Browsing all articles tagged with economic
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.

Apr
30

Precious metal Down 1 percent; ETF holdings hit lowest Since Sept 2009

Precious metal fell 1 percent on Tuesday, falling into negative territory following some early bargain hunting, however daily outflows from exchange traded funds highlighted investor’s lack of confidence in the gold.

Tim Riddell, head of ANZ Global Markets Research, Asia said that from a technical point of view, while the rebound has been relatively solid it appears to be a more sustained correction of the drop that we saw from late March rather than a turn in trend.

Although yellow metal’s appeal as a hedge against inflation may be burnished by hopes the US Federal Reserve will continue its bond buying programme, flowing stock markets could tempt investors to ditch gold and shift to equities.

Actually what we need to see is a series of closes above $1,505 to take the pressure off, he added that a fall below $1,435 could trigger a favored technical pullback to $1,300 and potentially even as deep as $1,245.

US gold for June delivery gave up early increases and stood at $1,461.10, down $6.30.

US gold futures and Cash dropped to almost $1,321 on April 16, their lowest in more than two years, after a fall below $1,500 led to a sell-off which stunned investors, and encouraged them to slash holdings of exchange-traded funds.

Precious metal fell $14.18 per ounce to $1,461.61 by 0617 GMT.  It had increased slightly on Monday on expectations the Fed would keep the pace of its bond buying unchanged at $85 billion a month following less than expected US growth.

The SPDR Gold Trust, the world’s biggest gold backed exchange-traded fund, said its holdings dropped 0.22 percent to 1,080.64 tonnes on Monday from 1,083.05 tonnes on Friday to their lowest since September 2009.

A weak March employment report in the US and other softer signals from the economy seemed to kill off expectations the Fed could taper the pace of bond buying in next months.

Asian shares edged higher on Tuesday, a day after the S&P 500 index ended at an all-time high and as investor risk appetite was bolstered by expectations the European Central Bank and US Federal Reserve the will continue with growth supportive monetary stimulus measures.

The Fed is currently buying longer dated US Treasuries and mortgage backed bonds every month and is expected to vote to keep doing so at the conclusion of a two day policy setting meeting on Wednesday.

Fears that central banks money printing to buy assets will stoke inflation have been a key driver in enhancing gold, which rallied to an 11-month high in October last year subsequently the Fed announced its third round of aggressive economic stimulus.

Apr
29

Precious Gold Rises 1 percent, Holds near One Week High

Yellow metal rose more than 1 percent on Monday and held near its highest level in more than a week as a bounce back in prices from multi-year lows failed to control investor appetite for the gold’s, leading to a shortage in physical supply.

Current bleak US growth statistics that raised expectations the Federal Reserve will keep its current pace of bond buying at $85 billion a month also supported precious metal that is typically seen as a hedge against inflation.

However investors are still roiled by the very recent event of the tumble. The question is how supportable is this physical buying as at the same time, we are still seeing funds flowing out of yellow metal. Retail investors won’t be buying bullion in hundreds of millions of dollars like the funds.

Both cash gold and futures dropped to around $1,321 on April 16, their weakest in over two years, subsequently drop below $1,500 sparked a sell-off that encouraged investors to slash their holdings on exchange traded funds. They touched an 11 day high above $1,484 on Friday.

I don’t consider gold is out of the woods yet, however there’s room for upward correction. One of the reasons why precious metal has plunged so much was the strong signs of US economic recovery.

US gold futures which often give trading cues to cash metal, hit a high of $1,472.20 per ounce. By 0226 GMT, prices stood at $1,469.60 climbed $16.00. Spot gold gain $7.51 per ounce to $1,470.01.

Premiums for gold bars have jumped to multi-year highs in Asia as of strong demand from the physical market, which has led to a shortage in gold coins, bars, nuggets and other products.

In other markets, shares in Asia crept ahead on Monday however the US dollar lost ground to the yen as markets braced for a busy week for economic statistics and central bank policy meetings in the United States and euro zone.

Holdings on the biggest gold-backed exchange-traded-fund ETF, New York’s SPDR Gold Trust continue to drop, which was a sign investors have yet to reinstate their confidence in gold. The holdings are currently at their lowest since September 2009.

The current string of underwhelming statistics will strengthen the hand of the doves at the Fed and temper any talk of tapering back the bond buying programme. The policy setting Federal Open Market Committee will announce its decision at 1815 GMT on Wednesday.

Report by the Commodity Futures Trading Commission showed on Friday that yellow metal rallied to an 11-month high in October previous year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank’s money printing to buy assets would stoke inflation, money managers and Hedge funds trimmed their net longs in gold futures and options in the week to April 23 as investors reduced optimistic bets.

