Gold prices gain in Asia as China CPI rise noted

Investing.com - Gold prices gained in Asia on Thursday with regional data sets noted, particularly a rise in consumer prices in China.

In China consumer prices rose 0.5%, higher than the 0.4% gain seen in August and producer prices fell 5.9%, ore than the expected drop of 5.5% year-on-year.

Earlier, in Australia the overall unemployment rate fell to 6.2% as expected from from 6.3% and 11,500 jobs were added, compared to an expected 5,000 under a participation rate of 65% as seen.

Japan's corporate goods price index for August fell 0.6%, compared to a 0.4% fall seen month-on-month, while core machinery orders dipped 3.6% in July month-on-month, well off the 3.7% gain seen.

And the New Zealand dollar slumped in Asia on Thursday after the central bank, as expected, cut its overnight cash rate by 25 basis points to 2.75%.

On the Comex division of the New York Mercantile Exchange, gold for December delivery rose 0.33% to $1,105.60 a troy ounce, wjhile silver for December delivery fell 0.04% to $14.570 a troy ounce.

Copper for December delivery rose 0.39% to $2.432 a pound.

Overnight, gold futures fell sharply on Wednesday suffering its largest one-day fall in more than six weeks, amid a broadly stronger dollar and the introduction of further stimulus measures by China to rekindle its flagging economy.

In Beijing, China's finance ministry said it would introduce "more forceful" fiscal measures in order to boost slowing economic growth, which is projected to remain at the lowest level in more than a decade for the third quarter. The measures include a potential tax cut for small business, as well as the allocation of funding for infrastructure projects. As part of the proposal, the ministry approved two railway projects worth nearly 70 billion yuan or $11 billion.

“We will accelerate the implementation and improvement of proactive fiscal policy and related measures, do timely fine tuning, and speed up reform measures to support stable growth and promote continued healthy economic development,” the finance ministry said in a statement.

It came one day after China announced that its dollar-denominated exports fell sharply by 5.5% on a year-over-year basis in August, exacerbating concerns about persisting weakness in the world's second-largest economy. Imports, meanwhile, tumbled 13.8% on a yearly basis, producing a trade surplus of $60.24 billion. On Wednesday, theShanghai Composite index closed 2.3% higher extending gains from one session earlier. China is the world's largest producer of gold and the second-largest consumer behind India.

In the U.S., the Labor Department said on Wednesday in its Job Openings and Labor Turnover Survey (JOLTS) that nationwide openings increased to a new series high in July, reaching a level of 5.8 million. The survey previously rose to a series-high in May when it reached a level of 5.4 million. The job openings rate surged 3.9% in July, after measuring at 3.6% the previous three months. It also came off the back of a mixed employment report for August on Friday when the labor market added 173,000 non-farm payrolls, while the unemployment rate dropped to 5.1%, its lowest level since April, 2008. The data could strengthen arguments from the hawks at the Federal Reserve for a September interest rate hike.

Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in raising rate environments.

On Tuesday, World Bank chief economist Kaushik Basu warned that a rate hike by the Fed next week could trigger a widespread crisis in emerging markets, pushing capital away from their economies and potentially creating sharp fluctuations in their currencies. Officials from the International Monetary Fund have issued similar warnings in recent weeks on the severe ramifications a rate hike could have on global markets that are not in the position to absorb a tightening of monetary policy from the U.S. central bank.

UPDATE 2-Oil prices fall as Asia's leading economies slow further

* ANZ bank lowers global growth forecast

* Japan's machinery orders shrink

* China's producer price index falls 42nd straight month

* Brazil downgraded to junk status (Adds growth comment, updates prices)

By Henning Gloystein

SINGAPORE, Sept 10 (Reuters) - Oil prices fell on Thursday as weak Japanese and Chinese economic data fuelled concerns that low levels of investment could further erode already slowing global growth.

Japan's core machinery orders fell 3.6 percent in July, official data showed, much worse than a 3.7 percent increase expected by economists, and followed a 7.9 percent month-on-month decline in June.

