Last Updated : 27 November 2012 at 12:15 IST

Gold: Two unfolding events may lead to safe haven buying

Source :Commodity Online

NEW YORK (Commodity Online):  A New York based financial-services firm INTL FCStone Inc cites two unfolding events that could lead to safe-haven buying of gold. 

Protests are occurring in Egypt after decrees from President Mohamed Mursi consolidating power. The country's stock market has tumbled and the Muslim Brotherhood is expected to stage a massive demonstration in support of Mursi, which could set the stage for more violence.

" The Egyptian situation should be largely supportive for gold, as it could fuel further 'safe refuge' buying by Mideast origins," said Edward Meir, commodities consultant with INTL FCStone.

Meanwhile, US lawmakers and the administration still have not resolved the so-called fiscal cliff issue, and much remains to be done.

“Despite all the public bonhomie on display, the various sides are still quite far apart. This will mean that there will continue to be relatively rocky patches ahead for the markets, a scenario that should bode well for gold as a relative safe haven," Meir concluded. 

Last Updated : 27 November 2012 at 11:00 IST

Gold may try testing $1800 levels this week: Analyst

Source :Bloomberg

BEIJING (Commodity Online):  As the Greek debt deal is clinched by the troika of European Central Bank, IMF and Finance Ministers of Europe, Euro strengthened against Dollar which helped gold prices to climb. Meanwhile a Chinese analyst is of the opinion that gold may test $1,800 levels this week.

“As investors once again gain confidence in Europe after leaders give Greece another chance, that will help the euro and in turn gold,” said Wang Xiaoxi, an analyst at Beijing Capital Futures Co., a unit of the Chinese capital’s investment arm to Bloomberg.

“The market may try for a test of $1,800 this week.” he added.

Spot gold prices have climbed to $1,749.94 an ounce at 10.50 am IST even as gold for February delivery on the Comex was seen trading at $1752.55 an ounce, a gain of 0.03%.

On India's MCX, gold for December delivery was seen trading at Rs.32425 for 10 grams, a gain of 0.20% as of 10.41 am IST.

As per the debt deal, the debt levels of Greece will be brought down to 124% of GDP by 2020. This has cleared way for the tranche of funds to be released in aid of the debt-stricken nation to the tune of 43.7 billion euros.

December will see the lion's share of money being paid out to Greece with the rest being handed over in Q1, 2013. But this presupposes that Greece fulfills its tough austerity pledge. 

 

NEW YORK (Commodity Online):  Gold may be buoyed by expectations of further monetary-policy easing at the December 11-12 meeting of the Federal Open Market Committee, said HSBC Holdings plc (HSBC).

The Fed currently is conducting two programs. One is known as “Operation Twist,” which involves the extension of the average maturity of the Fed’s securities portfolio through the simultaneous sale of short-term Treasuries and the purchase of longer-term ones.

The second program, commonly referred to as Quantitative Easing 3, is the outright monthly purchase of $40 billion a month in agency mortgage-backed securities.

“The Fed cannot continue with “Operation Twist” since holdings of short-term Treasuries will have been exhausted. This means the FOMC could shift directly into another large-scale asset purchase program,” said Kevin Logan, HSBC’s chief U.S. Economist.

“Bullion is historically sensitive to monetary easing expectations. We have noted…that gold tends to react more favorably to Fed announcements of outright asset purchases when compared to maturity extension programs such as ‘Operation Twist.’ As such, an announcement by the Fed of another round of quantitative easing would be a bullish case for gold, we believe,” said Jim Steel, HSBC precious metals analyst.

“Prices are likely to continue to search for triggers from the macro and geopolitical environment, but the downside rests with the physical market and central bank buying, with the latter looking more supportive,” Barclays said in a note.

Price forecast: Q4 12: $1810/oz, 2012 annual average: $1691/oz

“ Although the price of gold has been stabilising under nearby resistance in the 1740 area, the overall bias remains bullish. Indeed we view the pause as a healthy development within context of the move higher off the November lows near 1670. We look for a break above 1740 to confirm further upside for gold, with near-term targets in the 1775 area. Ultimately we are looking for a test and break above the range highs near 1800 to confirm our broader bullish view for a move to the record highs near 1921,” Barclays said.

- Resistance: 1740, 1775
- Support: 1720, 1705

Last Updated : 26 November 2012 at 11:45 IST

Silver to average $35/Oz in Q1 2013 Gold $1850/Oz

Source :Commodity Online/Barclays Capital

 

LONDON (Commodity Online):  Silver prices are expected to average $35 an ounce in the first quarter of the next year while gold prices could be at $1850 per troy ounce, said Barclays Capital in a research note.

According to the British bank,  silver is the strongest-performing precious metal so far this year but true to form has traded the widest range across the four precious metals.  This volatility continues to reflect the lack of support provided by the metal’s fundamentals while sizeable growth in investment demand maintains the necessary scope to plug the gap and drive prices higher.

According to Thomson Reuters GFMS’ (GFMS) interim silver market review released last week, most of the trends highlighted were in line with  our own expectations but there were two exceptions, scrap supply and industrial demand, which painted a weaker supply and demand picture,  Barclays added.

GFMS expect  silver to trade up to the $36/oz before the 2012 year-end (Barclays Q4 12: $31.5/oz) and possibly over $50/oz during 2013 on the back of investor interest (Barclays 2013 annual average forecast: $32.5/oz).

" In terms of scrap, GFMS expect 1% y/y growth of just over 100 tonnes to a fresh all-time high on the back of higher recycling in India in jewellery and silverware whereas we have estimated a decline due to the ongoing decrease in photography usage. While we had certainly estimated silver industrial demand to slow this year to growth of less than 1% y/y from the drop last year, GFMS expect the contraction to continue into 2012, falling by 6% y/y on the back of heavy destocking and pressure from thrifting and substitution," they noted.

" In line with our own estimates, on the supply side, GFMS expect mine output to grow to yet another record high and official sector selling to soften. Demand is expected to soften overall with photography maintaining its secular decline and coin sales easing from the tremendous strength in 2011, in turn leading GFMS to estimate a surplus of 7.5kt in 2012 to be absorbed by investment demand, compared to our surplus of 5kt. Silver has certainly benefitted from recovering investor demand with ETP flows into open-ended funds up almost 800 tonnes, compared to outflows of almost the same magnitude last year, while including closed funds, flows are up around 1000 tonnes," Barclays concluded. 

 

Elsewhere in the precious metals complex, spot silver was flat at $33.330/oz, platinum was up 0.3% at $1,577.25/oz, and palladium was up 1.4% at $652.50/oz.

Commodity Technical Analysis: Gold Looking to Extend Towards 1760s

Daily Bars

Chart  Prepared by Jamie Saettele, CMT

Commodity  Analysis: “Gold bounced from the 50% retracement of the rally from 1672.50 Thursday but what bothers me about being bullish is the corrective nature of the rally from the low (3 waves). However, the low on day 3 of the month and emotional trade at the low (11/2 was a JS Thrust day) suggests that price is likely to stay above 1672.50 for the remainder of November. Perhaps a complex correction is underway (series of 3 wave movements) throughout November.”

Commodity Trading Strategy: “I’m on the lookout for a wave 2 or B top below the October high at higher levels.”

LEVELS: 1698 1705 1717 1739 1749 1780