Gold / Silver / Copper futures - weekly outlook: October 14 - 18

Investing.com - Gold futures tumbled to a three-month low on Friday, as hopes that U.S. lawmakers would reach a deal on the U.S debt ceiling impasse before the October 17 deadline reduced the safe-haven appeal of the precious metal.  

Some technical selling also contributed to losses after prices fell through key support levels.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery dropped 1.93% on Friday to settle the week at USD1,271.90 a troy ounce. 

Comex gold prices fell to USD1,259.60 a troy ounce earlier in the day, the weakest level since July 10. The December contract settled 0.79% lower at USD1,296.00 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,242.35 a troy ounce, the low from July 10 and resistance at USD1,311.80, the high from October 10.

On the week, the precious metal lost 2.9%, the second consecutive weekly decline.

House Republicans and the Obama administration began a second day of negotiations on Friday on a deal to reopen the government and raise the U.S. debt ceiling for six weeks.

The federal government has been shut down since October 1. Lawmakers must raise the national borrowing limit by October 17 or run the risk of a U.S. sovereign debt default.

Technical selling also pressured gold after it fell through key support levels close to the USD1,280-level, triggering a flurry of automatic sell orders amid bearish chary signals.

An unusually large sell order at the start of the Comex floor trading session sent prices tumbling by USD30 within a minute, fuelling speculation hedge funds and large institutional investors unwound long positions.

Uncertainty surrounding the Federal Reserve's stimulus program was also in focus.

Wednesday’s minutes of the Fed’s September meeting said the decision not to begin tapering stimulus was a "close call," with all but one voting member opting to leave the program unchanged.

Concerns over economic impact of the U.S budget and debt ceiling impasse fuelled expectations that the central bank will further delay plans to start phasing out its USD85 billion a month asset purchase program.

Data released on Friday showed that U.S. consumer sentiment fell to the lowest level in nine months in October, as concerns over the impact of the government shutdown weighed.

The University of Michigan’s consumer sentiment index declined to 75.2 from a final reading of 77.5 in September, and below expectations for a reading of 76.0.

In the week ahead, investors will continue to closely monitor political developments in Washington. Gold traders will also scrutinize speeches from a number of Federal Reserve officials for clues on monetary policy.

Elsewhere on the Comex, silver for December delivery plunged 2.91% on Friday to settle the week at USD21.25 a troy ounce. Silver prices settled 0.02% higher at USD21.89 on Thursday.

On the week, silver future prices declined 2.29%, the fifth consecutive weekly loss.

Meanwhile, copper for December delivery advanced 0.63% on Friday to close the week at USD3.269 a pound. On Thursday, copper futures rose 0.54% to settle at USD3.248 a pound.

Despite gains on Friday, prices of the red metal declined 0.96% on the week, amid concerns a U.S. government shutdown will create a drag on fourth quarter economic growth.

Official data released on Saturday showed that China’s trade surplus narrowed sharply in September as exports declined unexpectedly, fuelling concerns over growth prospects in the world’s second-largest economy. 

China’s trade surplus narrowed to USD15.2 billion last month from a surplus of USD28.6 billion in August, compared to estimates for a surplus of USD27.7 billion.  

Chinese exports fell 0.3% from a year earlier, defying expectations for a 6% increase and following a 7.2% gain in August. 

Market players now looked ahead to a raft of Chinese economic data later in the week, including reports on inflation, gross domestic product, industrial production and retail sales.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

http://www.investing.com

Gold: A Great Buying Opportunity Approaches

Gold has officially entered a bear market, declining more than 20% from the September 2011 peak of US$1,924/oz. I warned in December last year and in March this year that gold was likely to fall further, even though I was optimistic on the long-term outlook. The reasoning was that gold had gone up every year for 12 straight years, a feat achieved by few assets, and that a sharper correction seemed inevitable at some point. After all, most bull markets have several corrections of +30% and gold had only experienced one steep fall of 29% in 2008. Also, the March-July period is traditionally weakest for gold prices as seasonal demand slows.

