Browsing all articles tagged with Cyprus

Precious Metal Holds Near 1 week Low, ETFs Outflows Persist

Precious metal held near its weakest level in practically a week on Thursday, following declines in holdings of exchange traded funds, equities and other commodities overshadowed the US Federal Reserve’s decision to uphold its loose monetary policy.

Prices fall $225 per ounce between April 12 and 16 on fears of a withdrawal of the Fed’s monetary stimulus and after the International Monetary Fund and the European Central Bank asked Cyprus to sell reserves as part of a bailout deal.

While the Fed’s money-printing to buy assets could stoke inflation, yellow metal has been overwhelmed by fears of sales by central banks and a fall in global bullion ETF holdings to their lowest since September 2009.

However this is unlikely to be sold on the open market. I consider another central bank will be buying it. China’s physical demand is still strong. This morning they are perhaps keeping a lookout to see where the market is going before purchasing.

Precious metal fell $3.05 per ounce to $1,453.69, having shed more than 1 percent in the previous session its largest daily drop since gold’s historic decline in mid-April. It smash a low of $1,439.74 on Wednesday, the weakest since April 25.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said that people are more wary as yellow metal has been trading within the same trading band. Moreover, Europe has agreed on a loan deal for Cyprus, and one of the terms state that assets in bullion might be sold.

US gold for June delivery stood at $1,453.70 per ounce, climbed up $7.50.

In its statement subsequent a two-day meeting, the Fed reiterated it would carry on to buy $85 billion worth of bonds each month to support a moderately expanding economy that still has too high an unemployment rate.

Investors are now waiting for US non-farm payrolls report for April scheduled for release on Friday, which will signal the longer term predictions for the Fed’s monetary stimulus.

However instead of rallying on the news, yellow metal tracked other markets lower on renewed doubts over the Chinese and US economies following the latest economic data from both countries elevated doubts about the strength of the global economy.

The US economy is likely to have added 145,000 jobs.

March’s number chop down far short of expectations at 88,000, triggering a sell-off in riskier assets. Precious metal for June delivery added $9.70, or 0.7%, to $1,456 per ounce.

China’s factory sector growth eased in April as new export orders chop down for the first time this year, a private survey showed on Thursday, suggesting the euro zone slump and sluggish US demand may be risks to China’s economic recovery.


Euro zone finance ministers Back 10 billion Euro Cyprus Bailout

Euro zone finance ministers backed a 10 billion euro bailout for Cyprus on Friday and the European Commission stated it would try to assist the island’s economy grow again with enhanced use of EU structural funds.

The ministerial support opens the way for numerous euro zone countries, including Finland and Germany to seek approval for the three year bailout in national parliaments, so that loan agreement with Nicosia can be signed by April 24.

The first tranche of the credit 9 billion of which will come from the euro zone and 1 billion from the International Monetary Fund will flow to Nicosia in mid-May.

The euro zone loans will have an average maturity of 15 years and highest maturity of 20 years.

The euro zone ministers said in a statement, The Euro group consider that the necessary elements are now in place to launch the relevant national procedures required for the formal support of the ESM financial assistance capability agreement for an amount of up to 10 billion euro’s, subject to IMF’s contribution.

To wrap its financing requirements over three years, Cyprus itself will have to come up with 13 billion euro’s of its own, with the mass of that sum coming from the closure of its Laiki bank and the reform of the Bank of Cyprus.

Olli Rehn told a news in conference that the amount that Cyprus would require to contribute on its own had been estimated a month ago at about 7 billion however the two sums were not directly alike, EU Economic and Monetary Affairs Commissioner.

If you seem at these two figures of 17 billion and the 23 billion for program financing, they are not strictly comparable as the construction of the first and second, or final package are different.


Gold Drop into bear market on institutional Migration

Yellow metal sank more than 5 percent on Friday, entering bear market territory as institutional investors fled gold in favor of other safe-haven assets amid concerns regarding central bank sales and souring sentiment.

The span of the sell off will underscore some expectations that gold’s meteoric rally may end following 12 years of gains.

Robin Bhar, Societe General analyst stated the scale of the turn down has been absolutely breathtaking, they tried to rally and that just did not get anywhere, there has not been any downside support it’s like a knife through butter.

