central banks buying the yellow metal and rising inflationary pressure.
Platinum and palladium hold above last week’s lows and rebound. While platinum edges +0.7% to 1519, palladium soars +1.2% to 420.
Source: Oil n Gold
USD’s Strength Amid Rate Cut in Russia Put Pressure on Commodities
Crude oil pulls back again after soaring to 67.33 in European morning as USD strengthens. Moreover, mixed performance in European stock markets Tuesday put pressure on energy prices. Although the tension in Iran remains a threat, the actual impact is likely minimal as spare capacity is so ample that producers in other countries can easily produce more to meet demand.
USD rebounds for the second consecutive day against the euro. Current trading at 1.455, the greenback has recovered 1.4% from the 1-year low of 1.4843. Bank Rossii, the Russian central bank, cut its refinancing rate by 50 bps to 10% and reduced the repurchase rate charge on central bank loans, also by 50 bps, to 9% in an attempt to boost economic growth. In the accompanying statement, Bank Rossii said that ‘further steps in lowering interest rates will depend on the need to create conditions for broadening lending and stimulating economic growth, taking inflationary tendency into account’. The action spurs worries on global economic recovery and drives investors back to safer investments.
Economic data released in the Eurozone were largely inline with market expectations. Economic confidence improved to 82.8 in September, slightly higher than consensus of 82.7, from 80.8 a month ago. Other confidence indices also rose during the month with consumer confidence, industrial confidence and services confidence rising also rose to -19, -24 and -9 from -22, -26 and -10.7 respectively.
The market’s focus has been shifted to US’ consumer confidence to be released by the Confederation Board. September’s reading should have risen to 57 from 54.1 in August as driven by better stock markets and stabilized employment conditions.
Gold remains under pressure after failing to re-test 1000 Monday. Strength in USD certainly weighs on the yellow metal. Others in the precious metal complex also decline with silver slipping to 16.1 and platinum edging lower to 1275. Impala Platinum’s production cut fails to help platinum price amid broad-based decline in the complex. According to Impala Platinum, the second largest platinum producer, said production in its Impala Lease Area mine will be lowered by 100K oz from previous estimates of 950K oz due to an accident and a strike.
Base metal prices are mixed today. While copper and aluminum drop, nickel rebounds while zinc has little change today. The major issue in the complex is rapid slowdown in Chinese buying. Take a look at copper, stockpiles has increased to 344.4 metric tons, the highest level since May 19, in LME. Demands have weakened a lot in recent months and this is obviously due to completion of stockpiling in China. The only exception in demand slippage is aluminum as the restocking process has not completed yet. However, we believe demand should reduce in coming months.
Source: Oil n Gold