Now that gold is falling, what should you do? Well, the technical picture suggests that gold will move to US$1,300-1,400/oz. At these levels, gold would have fallen 27-32% from its peak. Remember that during the 1970s bull market, gold fell 47%, before rising 8x to peak in 1980. So no-one can rule out gold declining a lot more. But there are still good reasons to believe that the gold bull market is far from over. If you think that’s right, accumulating gold below US$1,400/oz makes sense.

But we’re getting ahead of ourselves. Let’s go through Friday’s events and what to expect from here.

What triggered gold’s steep fall on Friday?

Gold was smashed on Friday, down 4.7%. It wasn’t alone as silver finished down 5.3% and other commodities were also sharply lower.

Gold’s fall was largely technical. It breached May 2011 lows of US$1,536/oz. This triggered stop losses. Then the psychological US$1,500/oz was breached and further selling kicked in.

Silver hasn’t yet broken through its key technical support level of US$26/oz. But it should do soon enough.

Beyond technicals, are there other reasons for the sharp fall in gold?

Some have pointed to the European Central bank forcing Cyprus to sell its gold. This is nonsense though given Cyprus’ gold holdings were tiny.

The fact is that gold’s price action has been a concern for the past six months. Despite QE4 and Japan‘s monstrous stimulus package, gold has shown few signs of moving higher. Prior to this, stimulus had always stimulated the gold price too.

So what gives? Well, I think supply and demand for gold may offer a more plausible explanation for the recent price weakness. In 2012, gold demand fell 4%, the first decline since 2009. This was driven by a 12% decline in demand from India, the world’s largest consumer of gold. A rising rupee, making gold more expensive, as well as higher import tariffs, took a toll on Indian demand.

The decrease in gold demand was all the more remarkable given that central bank gold buying reached 48-year highs.

With India imposing higher tariffs on gold this year, there are good reasons to believe that Indian demand will continue to remain soft. Also, retail demand for gold exchange-traded funds has clearly been in sharp decline of late. Lastly, seasonal demand for gold is weakest in the second quarter of the year. It only ramps up in the second half in the lead-up to India’s festival of lights, Diwali.

The decline in gold demand has come while gold supply remains muted. While gold demand is likely to pick up in the second half of the year, supply should stay relatively flat. This is because it takes at least five years to get a gold mine up-and-running, and the 2008 financial crisis delayed a lot of investment into new mines.

Long-term, the supply picture looks poor as gold companies are cutting back investment spend, after it got out of control in the lead-up to 2008. More than a quarter of CEOs at the world’s top 25 gold companies have been replaced over the past 18 months as boards demand better returns on capital.

Therefore, though the near-term outlook is challenging, the picture beyond 2013 appears brighter.

How much further could gold fall?

The truth is that no-one knows. You can monitor supply and demand, the technical and so on, but putting a bottom on the price is impossible.

The 1970s can offer insights, though history never repeats. The gold price from 1974-1976 corrected 47% before it rose 8x to peak at US$887/oz in 1980. Extraordinarily, the price increased 4x in the 13 months before the peak.

All bull markets have sharp corrections. You should expect them and that way there’s not much to panic about when they do happen.

Does gold’s fall signal anything about the broader economic environment?

The different markets are sending mixed signals. Strengthening in bonds and the commodities sell-off would seem to indicate investor caution, or so-called risk off. But stocks are still at or near record highs in most markets, which indicates risk-on.

What’s clear is that economic data have deteriorated of late. In the U.S., poor retail sales numbers were the latest in a line of data which were below expectations. In Asia, export figures from countries dependent on global trade such as South Korea, Taiwan and Singapore have been abysmal.

My take on this is that stocks are the odd man out due to printed money flowing through to them. What I’m seeing is that deflation appears to be defeating central banks’ best efforts to produce inflation to reduce their debt loads. The prices of gold and copper (Dr Copper is used as a sign of economic strength or weakness) indicate that inflation isn’t on the horizon.

Whether these commodity price decline indicate a larger deflationary event is on the way is an open question. Let’s wait and see.

Is the gold bull market over?