 

Apr
27

Gold down Still Posts Greatest Weekly Addition in 3 Months

Bullion knock down in choppy trade on Friday on as investors took profits, however the market still posted its greatest weekly gain in three months on strong physical demand following bullion hit a two year low previous week.

In untimely trade gold climbed more than 1 percent following the US Commerce Department reported that economic growth regained speed in the first quarter, however not as much as expected. Gold gave back those early additions and slipped into negative territory as options related selling kicked in, and losses in industrial commodities including copper and crude oil also weighed.

Gold has recovered more than half of the loss of $225 an ounce incurred among April 12 and 16.

Investors in exchange traded funds headed for the exits concerned regarding potential central bank sales of gold and uncertainty over the outlook for US monetary stimulus.

Erica Rannestad, precious metals analyst at the CPM Group said that there is still some long liquidation in the market, signifying that some investors are still repositioning themselves and that leaves the price susceptible to some sideways actions.

Spot gold was down 0.6 percent at $1,457.76 per ounce by 3:28 p.m. EDT (1928 GMT), off the session high of $1,484.80.

US gold futures for June delivery settled down $8.40 at $1,484.80 per ounce. Trading volume was almost 10 percent above its 30-day average.

Robin Bhar, Societe General Analyst said that GDP is encouraging for precious metal as the whole sell off in the yellow metal was linked to perceptions that the US economy was getting stronger and stronger.

US first quarter growth expanded at a 2.5 percent annual rate, less then economists expectations for 3 percent. In the meantime, a separate report on consumer sentiment demonstrates a drop from the previous month.

Silver also climbed early, striking a 10 day high of $24.82. Then it slipped down 1.7 percent in late trade to $23.91 per ounce.

Holdings of the biggest gold backed exchange traded fund, the SPDR Gold Trust dropped 0.25 percent to 1,090.27 tonnes on Thursday from 1,092.98 on Wednesday. Holdings are at their weakest level since September 2009.

Among platinum group metals, platinum added 0.4 percent to $1,472.49 per ounce, as palladium was down 0.4 percent at $677.25 per ounce.

Apr
23

Euro zone Slump Moderates However German Uncertainties Appear

A sharp fall in German business activity overshadowed an easing slump in France in April, surveys showed on Tuesday, and lifting concerns over a further economic contraction in the euro zone.

Markit’s flash euro zone services PMI, an early gauge of business activity each month climbed to 46.6 in April from 46.4 in March, below the 50 line that divides growth from contraction however matching the predicted of economists.

Survey compiler Markit cautioned against taking the increased as a clear sign the region’s recession has bottomed out, pointing to a surprise turn down in German companies that form the backbone of the euro zone economy.

Chris Williamson, chief economist at Markit said that formerly we’ve seen Germany expand while other countries have contracted – notably Spain, France and Italy.

Currently it seems those contractions are being accompanied by a recession in the largest economy, Germany, and that will no uncertainty act as a drag on growth.

Williamson stated officials at the European Central Bank, which meets coming week to decide monetary policy, may be relieved to see the euro zone PMIs at least did not signal a promote deterioration this month.

The forward looking indicators suggest there are risks to the weakness for the contraction to gather pace. The euro zone economy contracted 0.6 percent quarter on quarter in the previous three months of 2012.

Comments by European Central Bank policymakers on Monday stressing declining inflation and poor growth prospects in the euro zone suggest the ECB may be leaning towards an additional cut in its main interest rate.

Confidence in services companies concerning the coming year slipped to the lowest level this year, with the business expectations index fall to 55.7 from 56.2 in March.

Consumer morale in the euro zone improved in April, the European Commission stated on Monday, however remained well below the currency area’s long-term average.

Apr
17

Bank of America Profit Misses Estimate as Revenue Collapse

Bank of America Corp reported a lower than expected first quarter profit and its revenue knock down, sending the No. 2 US bank’s shares down 3 percent earlier than the bell on Wednesday.

Net income quadrupled to $2.62 billion or 20 cents per share from $653 million or 3 cents per share a year earlier as expenses fall and the bank set aside less money to cover bad loans.

However total adjusted revenue knock down 8.4 percent to $23.85 billion, partly due to lower revenue from trading in fixed mortgages and income securities.

Revenue from the fixed income, commodities and currency markets knock down $829 million to $3.3 billion.

BofA shares slump 3 percent before the bell to $11.90.

Income in the year earlier period were affected by a host of one-time items including a $4.8 billion charge related to the value of its debt.

Net income in the Global Banking division chop down to $1.34 billion from $1.57 billion because net income in the Global Markets arm dropped to $1.4 billion excluding items from $1.7 billion.