In Asia's biggest economy China, the producer price index fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed on Thursday.

With many economies facing headwinds, ANZ bank said global growth for 2016 and 2017 would hold around 3.5 percent, revised down from the 4 percent it had previously forecast.

ANZ added that "in the near term the risks are skewed to further downward revision."

Benchmark Brent crude oil futures LCOc1 fell by around 1 percent to $47.09 per barrel at 0433 GMT. U.S. crude futures CLc1 were down 0.8 percent at $43.79 a barrel.

Oil prices have fallen by more than 50 percent since June 2014 as soaring output clashed with slowing economies in Asia, the main growth engine for commodities over the previous years.

The weakening in Asia's economies and commodity demand is having far-reaching effects.

On Wednesday, Standard & Poor's downgraded Brazil to a junk-grade credit rating, just seven years after it first won an investment-grade rating. Brazil, one of the main commodity exporters to China and a member of the so-called BRICS emerging economies - Brazil, Russia, India, China and South Africa - was until recently seen as one of the key drivers of the global economy.

The oil price fall was compounded after the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, decided last November to keep output high in favour of market share over prices.

"In the first half of 2015, Saudi Arabia exported on average 4.4 million barrels per day (b/d) of crude oil to seven major trading partners in Asia, making up more than half of Saudi Arabia's total crude oil exports over that period," the U.S. Energy Information Administration (EIA) said.

"Even as global crude oil prices fell in 2014 and 2015, Saudi Arabia increased production and kept its export levels high, enabling it to maintain its market share in these countries," the EIA added. (Editing by Kenneth Maxwell and Tom Hogue)

नई सोयाबीन की आवक शुरू, कीमतों में गिरावट की आशंका

नई दिल्ली। समय से दो हफ्ते पहले ही सोयाबीन की आवक शुरु हो गई है। इसका नकारात्मक असर सोयाबीन की कीमतों पर देखने को मिल सकता है। सोमवार को इंदौर में 4 टन नई सोयाबीन की आवक हुई। कारोबारियों के मुताबिक इसमें नमी की मात्रा 20-30 फीसदी है। सोमवार को 3300-3350 रुपए प्रति क्विंटल के भाव सोयाबीन बिका। एक्सपर्ट्स के मुताबिक आने वाले दिनो में सोयाबीन की आवक और बढ़ेगी, जिसके कारण कीमतें फिसल सकती है।

आने वाले दिनों में बढ़ेगी आवक

इंदौर ट्रेडर्स एसोसिएशन के प्रसिडेंट एन के अग्रवाल ने कहा कि खरीफ सीजन के दौरान समय से पहले सोयाबीन की बुआई हुई। इसलिए आवक समय से पहले शुरु हो गई है। नई फसल की की क्वालिटी अच्छी है। वहीं पिछले सीजन का सोयाबीन 3300 रुपए प्रति क्विंटल के भाव बिका।

एन के अग्रवाल ने बताया कि अगले एक हफ्ते के दौरान दूसरी मंडियों में भी सोयाबीन की आवक शुरु हो जाएगी। अगले 5 स 6 दिनो में नई सोयाबीन की आवक बढ़कर 50-100 टन पहुंच सकती है। वहीं सितंबर के अंतिम हफ्ते में आवक पूरे जोरों पर होगी।

आवक बढ़ने से कीमतों पर दबाव

इंदौर के सोयाबीन कारोबारी महेंद्र जैन ने कहा कि पिछले साल मानसून में देरी की वजह से इस समय तक सोयाबीन की आवक शुरु नहीं हुई थी। नई फसल की आवक समय से पहले शुरु होने से कीमतों पर दबाव बन सकता है। कृषि मंत्रालय के आंकड़ों के मुताबिक अबतक देशभर में 115 लाख हेक्टेयर में सोयाबीन की बुआई हुई है, जो कि पिछले साल के मुकाबले 5 फीसदी ज्यादा है। इसके बावजूद कारोबारियों के मुताबिक देश में 100 लाख टन ही उत्पादन होगा।

Gold prices up smartly in Asia as Crimea vote supports joining Russia

Gold prices were up smartly in early Asian trade on Monday as an annexation of the Crimean region looked inevitable after a vote on Sunday, prompting President Barack Obama to warn Russia President Vladimir Putin again that the United States and Europe are "prepared to impose additional costs" on Russia for its actions.