Selling became heavy following an unexpected contraction in US retail sales statistics, which hurt stocks and supported the US dollar. It increased to pressures that were building this week from numerous factors, including a draft plan for Cyprus to sell gold and outflows from exchange traded yellow metal funds.

The precious metal slide below $1,500 per ounce for the first time since July, 2011. Yellow metal posted its largest weekly decline since December, 2011.

The speed of the sell-off appeared tied to instability in the price of Japanese government bonds, which has forced certain holders to sell other assets to meet the risk modeling of their investment portfolios.

The spot price of gold strike a low of $1,476 per ounce, down 5.3 percent on the day. For the week, it showed a turn down of more than 6 percent, in its largest weekly drop since December 2011, bonds rallied on Friday.

Geoffrey Fila, associate portfolio manager at Galtere Ltd, commodities focused hedge fund in New York with almost $600 million under management. Could it retest $1,300 or $1,200 on a short term technical basis? Absolutely yes.

Losses in precious metal accelerated and trading volumes ballooned following prices fell through key support at $1,521 per ounce. The market is down some 23 percent below a record peak of $1,920.30 strike in September 2011. Investors define a bear market as a turn down of 20 percent or more from a market high.

US gold futures also strike their lowest since July 2011, with metal for June delivery declining to as low as $1,476 per ounce by 5:20 p.m. EDT (2150 GMT). It settled at $1,501.40, losing 4.1 percent.


Cyprus Consider Early EU structural Funds, Officials Said

EU officials said that Cyprus is considering placed EU structural funds to earlier use to assist its stricken economy however is not asking for a superior bailout from the euro zone and the International Monetary Fund than the agreed 10 billion euro’s.

Nicos Anastasiades, Cypriot President told reporters in Nicosia on Friday that he would send a letter to European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso to give it extra assistance given the bad economic situation of the island.

That fueled assumption on financial markets that the island may be pushing Brussels for additional money under a bailout package which now illustrates Cyprus contributing roughly twice as much in budget cuts and asset sales than originally debatable.

However euro zone finance ministers gave political backing to 10 billion euro’s of loans for the Mediterranean island on Friday and stated there were no plans or requests to raise that amount.

The letter from President Anastasiades has nothing to do with asking for additional money than the sum decided in the MoU.

It is about a request for more financial assistance and support from our EU partners in the middle term as of the financial and economic situation Cyprus is facing.

The two international lenders have predicted Cyprus will contract about 9 percent this year and approximately 4 percent in 2014 prior to returning to growth in 2015.

Structural funds come from the long term EU budget and are used to co-finance projects in less EU developed countries to assist them enlarged economically.

The flow of such funds is increased over the seven years of the EU budget, however can be accelerated to boost the amount of money in the earlier years at the cost of the outer ones, this method has been employed to help Greece already.


Precious Gold Losses Seemed limited on Cyprus bullion Sale Program

Yellow metal posted its largest one day fall in almost 2 months on Wednesday following Cyprus was forced to sell most of its gold reserves, however analysts stated strong gold buying by other central banks should underpin the price of the metal.

James Steel, chief precious metals analyst at HSBC said that the bigger concern for the bullion market may be the prospective for other distressed euro zone nations to liquidate a portion of their precious metal reserves.

He further said that we do not think this will be the case, but we expect the official sector to remain standout buyers of bullion.

Investor fears over additional gold sales by other debt stricken euro zone members such as Greece and Portugal sent spot gold prices down 1.7 percent on Wednesday, within striking distance of a 10 month low.

Rehabilitated gold interest by emerging economies and gold sales limitations stipulated by Europe’s Central Bank Gold Agreement (CBGA) are positive factors that should place a floor under the market.

Cyprus, one of euro zone’s nominal economies, has to sell excess gold reserves to lift about 400 million euros which is equal to $523 million to assist finance its part of its bailout, an estimation of Cypriot financing needs prepared by the European Commission showed.

At existing prices, 400 million euros worth of yellow metal amounts to 10.36 tonnes, representing just a small fraction of precious metal liquidated by gold exchange traded funds since the start of the year.

