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Jun
1

Gold falls 1.6 Percent Notches Second Sharp Monthly Loss

Precious metal knock down almost 2 percent on Friday following US data showing low inflation and improving consumer confidence dampened investor interest, with gold notching sharp losses for a second consecutive month.

A combination of declining fund interest, option expiration and squaring of books following investors covered short positions also sent open interest in US gold futures to its lowest in approximately four years traders said.

Data showing a six-year high in consumer sentiment weighed on yellow metal a traditional safe haven.

Carlos Perez-Santalla at brokerage Marex Spectron said that the metals were previously under pressure going into the end of the month as many people have a lot of short positions outstanding and the consumer confidence statistics just added fuel to selling.

Spot gold knock down 1.6 percent to $1,390.80 per ounce by 3:17 p.m. EDT (1917 GMT), its largest one-day loss in two weeks.

US Comex gold futures for August delivery settled down $19 at $1,393 per ounce, with trading volume almost 30 percent below its 30-day average.

Yellow metal had gained more than 3 percent in the previous three sessions as discouraging US growth data and jobless claims figures boosted expectations for continued Federal Reserve stimulus.

However for the month of May, precious metal fall 5.8 percent following April’s decline of more than 7 percent. On Thursday, CME data showed Comex gold futures open interest inched up less than 1 percent to 385,901 contracts, hovering near its weakest level since September 2009. The market gauge was 13 percent lower versus 445,517 lots previous Thursday.

Economic optimism and increasing investor interest in better-performing assets such as equities explained decreasing interest in the safe-haven metal.

Holdings in the SPDR Gold Trust, the world’s biggest gold backed exchange traded fund, remained unchanged at 1,013.15 tonnes on Thursday, following increasing for the first time in three weeks on Wednesday. However these are still near four-year lows, having lost almost 337 tonnes in 2013 so far.

Jun
1

Banks In The Dark Over $15 Billion of Promised Rosneft M&A business

Banks that assist Russian oil company Rosneft finance its $55 billion buyout of rival have been left waiting for their payback a share in $15 billion in asset sales projected to follow the deal.

State oil company Rosneft’s takeover of this year aimed to generate a major oil group producing more oil than however it also tightened the Russian government’s grip on the country’s energy sector.

The asset sales promised by Rosneft Chief Executive Igor Sechin would offload less-profitable businesses to turn the company into the major oil player the CEO has stated he wants it to be. The delay demonstrate Rosneft has a lot on its plate integrating and that the sales are on the back burner.

Rosneft had dangled the juicy divestment mandates at the banks in exchange for a $29.8 billion loan the largest in Russia’s history on good terms, all the lending banks are waiting. We thought asset sales and refinancing bonds would kick start straight following the closing.

Rosneft’s slow motion is annoying the banks as they would earn fat fees from advising the oil giant on the asset sales this year, which would assist boost M&A revenues in an otherwise arid deal making landscape.

M&A activity across all sectors is losing 7 percent in Europe, Africa and Middle East since January partly due to the impact of the euro zone crisis on business confidence.

Banks that uphold big balance sheets throughout the financial crisis have been hoping to use this muscle to win lucrative M&A advisory business from competitor which had to shrink partly to meet tough European capital rules.

Banks frequently use their balance sheets to offer cheap loans to corporate clients to secure higher margin business such as share or bond issues or M&A work.

Big balance sheets helped Deutsche Bank and Barclays to achieve number 2 and 3 rankings in M&A league tables previous year, challenging US rival Goldman Sachs which had the top slot.

Jun
1

Record Unemployment Low Inflation Highlight Europe’s Pain

Unemployment has reached a new high in the euro zone and inflation remains well beneath the European Central Bank’s target, pacing pressure on EU leaders and the ECB for action to stimulate the bloc’s sickly economy.

Joblessness in the 17 nation currency area climbed to 12.2 percent in April, EU statistics office Eurostat stated on Friday spoting a new record since the data series began in 1995.

With the euro zone in its greatest recession since its creation in 1999, consumer price inflation was far lower the ECB’s target of just below 2 percent, coming in at 1.4 percent in May slightly higher then April’s 1.2 percent rate.

That augment may quieten concerns regarding deflation, however the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are not capable to find work exemplifying southern Europe’s lost generation.

Policymakers and economists including Germany’s finance minister Wolfgang Schaeuble have stated the greatest menace to the unity of the euro zone is now social collapse from the crisis, rather than market-driven factors.

In France, Europe’s second biggest economy, the number of jobless rose to a record in April while in Italy the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers handling of Europe’s debt crisis.

Some economists suppose the ECB, which meets on June 6 will have to go beyond an additional interest rate cut and consider a US style money printing program to breathe life into the economy.

Nick Matthews, a senior economist at Nomura International in London said we do not expect a strong recovery in the euro zone. It puts pressure on the ECB to deliver even more conventional and non conventional measures.