The U.S. and Europe have said they would impose economic and diplomatic sanctions on Russia next week, if the vote took place. On Sunday reports said an overwhelming majority supported the referendum to joing Russia and leave the Ukraine with celebrations underway. Official results are due within the day.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,388.80 a troy ounce, up 0.71%, after settling at $1,379.00 a troy ounce last week.

Comex gold prices ended the week with a gain of 2.95%, or $40.80, amid heightened tensions between Russia and the U.S. over Russia's involvement in Ukraine's political crisis. 

Meanwhile, weaker than expected U.S. consumer confidence data further boosted the appeal of the precious metal.

The University of Michigan consumer sentiment index ticked down to 79.9, from the 81.6 final reading in February. Analysts had expected the index to improve to 82.0.

In the week ahead, investors will be looking ahead to Wednesday’s monetary policy announcement by the Federal Reserve amid speculation the central bank is likely to continue to scale back its stimulus program.

The Fed is also to publish its economic forecasts and Fed Chair Janet Yellen will hold a press conference.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers increased their bullish bets in gold futures in the week ending March 11.

Net longs totaled 123,007 contracts, up 3.87% from net longs of 118,241 in the preceding week.

Elsewhere on the Comex, silver for May delivery traded at $21.587 a troy ounce, up 0.81% and copper for May delivery rose 0.29% 2.949 a pound. The industrial metal fell to $2.908 a pound on March 12, the lowest since July 2010.

Fears over problems in China’s financial sector also sapped risk appetite following the country’s first domestic bond default this month.

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

Asian share markets slip as Ukraine tensions weigh on sentiment

Stocks in Japan and Hong Kong slipped on Monday as investors nervously awaited the West's response to Crimea's vote to break away from Ukraine and join Russia, which has drawn international condemnation.

Stock markets across Asia Pacific were mixed after the referendum Sunday in Crimea, the latest development in the volatile region, amid rising worries over another possible military incursion into Ukraine by Russia. Tensions there have weighed on global markets in recent weeks.

Japan's Nikkei lost 0.4%, while Australia's benchmark S&P ASX 200 shed 0.2% and South Korea's Kospi gained less than 0.2%. In China, the Hang Seng Index in Hong Kong lost 0.4% and the Shanghai Composite was flat.

However, business proceeded in the region with Taiwanese insurer and a Chinese private-equity firm pledging to buy a big portion of Chinese lender Harbin Bank's initial public offering, which is expected to raise around US$1 billion when it is launched Tuesday.

Fubon Life Insurance Co., an insurance unit of one of Taiwan's biggest financial firms by assets, Fubon Financial Holding Co., and Citic Capital Holdings Ltd. are among seven cornerstone investors, and have committed to buying a total of 43% of the institutional tranche of Harbin Bank's IPO, people familiar with the situation said Monday. 

But the drops in Asia mirrored the mood on Wall Street Friday. At the close of U.S. trading last week, the Dow Jones Industrial Average fell 0.27%, the S&P 500 index fell 0.28%, while the Nasdaq Composite index fell 0.35%. European indices, meanwhile, finished largely lower.

After the close of European trade on Friday, the EURO STOXX 50 fell 0.53%, France's CAC 40 fell 0.80%, while Germany's DAX 30 rose 0.43%. Meanwhile, in the U.K. the FTSE 100 fell 0.40%.

Investors were also looking at China after the People's Bank of China said over the weekend that it has decided to widen the yuan's daily trading band, allowing it to move up or down by 2% from the daily rate set by the central bank.

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.

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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