It was the first major bullion disposal by a euro area central bank since France sold 17.4 tonnes in the first half of 2009.

According to data from the World Gold Council Cyprus total, gold reserves stood at 13.9 tonnes at end-February.

Strength in the US dollar and a rally in US equities combined with a bearish gold attitude from Goldman Sachs to push futures prices for gold losing by almost $28 per ounce on Wednesday. The turn down came just a day following prices marked their highest closing level since April 1. June gold dropped $27.90 or 1.8%, to settle at $1,558.80 per ounce on the Comex division of the New York Mercantile Exchange.


Banking Union a Priority For Lew in Europe

Europe’s economic weakness and financial disorder affect the US economy, Jack Lew, US Treasury Secretary told EU leaders on Monday, stressing the require to enhanced demand and move ahead with a euro zone banking union.

There economy’s strength remains sensitive to events beyond our shores and they have an huge stake in Europe’s health and stability, Lew informed reporters following talks with European Union leaders including European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

Lew further said in this circumstance he was particularly interested in their European partners plans to strengthen sources of demand at a time of growing unemployment, EU forecasts indicate the largest trading partner of the United States will remain in recession for the second year in a row this year.

Lew’s visit also comes shortly following messy negotiations among the euro zone, the Cyprus and International Monetary Fund on a bailout for the Mediterranean island, which in the end forced losses on large Cypriot bank depositors.

In his talks with Van Rompuy and Barroso, Lew highlight the significance of the euro zone moving ahead with plans for a banking union which will engaged handing over supervision to the European Central Bank and drafting bank resolution laws.

This would permit the 17-nation bloc to handle troubles like the resolution of banks in Cyprus more efficiently. Senior EU official said that they discussed the banking union a bit more than other things the Americans are keen for the process to move forward.

The surprise levy on bank deposits over 100,000 euros in Cyprus agreed as part of the country’s bailout has spoiled confidence that Europe will be united in tackling bank problems rather than leaving countries to struggle alone.

If anything, this crisis and recent events in Cyprus have exposed the absolute need to anchor, once and for all a logical scheme that would allow resolving failing financial institutions in an effective, consistent manner and predictable across the European Union.


Michael Sarris Cyprus Finance Minister Quits, Capital Controls Partly Eased

Michael Sarris, Cypriot Finance Minister quit on Tuesday following concluding talks with foreign lenders on a bailout that forced the island to hit extraordinary losses on bank depositors in return for aid.

The news came following Cyprus announced a partial relaxation of currency controls, lifting the ceiling for financial transactions that do not require central bank approval, however keeping most other restrictions in place.

Sarris, who was dispatched to Moscow previous month however come back empty handed as Cyprus sought Russian aid following rejecting a European bank levy proposal, stated his main goal of agreeing a deal with lenders had been accomplished.

He stated it was also suitable to quit since he was between several people under scrutiny by a team of investigators seeming into the collapse of the country’s banking system, his resignation was accepted by the government.

He suppose that in order to facilitate the work of investigators the right thing would be to place my resignation at the removal of the president of the republic.

Prior to quitting, he stated it was not clear when the residual capital controls would be lifted.

The island introduced control on money movements when banks reopened on March 28 following a two-week shutdown as the government negotiated a 10 billion euro bailout from the European Union and the International Monetary Fund.

Cyprus’s status as a financial hub has deteriorate in the space of a fortnight following authorities were forced to wind down one bank and slap heavy losses on richer depositors in a second in return for the financial aid.


Cyprus Bank Particulars Heavy Losses for Major European bank Customers

Foremost depositors in Cyprus’s largest bank will lose about 60 percent of savings over 100,000 euros, sharpening the terms of a bailout that has surprised European banks however saved the island from bankruptcy.

preliminary signs that huge depositors in Bank of Cyprus would take a strike of 30 to 40 percent the first time the euro zone has made bank customers added to a bailout had previously unnerved investors in European lenders this week.

The strength of the conditions sends a clear signal that the bailout means the end of Cyprus as a center for offshore finance and could accelerate economic turn down on the island and bring steeper job losses.

Banks reopened to relative calm on Thursday following the imposition of the initial capital controls the euro has seen since it was launched a decade ago.