Ah, the key question. I think there is a strong likelihood that the bull market isn’t over. History is my guide on this. Commodity bull markets have averaged 18 years over the past century, with 14 years as a minimum. We’re into year 13 of this gold bull market. If the bull market is over, it would be the shortest one in recent history.

More importantly, all bull markets have a so-called parabolic stage, where prices go up in a straight line. You see that in the gold chart of the 1970s. Same for the Nasdaq in the 1990s and so on. We just haven’t seen such a spike in this gold bull market.

Moreover, bull markets require significant public participation. I certainly don’t see the average person in most countries having participated in the gold bull market. It certainly isn’t reflected in the fund allocations of fund managers either. In the U.S. for instance, gold represents less than 1% of institutional fund portfolios.

Finally, history suggests that global currency devaluations favour precious metals. And as mentioned in my newsletter last week, the current expansion of central bank balance sheets is unprecedented.

What about gold stocks, which have been obliterated of late?

Gold stocks are at more than 10-year lows versus the gold price, as measured by the HUI index in the U.S.. They have been significantly underperforming gold for some time.

One key reason is that gold companies have seen mine cost blowouts, investment overspend and silly merger and acquisitions prior to this year. Shareholders did not get the benefits of higher gold prices through better company earnings and dividends.

As mentioned above, the cowboy culture of many gold companies is now changing. Boards are holding managements to account. CEOs are being more disciplined about investment spend, focusing on returns rather than getting bigger just for the sake of it.

In the end, gold stocks are leveraged plays on gold prices. But you need to be able to pick the right companies.

This post was originally published at Asia Confidential:http://asiaconf.com

Gold to be a lousy investment in the next decade

The Indian price of gold has risen six folds in the last decade, fueling a record speculative import spree. Soaring gold imports have hit $42 billion in the first ten months of 2012-13 , pushing the current account deficit to near-disaster levels. The finance minister is wringing his hands in distress, while housewives say that buying gold was the best thing they ever did.

Sorry, but the party is over. The notion that gold is the finest investment, whose value can only go up, is dead wrong. History shows that gold fluctuates crazily, so it can look a fabulous investment for some time and then become a total disaster. There's nothing safe about it.

The Indian price reached a peak of Rs 33,000 per 10gm in late 2011. It has since fallen steadily to just Rs 29,000. Global trends suggest we have entered an era of falling or stagnant gold prices. Housewives and all other buyers beware: gold will probably be a lousy investment in the next decade.

After the US went off the gold standard in 1971, gold shot up from $35/ounce to $835 in 1980. It looked the best investment in sight. But then its price crashed and stayed down till 2001, at around just $250/ounce. Gold investors lost their shirts (and sometimes underpants) for two decades.

However, after 2003 gold zoomed again. It reached a new peak of $1,890 in late 2011. But it has fallen steeply to just $1,501 last Friday. It may bounce back temporarily , but will then fall again.

The fall in price has been less dramatic in India because the rupee has depreciated against the dollar. Even so, gold in rupee terms is down 10% from its peak. Goldman Sachs estimates that the world price will fall sharply to $1,270 by the end of 2014, and other analysts are almost as gloomy.

--> Gold is a safe haven to which people rush in troubled times, so speculators hoped its price would rise in today's troubled conditions. North Korea is threatening nuclear war and Japan seeks to double its money supply. Cyprus has set a dangerous precedent by confiscating uninsured large deposits in its top banks, and this could have prompted a rush into gold. Why, then, has gold fallen instead of rising?

First, fears of a Eurozone breakdown took gold to a peak in 2011, but those fears are mostly gone, so gold is less needed as a safe haven. Second, the US is finally set, after five years, to end its quantitative easing of money supply, reducing the monetary fuel of speculators.

Third, as part of its bail-out package, Cyprus may have to sell its gold reserves to raise 400 million euros. Not only will this glut the market, it stokes fears that similar gold sales may be forced on other troubled Eurozone countries that may also go bust. Troubled Italy has the fourth largest gold holdings in the world of 2,452 tonnes, worth a whopping $95 billion.