May
28

GBP/USD D1 Technical May 28

GBP/USD didn’t manage to overcome 1.5180 level yesterday and get bearish strength and currently it is dropping towards  support 1.5023-1.4980 level. Bollinger bands are showing sell signals for GBP/USD.

There can be two scenario, first if cable manage to hold 1.4980 level which is acting as strong support then GBP/USD will start a new bullish trend.

But if cable fails to hold 1.4980 level and give a day closure below  1.4980 level. It will then indicate strong bearish strength which will take GBP/USD further down.

 

May
25

Gold Fall, however 2.15 percent Weekly Rise Biggest in a Month

Precious metal turned modestly lower on Friday as some players exited positions ahead of a long US weekend however registered its largest weekly percentage gain in a month, supported by a fall in stock markets and a softer US dollar.

Comments from a Federal Reserve official that dampened talk the US central bank is set to restrain monetary stimulus also underpinned yellow metal prices, which stuck to a fairly tight range.

Spot gold was down 0.23 percent at $1,387.51 per ounce by 2:37 EDT (1837 GMT), slightly lower than $1,390.40 late on Thursday. It remained up 2.15 percent on the week, its largest weekly rise since late April.

COMEX June gold futures closed at $1,386.6 per ounce, drop $5.2 or 0.37 percent and held about those levels in after-hours business.

Bullion got a boost this week from declining equity markets, which in Europe on Thursday posted their largest one day drop in nearly a year. On Friday, US stocks knock down for a third day, putting indexes on track for their first negative week since mid-April.

Robin Bhar, metals analyst at Societe Generale Group in London, a weaker greenback combined with continued QE, some physical buying at the lower levels out to China in particular all of those factors have helped precious metal in the last few days.

QE refers to quantitative easing, or the Federal Reserve’s program of buying almost $85 billion per month in debt to keep US interest rates low and stimulate the economy.

The US dollar extended its decline against the yen and was on track for its largest weekly loss in three years against the Japanese currency. The euro climbed 0.7 percent this week against the dollar its first weekly addition in three periods.

During the US session, precious metal ventured into negative regions with some players reluctant to hang onto a long gold position over the extended Memorial Day weekend in the US, given the newest uncertainty about Federal Reserve policy.

Speculation the Fed would scale back its monetary easing program evaluate on yellow metal this week after Fed Chairman Ben Bernanke stated the central bank could start scaling back its $85 billion in monthly bond purchases in the next few meetings.

But, St. Louis Fed President James Bullard stated on Friday that US inflation would have to pick up before he voted to scale back stimulus.

Bhar said there’s a lot of uncertainty, there’s still no better than 50/50 chance that the Fed will unwind its stimulus or that the economy performs as they expect it will.

May
25

German Economy to Pick up Although Fall Short of Traditional Pace

Germany’s economy will recuperate from a bout of winter weakness however fall well short of the dynamic growth rates of previous years as euro zone recession and global slowdown stunt investment and exports.

There are homegrown problems too. What hue of government will result from September elections is injecting doubts and foreign investors cite worries regarding over-regulation and Germany’s future energy mix after Chancellor Angela Merkel turned her back on nuclear power.

Europe’s paymaster was long flexible to the euro debt crisis but contracted at the end of previous year and only eked out meager growth in the first quarter.

The Bundesbank stated this week a solid second quarter recovery was in prospect. Construction is expected to bounce back following a harsh winter and private consumption will grow thanks to low unemployment inflation-busting wage boost and low interest rates.

Although even the government forecasts just 0.5 percent growth in 2013 and economists doubt German companies will start investing heavily in the short term.

Christoph Schmidt, head of the German Council of Economic Experts, nobody expects strong growth for this year now particularly as the first quarter was so sobering, advisors to the government known as the wise men.

The economy grew just 0.1 percent in the first quarter following shrinking 0.7 percent in the previous three months of 2012.

Schmidt said trade will not contribute much, it could even drag on growth so that leaves domestic demand, private consumption is comparatively stable however investments are restrained and the key question will be when and how much they pick up.

May
25

Budget Cuts Mean Furlough Friday at Four Federal Agencies

Across the board budget cuts have shaped Furlough Friday in Washington and somewhere else because the one day closing of four federal agencies forced an unpaid day off for 115,000 workers.

Employees at the Environmental Protection Agency, the Department of Urban Development and Housing, the office of Management and the Internal Revenue Service and Budget stayed home on Friday.

According to Cory Bythrow, communications director at the National Federation of Federal Employees, a union representing government workers. The unemployment affects about 5 percent of the federal workforce. Bythrow tracks workplace fallout from the budget cuts that are known as sequestration.

Bythrow said eighty-five percent of the workers who were furloughed on Friday are based outside Washington. They include union and non-union employees, depending largely on where they are.

The layoff come as the United States heads into a holiday weekend, with Memorial Day celebrated on Monday, when government offices will be closed.

A Washington Post poll released on Friday found 37 percent of Americans feel confiscation has hurt them personally, up from 25 percent in March. Almost half of those affected say the harm to them has been major.