Brian Moynihan, Chief Executive has made progress in building capital and settling mortgage related lawsuits since taking over in January 2010. The bank stated on Wednesday it had settled a mortgage backed securities class action lawsuit related to its nationwide unit for $500 million.

However Moynihan is under pressure to show that the bank can create higher earnings at a time of low interest rates, volatile economic conditions and stricter regulations.

BofA, the last of the big four US banks to report outcome has vowed to cut $8 billion in expenses by mid 2015 and has stated it could reduce expenses in its division that handles delinquent mortgages by $1 billion by the end of 2013.

The bank stated on Wednesday it expects to save almost $1.5 billion in costs per quarter, by the fourth quarter of 2013, representing 75 percent of the quarterly target. Total expenses knock down 5.2 percent to $18.15 billion in the first quarter.

Apr
15

Gold slump for 2nd day, Week China Data Fuels Recovery Uncertainty

Precious metal sank to its weakest in two years and because investors sold off commodities for a second day on Monday, concerned that central banks will pull the plug on stimulus and as disappointing Chinese statistics signaled a setback for the global economic recovery.

China’s economy grew 7.7 percent in the first quarter undershooting market prospect for an 8.0 percent expansion and annoying investors hoping the world’s No. 2 economy would rebound following posting its weakest growth in 13 years in 2012.

The Chinese statistics comes following soft US retail sales and consumer sentiment numbers lift worries regarding the economic recovery momentum in the world’s top economy, driving down commodities and equities on Friday.

Yellow metal fell more than 3 percent, following sliding 5.3 percent on Friday, as investors further cut their gold holdings on concern that central banks are bent on halting stimulus measures this year, cutting precious metal’s appeal as a hedge against inflation. Holdings on global gold exchange traded funds strike their lowest in more than a year.

Spot gold hit a session trough of $1,427.14 per ounce, its lowest since April 1, 2011. Spot gold climbed as high as $1,495.16 early in the session, earlier than a sell-off in US futures dragged it down.

Vishnu Varathan, market economist at Mizuho Corporate Bank in Singapore said that there are questions concerning the trend of bottoming in China’s economy and whether it can re-accelerate over 8 percent this year in a sustainable way.

China’s weaker than predicted GDP growth is backed by slower boost in industrial production and fixed-asset investment, despite strong lending growth in March as previous week’s data indicated.

Varathan said that demonstrate how China’s economy looks a bit uneven and risks in the property and shadow banking sectors might be mounting. What this means is that policymakers in China have less autonomy to spur the economy because they’ll be mindful of these risks.

Gold future for June delivery fall $90.20 or 6%, to $1,411.00 per ounce. Gold last week lost 4.7%.

Apr
9

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.

Apr
6

Gold Rallies as Weak US jobs Statistics Affirms Federal Reserve Easing

Precious metal rallied over 1.5 percent on Friday, its highest one day addition since November, because disappointing US job statistics fueled expectations the Fed will carry on its bullion friendly bond purchases.

The metal break it’s three consecutive days of sharp losses following the Labor Department stated US employers in March hired at the slowest rate in nine months, adding just 88,000 non-farm posts. Heavy bullion short covering and quick losses in US equities also lifted gold prices.

Yellow metal is used by many as a hedge against inflation which can be brought on by central banks monetary stimulus. Gold still lost over 1 percent for the week for one of its sharpest weekly turn down since the start of the year.

The weak jobs statistics condensed the chance the Fed would change its current $85 billion monthly purchases of mortgage backed Treasuries and securities known as qualitative easing in a bid to enhanced economic growth.

Bill O’Neill, partner of commodities investment firm LOGIC Advisors said that the payrolls report gives more credibility to the idea that they are not going to see any reduction in QE3. It’s just a knee-jerk response and he don’t think it necessarily indicates that the market has bottomed out here.

Heavy outflows from precious metal’s exchange traded funds and sharp losses of prominent gold bull John Paulson’s precious metal fund also weighed on investor sentiment.

Bullion accelerated additions throughout the session on the payrolls statistics and was climbed 1.7 percent at $1,579.60 per ounce (1854 GMT), having earlier strike a high at $1,580.80 per ounce.

Trading volume, however was relatively feeble given the sharp rally. Turnover was at about 200,000 lots, in line with its 30 day average.

Yellow metal’s response to the payrolls report was principally strong as previous advances in the labor market had fueled discussion within the US central bank regarding whether to cut back the third round of bond purchases, possibly as soon as this summer.

Gold futures closed more than $20 per ounce higher on Friday, paring their loss for the week because a disappointing US jobs report pressured the US dollar and contributed to a slip in the stock market.

Gold future for June delivery climbed $23.50 or 1.5%, to settle at $1,575.90 per ounce on the Comex division of the New York Mercantile Exchange.