Speculators had poured $26 billion into gold-linked securities in 2010 and 2011. But after mid-2012 , when fears of the Eurozone's survival ended, many speculators (including George Soros, the most famous of all) decided that the gold boom was over and got out of the market. Money fled from gold-linked securities. SPDR Gold Shares, the biggest exchange traded fund linked to gold, has seen net redemptions of $7.7 billion in 2013 so far.

Indian speculators and housewives, please read the writing on the wall. The special reasons driving the gold boom of the last decade have gone. It's time to sell gold, not buy.

To discourage gold imports, the finance ministry has increased the import duty on gold. Unfortunately this has raised the domestic price correspondingly, rewarding instead of penalizing speculators. It has also led to increased smuggling.

In decrying and trying to suppress gold imports, the finance ministry has unwittingly given the impression that gold is a great bet. Moreover, government banks today are aggressively pushing sales of gold coins to customers as a must-have investment. They should be obliged to warn customers of the risks too.

The finance minister should warn people, in speech after speech, that gold has already fallen a lot and is likely to fall much further. Every time the gold price falls, he should come out with advertisements saying "I told you so".

Last but not least, he should announce that the import duty on gold will be abolished by the end of the financial year. This will induce people to stop importing now, and wait for next year, by which time speculation may be ebbing anyway. The balance of payments will improve magically.

Why gold and silver are in the dumps

By Nigam Arora

Over the last month, if one could simply watch the news but not know the price of gold and silver, the logical conclusion would have been that this is the glory time for precious metals. After all, from every direction, news was coming that should have driven precious metals higher.

The Bank of Japan got a new chief who started running printing presses faster than Bernanke. Cyprus came close to confiscation of bank deposits, by taxing the deposits. Central banks bought $3 billion worth of gold in the first two months of 2013. North Korea threatened to fire nuclear missiles at U.S. targets.

Based on all of this news, gold should have gone to new highs, but instead gold and silver are in the dumps.

There are outflows from the popular SPDR Gold Trust GLD -3.55%  and iShares Silver Trust SLV -4.33%  . Gold and silver miners have been hard hit. Several components of popular miner ETFs Market Vectors ETF Trust Market Vectors Gold Miners GDX -4.59%   and Market Vectors Junior Gold Miners ETF GDXJ -6.39%   have been hovering near recent lows.

To understand what is happening, take a look at the long-term weekly chart and the medium-term daily chart of GLD.

Click here for the long-term weekly for chart.

Click here for the medium-term daily chart.

The long-term chart shows that about a year after I gave a signal to aggressively buy gold in the $600 range, gold started moving in a smooth channel with a slope of about 45 degrees. Smooth channels with a 45-degree slope are often sustained for a long time. Such was the case with gold.

As the chart shows, in 2011, gold broke out of the smooth channel in a parabolic move that resulted in exhaustion. Such a parabolic breakout from a smooth channel is often a medium-term top, and this was the case with gold. After exhaustion, gold traced a symmetrical triangle, which is shown on the chart. A symmetrical triangle indicates a battle between bulls and bears, with neither side able to prevail. Then came the break on the downside, bears won the battle.

The chart also shows Fibonacci retracement levels. Retracement of 50% to 61.8% also coincides with the target on gold based on the Quantitative Analysis Screen. This is the same target zone that I set when I gave a call to sell gold at $1904 after being a mega bull for a number of years.

Over years at The Arora Report, we have refined algorithms that detect footprints of different types of market participants from trading data across the world. The chart shows the zone where we believe the majority of buying was being done by the momentum crowd. The momo crowd buys gold and silver simply because everyone else in their social circle is buying gold and silver, they think it is going up, and they are scared of monetary policy pursued by the Federal Reserve.

The gold momo crowd keeps up the ruse that they understand inflation and history, but in reality, my experience is that unlike gold bugs, their knowledge is superficial. Further, the momo crowd misunderstood QE3 mortgage-backed security buying as inflationary, when in reality, it was not likely to have any impact on inflation.

The chart also shows the zone where Smart Money has been consistently selling, according to our algorithms.