May
18

Gold Drop Further in Longest Losing Streak in Four Years

Precious metal knock down on Friday for a seventh straight session, in its greatest losing streak since March 2009 because the dollar strengthened and investors cut exposure to the gold fearing further drops and choosing equities instead.

Yellow metal has lost almost 6 percent of its value in the six sessions through Thursday as stocks added on the back of strong US economic statistics and on fears the Federal Reserve could end its bullion friendly bond buying program.

Spot gold was losing 0.34 percent at $1,380.91 per ounce by 0538 GMT, having plunge to a four-week low of $1,369.29 on Thursday as renewed liquidation in precious metal’s ETFs and a recent drop below the $1,400 per ounce level spooked investors.

The gold is down 17 percent for the year and is on track for its worst weekly turn down in a month. Holdings in SPDR Gold Trust, the world’s major gold-backed exchange-traded fund, knock down to their lowest in four years.

Traders and dealers said Physical demand was also quiet on Friday as consumers in the largest gold buyers, China and India, wait for prices to stabilize or fall further.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said many people are waiting on the sidelines as they are expecting another fall.

Demand in India is being hurt by central bank curbs on gold imports. Limits on bank batch have hit supply and triggered a sharp jump in premiums.

Indian gold futures chop down 1.5 percent on Thursday, extending losses for a second straight session to their lowest level in almost a month in line with global markets.  Lan said buying in India had plunge considerably from Monday, which saw the celebration of Akshaya Tritiya, considered an auspicious day to buy metal.

Premiums for gold bars in Hong Kong the main supply of gold for China, strike record highs this week on supply constraints.

Yellow metal demand knock down 13 percent to a three year low of 963 tonnes in the first quarter because rising jewelery demand and strong appetite for coins and bars failed to offset a sharp fall in investment, the World Gold Council says.

SPDR said holdings knock down 0.55 percent to 1041.42 tonnes on Thursday, the weakest in four years.

US gold future for June delivery was down 0.52 percent at $1,379.70 per ounce.

May
18

French President Urges Euro Zone Government

Francois Hollande, French President called on Thursday for an economic government for the euro zone with its own budget the right to borrow a harmonized tax system and a full time president.

At a 150 minute news discussion marking his first year in office a day following economic statistics showed France had fall into recession, the Socialist leader defended his record on economic reform and budget regulation and informed the French people they would have to work a bit longer for a complete pension in future.

Rebutting criticism that France has lost its leadership role in Europe as of its dwindling economic competitiveness, Hollande thought he wanted to create a fully-fledged political European Union within two years.

Hollande said it is my responsibility as the leader of a founder member of the European Union to pull Europe out of this torpor that has gripped it and to reduce people’s disappointment with it.

He accepted that he could face resistance from Germany, Europe’s dominant power, which opposes mutualising debt between member states. Berlin is also reluctant to give the euro zone its own secretariat for fear of deepening division in the EU, among the 17 members of the single currency and the 10 others.

Non-euro Britain’s government previously faces growing domestic pressure to hold a referendum on leaving the bloc.

Hollande stated he wanted Britain to stay in the EU but added, he can understand that others don’t want to join the single currency, however they cannot stop the euro zone from advancing.

Hollande said a future euro zone economic government would debate the main economic and political decisions to be taken by member states, harmonize welfare policies and national fiscal and launch a battle against tax fraud.

He proposed bringing forward planned EU spending to combat record youth unemployment, pushing for an EU-wide transition to renewable energy sources and envisaged a budget capacity that would be decided to the euro zone along with the gradual likelihood of raising debt.

May
11

ECB Says Has Tools Left to Act if Required

ECB policymakers said that European Central Bank still has room to plan should the euro zone economy persistent to worsen following it cut interest rates to a new record low previous week. The ECB cut its main rate to 0.5 percent previous Thursday.

Yves Mersch, a member of the ECB’s six-man Executive Board stated the bank still had tools at its disposal, however added that it could only spur lending to small euro zone companies in combination with other European institutions.

Joerg Asmussen stated the ECB had an open mind about what it could do to renew lending to small and medium-sized enterprises known as SMEs a growing concern for the central bank, principally in the crisis-stricken periphery countries.

Mersch said in a panel discussion in the northern German city of Aachen that we still have tools in our toolbox we are not a toothless tiger.

The ECB stated previous week it had set up a task force with the European Investment Bank known as EIB to assess ways to unblock lending to SMEs, for example by supporting a market for asset-backed securities known as ABS based on SME loans. ABS would permit banks to pass some credit risk on to other investors, enabling them up to lend more.

The move to promote ABS is controversial mainly in Germany, because during the financial crisis such securities became toxic due to the default of housing loans that underpinned them.

We have an open mind to seem at all things that we can do within our mandate and this relates to how can the market for asset backed securities, particularly backed by SME loans, be revitalized in Europe.

Asmussen was responding to a question regarding a Wednesday article in German newspaper Die Welt, which cited a central bank source as saying a majority of ECB Governing Council members seemed to be in support of the central bank buying ABSs itself.