Tryfonas Neokleous, owner of a clothes shop on a cobbled street in the center of the city said that the Europe should not have allowed this disaster to happen here. Cyprus was heaven and they have turned it into hell.

He further said that he didn’t except business to pick up even now that the banks were open again following an approximately two-week shutdown.

He don’t anticipate anything and he don’t expect for anything anymore. People are going to spend their money on food and the whole thing else they have been depressed of the last 15 days.

There are no symbols for now that bank customers in other struggling euro zone countries like Italy, Greece or Spain taking fright at the precedent set by the bailout.

German Finance Minister Wolfgang Schaeuble informed German mass selling daily Bild that savings accounts in Europe are safe Cyprus is and will remain a special one off case.

European representatives have worked hard this week to stress that the island’s bailout was a exceptional case following a proposal by Euro  group chairman Jeroen Dijsselbloem that the rescue would serve as a model for potential crises rattled European financial markets.


Yellow metal Climbed on China PMI Figures, Flirts with $1,600 per ounce

Precious metal firmed on Monday, as signs that China’s economic revival was attaining traction could enhanced demand for commodities, however prices could be capped by doubts regarding the debt crisis in Cyprus bank and the weakness of the euro versus the US dollar.

Yellow metal rallied to a 1-month high in March on concerns regarding fiscal stability in Europe following the European Union gave Cyprus an ultimatum to lift billions of euros it needs to settle a bailout deal or face a possible exit from the currency zone.

Strain in the Korean peninsula has yet to generate a rush in purchases from investors in Asia, however a full-scale conflict among the two Koreas could potentially increased yellow metal’s safe haven appeal in times of uncertainty.

Bullion hit an intraday high of $1,600.81 per ounce and traded at $1,597.76 by 0647 GMT, up $1.59. Gold ended the quarter down around 4 percent following stock markets rushed and the euro stayed weak as compare the dollar.

Brian Lan, managing director of GoldSilver Central Pte Ltd said that investors are in an uncertain market, usually a strong PMI data from China would tend to draw investors towards stocks and not support precious metal prices, however this time investor perceive a reverse. The North Korea stress is adding to the market doubt’s.

Physical buying by the retail investors during price plunged have been observed and this helped to support prices, which should increased to $1,600 per ounce. If thing goes well it look’s like a bullion could move on to a higher trading range of $1,620 per ounce.

The euro fall to approach a four month low on concerns regarding the spillover from Cyprus bailout conditions, as the Australian dollar was tripped up following statistics showed a slower than expected bounce back in Chinese factory activity in March.


European Central Bank’s Knot backs Jeroen Dijsselbloem comments on bank rescues

Klaas Knot, ECB Governing Council member stated on Friday that there was a little wrong with Euro group chairman Jeroen Dijsselbloem’s method for dealing with future euro zone banking crises.

Dijsselbloem, the head of the euro zone’s finance ministers and similar to Knot a Dutchman stated on Monday that the rescue program decided for Cyprus the first to compel a levy on bank deposits would serve as a model for future crises.

Those comments in which Dijsselbloem afterwards rowed back on, encouraged a market sell off and led two other European Central Bank policymakers, including executive board member Benoit Coeure said on Tuesday that Cyprus was a exceptional case.

However Klaas Knot, who sits on the bank’s main decision making body stated that there is little wrong with Dijsselbloem’s comments.

The content of his comments comes down to an approach which has been on the table for a longer time in Europe. This approach will be component of the European liquidation policy.

Spokesman for the central banker stated Knot’s remarks, reported by Dutch daily Het Financieele Dagblad were precise.

They threaten to additional muddy the waters over an concerns that continues to divide senior politicians and monetary policymaker in the currency alliance who should foot the bill for cleaning up the region’s under performing banks.

In his speech on Thursday night in Amsterdam, Knot said euro zone banks required to clean up their balance sheets by winding down loss making procedures.

He further said initially, there has to be transparency regarding losses in the banking sector. Secondly, banks have to wind down their loss making operations.

Under the Cyprus bailout the bank depositors whose accounts hold more than 100,000 euros face heavy losses.