Now look at the medium-term daily chart on gold. Please pay special attention to the down-sloping trendline. Gold bulls failed to penetrate this line on the upside in a meaningful way in the last six months. Every time gold approached the trendline, the Smart Money was selling to the unsuspecting momo crowd. Recent events caused only a weak bounce that did not even touch the trendline as shown on the chart. The last bounce on news from North Korea and Europe was even weaker. In the meantime, the chart shows that gold made a lower low.

Astute investors know the difference between short-term trades and long-term investments. We had downgraded gold and silver on Feb. 11, just before the recent drop in various timeframes based on our algorithms. These are the same algorithms that called for allocation of 20% of assets to silver for a long-term investment at $17.73, and then called silver to be sold at $45.00 - $50.00. Here are our current ratings on gold and silver.

Negative in the very short-term.

Negative in the short-term.

Negative in the medium-term.

Negative in the long-term.

Positive in the very long-term.

Negative psychology in the gold miners is evident from the fact that Barrick Gold ABX -5.46%   fell 8.36% Wednesday on relatively minor news, compared to the scope of this company, to halt work on the Pascua-Lama mine in Chile. Our favorite silver-miner short at this time is First Majestic Silver AG -5.24%  . We have recently taken profits on short positions in Silver Wheaton SLW -5.17%  and Hecla Mining HL -4.81%  .

Disclosure: Subscribers to the Arora Report are short SLV and silver miner AG.

Gold sinks over $60 to lowest since July 2011 Prices hit by technical selling; silver drops 5.3%

By Myra P. Saefong and Carla Mozee, MarketWatch


SAN FRANCISCO (MarketWatch) — Gold futures sank Friday, poised to settle at their lowest level since July 2011, as recent cuts to price forecasts continued to hurt sentiment, prompting investors to lose confidence in gold as a safe-haven investment.

Gold for June delivery GCM3 -4.28%   extended losses after downbeat U.S. retail-sales data, dropping $67.30, or 4.3%, to $1,497.60 an ounce on the Comex division of the New York Mercantile Exchange, on track for a weekly fall of nearly 5%.

“It’s pure panic bedlam on enormous volume,” said Gene Arensberg, editor of the Got Gold Report.

Based on most-active contracts, prices haven’t settled at a level this low since July of 2011.

Gold also fell along with other commodities as the dollar rose on a weak batch of U.S. data and as the psychological impact of potential selling of the precious metal from Cyprus continued to take a toll.

Gold these days “does not seem to respond adequately to the current financial and geopolitical situation,” said Frederic Panizzutti, senior vice president at MKS Group. “The rumors yesterday about Cyprus possibly selling some gold from its Central Bank reserves had a psychological impact resulting in some selling despite the fact that the amount of gold being mentioned could easily be absorbed by the market.”

Cyprus remained in the headlines Friday amid speculation the government was going to ask for more bailout money, which rattled commodities and underpinned the dollar. The country denied it would seek more help.

But despite the troubles in Cyprus, which are usually supportive for gold as a safe haven, investors have focused on Goldman Sachs’s cut to its gold forecast for 2013 to $1,545 an ounce, down from a prior forecast of $1,610. And minutes of the latest Federal Reserve meeting showed members were at odds about when to stop quantitative easing.

“The speculative funds are near-record short gold futures, so it is easy to understand why Goldman would make such a call, but with the trouble heating up in Europe again, and bonds being bid higher today, the move in gold is somewhat counterintuitive,” said Arensberg.

Overall, gold investors have now created an illusion that the metal is no longer a safe haven and that more declines are in the offing, said Chintan Karnani, an independent bullion analyst based in New Delhi.

More pressure

Also weighing on the dollar-denominated metal Wednesday, the dollar got a bid after poor U.S. economic data. Retail sales dropped by the biggest amount in nine months, falling 0.4% as Americans spent less at gasoline stations and many other stores in March, and exceeding the 0.1% drop that was expected. Oil prices also fell after that data was released.

The dollar index DXY -0.0024%  , which measures the greenback against a basket of six major currencies, rose to 82.267 from 82.153 seen in North American trading late Thursday.

Other data showed producer prices falling sharply in March.

Silver futures down 0.63% on lower global trend

NEW DELHI:

 Tracking a weak global trend, silver prices moved down by 0.63 per cent to Rs 51,450 per kg in futures trade today as speculators offloaded their positions.

At the Multi Commodity Exchange, silver for delivery in May moved down by Rs 325, or 0.63 per cent to Rs 51,450 per kg in business turnover of 5440 lots.

Similarly, the white metal for delivery in July declined by Rs 313, or 0.59 per cent to Rs 52480 per kg in 342 lots.

Market analysts said speculators offloaded their positions in tandem with a weak global trend, that mainly pulled down silver prices at futures trade.

Meanwhile, silver fell by 1.18 per cent to $ 27.65 an ounce in New York last night.

Silver futures down on weak global cues

NEW DELHI:

Silver prices fell by 0.76 per cent to Rs 51,280 per kg in futures trade today as speculators offloaded their positions in tandem with a weak global trend.

At the Multi Commodity Exchange, silver for delivery in May month fell by Rs 394, or 0.76 per cent to Rs 51,280 per kg in business turnover of 18,304 lots.

Similarly, the white metal for delivery in July declined by Rs 397, or 0.75 per cent to Rs 52,285 per kg in 1,256 lots.

Market analysts said speculators offloaded their positions, tracking a weak global trend mainly pulled down silver prices at futures trade.

Meanwhile, silver lost one per cent to 27.37 an ounce in London.

The math gets skewed for large commodity traders

Monday, Apr 1, 2013, 6:01 IST | Agency: DNA

Vijay Bhambwani

CTT can change trend in volume growth as impact costs rise.

Today will see the advent of turnover tax (0.01% or Rs1,000 for every Rs1 crore of trade initiated) for the first time on all non-agricultural commodities.

Prima facie, the amount may seem negligible for a retail investor as his / her turnover intra-day is not sizable. But for high frequency traders, algo traders and arbitrageurs, the levy would cut into profits because of their modus operandi – which is to initiate trades in large to very large quantities and reverse positions on small profits or losses.

Their profit depends on the economies of large-scale exposure. Typically, the USP (unique selling proposition) of this type of trading is keeping costs down to the barest minimum. Brokers offer such traders deeply discounted rates of brokerage, while statutory charges are the only level playing field.

Ramping up volumes helps brokers too, since they command a higher component of the total exchange traded volumes, which, in turn, has its own perks.

For the markets and participants alike, there are tangible benefits as well – higher volumes invariably bring efficient price discovery mechanisms and wafer-thin impact costs.

Impact cost is one of the first things large players look for before deploying funds. It’s extremely critical as it is the difference in price between the best seller (or buyer) at a particular price point and the next best seller (or buyer).

If the impact cost is efficient, there will be ample buyers and sellers at every tick, thereby making large-sized trades an easy and inexpensive proposition. The market is then said to “have depth.”

On the other hand, if buyers (or sellers) are few and far between, accumulating large positions becomes a very expensive and undesirable exercise. It hits the take-home profit significantly.

Big players usually avoid markets with high impact costs. The commendable growth in the turnover of Indian commodity exchanges has been partly due to their cost efficiencies and partly due to the novelty factor.

With the imposition of the CTT, the cost efficiency may just take a hit as high frequency traders will face a hurdle in terms of a hit in their take home profits.

There is also another aspect to the timing of imposition of the CTT: in a trending market (bull or bear), price moves are relatively large and the percentage returns on a trade are higher compared with a non trending (sideways) market.

A trader can tweak the exit price to factor in such additional costs as the CTT.

Unfortunately, the CTT has been imposed in a market where price moves are constrained due to global fears and the markets are more unrelenting in yielding profits to the high frequency traders.

Now behavioural finance principles say markets tend to come to terms with shocks over a period of time, and the CTT will be no exception. However, the future rate of growth in turnover will be a worrying point.

There is also the factor of the parallel market trading system (called ‘dabba’ trading) wherein trades are routed through illegal and off-the-books and therefore non-exchange platforms. The parallel trading system is one of the most persistent one anywhere in the world, especially in Tier II and Tier III cities in India.

There are legitimate fears that the parallel systems may just get a boost from the imposition of the CTT, since such levies are unheard of in the illegal betting system.

If empirical evidence is anything to go by, we have seen the Nifty trading volumes shift to the Singapore markets (SGX) due to a more friendly margining system and pliable trading hours.

The revenue loss to the exchequer cannot be wished away. More importantly, the prospect of loss of future business – the most critical aspect close to the heart of any capitalist endeavour.

With the future of commodity market turnover being closely linked to the permission to institutions, NRIs and FIIs (Indian commodity exchanges are currently fairly closed trading markets), the CTT may prove to be a stumbling block since price discovery mechanism and impact cost analysis may lose efficiency.

As mentioned earlier, large players will want very high degree of efficiency in terms of impact costs before they deploy money in our commodity markets.

Bhambwani is the author of ‘A Traders Guide to Indian Commodity Markets’ – India’s first commodity trading guide and invites feedback on vijay@bsplindia.com

Free life time commodity Tips

http://www.dnaindia.com/money/1817666/report-the-math-gets-skewed-for-large-commodity-traders

MCX Silver likely to trade range-bound till US- non farm payroll data release

(Commodity News word): On the MCX, silver for March delivery traded with minor change in prices and is likely to trade range-bound for today's session till the release of US - non farm payroll.

For intra-day, silver may trade sideways to bearish till the release of US payroll data. Silver on MCX for March delivery has support at 57700, if the commodity falls below the range then it could see a test of 56900 level.

The resistance is now likely to be seen at 58700, a move above could see prices testing 59200 for the commodity.

“Those traders who are holding long position in silver for March delivery should maintain stop loss of 57700 for today. Intra-day traders should wait and watch till the release of US data before entering into short term trades,” said Amrita Mashar, Research Analyst at Commodity Online.

The demand for risk-on assets such as gold was dampened by the US jobless claims which came in higher than last week which resulted in profit taking also.

End-of-the-month position squaring, profit taking from short-term traders, and pre - Job data report positioning were the the major reasons for sharp fall in prices on Thursday.

Bullion prices are also affected by stronger than expected Chicago PMI in early trading session.

COMEX silver for March delivery was seen trading at $31.380 a gain of $ 0.029 or 0.09% as of 03.16 PM, IST. On India's MCX, silver for delivery on March 5 was spotted trading at Rs.57781 a fall of of 0.12%.

MCX Silver likely to trade range-bound till US- non farm payroll data release

(Commodity News word): On the MCX, silver for March delivery traded with minor change in prices and is likely to trade range-bound for today's session till the release of US - non farm payroll.

For intra-day, silver may trade sideways to bearish till the release of US payroll data. Silver on MCX for March delivery has support at 57700, if the commodity falls below the range then it could see a test of 56900 level.

The resistance is now likely to be seen at 58700, a move above could see prices testing 59200 for the commodity.

“Those traders who are holding long position in silver for March delivery should maintain stop loss of 57700 for today. Intra-day traders should wait and watch till the release of US data before entering into short term trades,” said Amrita Mashar, Research Analyst at Commodity Online.

The demand for risk-on assets such as gold was dampened by the US jobless claims which came in higher than last week which resulted in profit taking also.

End-of-the-month position squaring, profit taking from short-term traders, and pre - Job data report positioning were the the major reasons for sharp fall in prices on Thursday.

Bullion prices are also affected by stronger than expected Chicago PMI in early trading session.

COMEX silver for March delivery was seen trading at $31.380 a gain of $ 0.029 or 0.09% as of 03.16 PM, IST. On India's MCX, silver for delivery on March 5 was spotted trading at Rs.57781 a fall of of 0.12%.

India infrastructure sector outlook mostly negative, govt initiatives encouraging: India Ratings

(Commodity News World): India Ratings has maintained an overall negative outlook for Indian infrastructure projects for 2013, considering project companies’ continued weak credit profiles. However, some sub-sectors have a split outlook. The outlook for power projects remains negative while certain pockets in the transportation sector have a stable outlook. 

The agency observes that a range of recent policy initiatives announced by the government are encouraging and have kindled a sense of optimism among market participants. However, it believes that the process of addressing fundamental risks through concrete and sustained on-the-ground actions to repair damaged credit quality is likely to be protracted. The policy initiatives include a presidential directive to the state-owned Coal India Ltd to sign fuel supply agreements, financial restructuring of distribution utilities, constitution of the Cabinet Committee on Investments and the likely introduction of the Land Acquisition Bill in the ensuing Budget session of Parliament. 

India Ratings expects that in 2013 a number of projects are likely to default on their bank debt obligations. Alternatively, lenders might be compelled to approve forced debt restructuring packages. This is in view of their weak financial structures and multiple risks including construction delays, plant stabilisation issues and fuel supply constraints in the power sector and traffic under-performance in the transportation sector. Reduced sponsor capacity to extend support would also likely contribute to this phenomenon. In a majority of the agency’s rated infrastructure projects, sponsors have played a significant role in preserving the credit profile of their projects. Deterioration in sponsor’s profile will impair their ability to keep supporting projects that have a low economic value. 

Some of the macro-economic variables – a pick-up in GDP growth rate, abatement of inflationary pressures and the expected drop in interest rates – may turn favourable during 2013. This may result in cash flows of infrastructure projects experiencing some improvement though the ‘lag’ effect would imply that benefits are unlikely to accrue immediately.

India Ratings maintains a negative outlook for power projects. Many projects face protracted delays in completion – either because of technical issues such as longer plant stabilisation or due to slow land acquisition for plant area, constraints in developing railway and transmission infrastructure and delays in operationalising captive coal mines. Fuel shortage, off take risks and counterparty credit profiles are compounding the issues faced by these projects, making them vulnerable to ratings downgrades. 

Construction delays and traffic underperformance will remain the two most important rating drivers for toll road projects in 2013. Many projects exhibit stable characteristics with drastic rating downgrades averted only on account of expectation of continued sponsor support to fund cost overruns and/or bridge marginal revenue shortfalls in case of operating assets. The ratings of availability-based (annuity) road projects will be stable in 2013 because of low revenue risks and simple maintenance requirements considering the operator-cum-sponsor’s track record in the sector.

The regulatory clarity that has emerged from the recent orders on project costs and the levy of airport development fee has provided relief to airport credits. However, global economic uncertainties and slowing growth in India coupled with rising air fares have led to negative growth in domestic passenger enplanements; international passenger traffic has grown at a slower rate. The agency views this fall in passenger enplanements as cyclical and believes that it is unlikely that long-term forecasts would not be achieved, given the strong growth recorded over the last six-seven years

Turnover of commodity bourses down 5.5% in April-December

 NEW DELHI:
The turnover of commodity exchanges fell 5.54 per cent during the April-December period to Rs 1,29,62,447 crore because of decline in bullion trade.

"The cumulative value of trade from April 1, 2012 up to December 31, 2012 during the financial year 2012-13 was Rs 129,62,447.62 crore," market regulator FMC said in its report.


 The turnover of commodity bourses was Rs 1,37,22,854 crore in the corresponding period of previous fiscal.

Bullion trade declined by 25.30 per cent in the first nine months of 2012-13 to Rs 60,03,141 crore, from Rs 80,36,753 crore in the year-ago period.

However, total trade in agriculture commodities during the period rose 16 per cent to Rs 17,12,849 crore, from Rs 14,71,629 crore in the nine months of the previous fiscal.

Similarly, trade in metals (other than bullion) increased by 17 per cent from April-December at Rs 23,99,548 crore, from Rs 20,43,105 crore in the year-ago period.

The trade in energy was up by Rs 28,46,907 crore compared with Rs 21,71,364 crore during the period under review.

There are more than 20 commodity exchanges (both national level and regional) in the country.