China "Offers Sturdy Floor" in Gold, But US Fed Meeting "Risks Downside"

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PRECIOUS METALS held in a tight range in London on Tuesday morning, moving sideways as world stock markets rose and commodities slipped ahead of the US Federal Reserve meeting, which begins today.

"No outstanding features, volumes fairly light and very little to report,"says broker Marex Spectron.

After telegraphing its intention to start reducing the $85 billion in monthly quantitative easing as soon as September, the Fed will announce its latest policy on Wednesday, soon after the release of official US data for second-quarter GDP.

Gold moved on Tuesday morning barely $4 per ounce above $1322 – the "crash"low of mid-April.

Silver moved just 0.7% around $19.70 per ounce.

"We could see some downside open up," says Standard Bank's commodities team, "if the Fed announces tomorrow that it will stay the tapering course."

Looking at recent bullion price action, "Gold is pushing hard" says technical analysis from Commerzbank "into the 2-month downtrend and the 55-day moving average at $1333/40."

Gold bullion and futures prices "reacted violently in June" Federal Reserve comments on policy, says a note from Bank of America-Merrill Lynch. But now "near-dated gold volatility has been falling in recent weeks.

"After the initial Fed fears lifted 10-year US Treasury rates from 1.6% to 2.7% in just a few weeks, rates seem to have stabilized in a 2.5% to 2.6% range, contributing to a drop in gold vols."

This "normalization" says BAML is now being reflected in gold futures prices. August futures settled Monday below further-dated contracts, confirming what the bank calls gold's "typically contango structure" – whereby prices are higher for delivery further into the future.

But "we are moving closer and closer to tapering,"reckons Tom Tucci, head of Treasury trading at CIBC World Markets, currently with $12bn in assets under management, speaking to Bloomberg.

"With no new news, the risk right now is for higher rates, not lower,"says Tucci, saying 10-year Treasuries should yield around 2.75% "given the state of the economy and the Fed's stance."

The quantity of gold bullion held to back investors' shares in exchange-traded trusts funds was unchanged Monday, remaining 25% lower from the start of 2013 at four-year lows.

Emerging-market central banks "disappointed gold bulls" with their bullion purchases in June, says a note from Swiss investment bank and London market-maker Credit Suisse.

"Reserve asset managers are as unwilling to 'catch a falling knife' as any other fund manager we think," says the note, "and in general are wary of spikes in volatility."

But in China – now the world's second-largest economy, and likely to overtake India as world No.1 gold consumer in 2013 – private household demand for gold bullion"does hold the promise of a sturdy price floor" says a note from fellow Swiss investment bank and London market-maker UBS.

Moreover, "In China banks are setting up and/or growing gold accumulation plans offered to the public. Better and easier access to gold via banks' growing networks combined with strong appetite from retail customers have driven the tremendous appetite from China this year."

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News Source: www.bloomberg.com 

Gold Prices Still Responding To Fed Stimulus...

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Precious metals diverged this morning with gold climbing by $5.25 to trade at 1339.95, and silver has declined by 17 cents to trade at 20.275.  Gold futures declined on profit-booking, marking their first decline in 4-sessions just after the metal’s biggest one-day price gain in more than a year. Prices mostly traded in a range, as investors weighed the US Federal Reserve’s next move on monetary stimulus against the prospects for demand amid higher prices.

A report in Bloomberg yesterday, said that they are expecting the Fed to reduce its monthly asset purchases in September to 68 billion from the current 85 billion. Gold has recovered about $150 from a three-year low of $1,180.71 an ounce hit on June 28, after the US Federal Reserve said it would only start phasing out its stimulus once it was sure the economy was strong enough to stand on its own. This allayed fears of imminent cuts to the Federal Reserve’s monthly bond purchases, which is tantamount to printing money and supports gold’s appeal as a hedge against inflation.

The dollar traded lower against the euro and pared gains against the yen in a thin volume trade on Tuesday, as investors adjusted positions with technical levels in the absence of any economic data to drive direction. The combined government debt of 17-euro zone nations rose to 92.2% of gross domestic product, the highest in its history – in the first quarter of 2013, despite stringent austerity measures deployed in the region since the beginning of the financial crisis.

The base metals complex traded on a positive note as a result of a rise in risk appetite in the global market sentiments. Further, weakness in the US dollar acted as a positive factor for prices.
However, sharp upside in prices was capped on the back of LME inventories scenario and compounded by the scandal in inventory prices and Goldman. The Federal Reserve faces new pressure to explain why it lets banks trade raw materials and control supplies after congressional witnesses said regulators can’t really grasp what lenders are doing in industrial businesses.

Copper prices traded on a positive note in the yesterday’s trade increased around 0.5 percent on the back of decline in LME copper inventories around 0.4 percent which stood at 632050 tons.  Further, weakness in the DX coupled with upbeat global markets supported an upside in prices.


Traders can expect the base metals group to trade on the back of weak global markets. Further, strength in the DX will act as a negative factor. Additionally, a decline in China’s manufacturing data which is at 11-month low will exert downside pressure in prices. However, a sharp downside in prices will be cushioned or reversal can be seen on account of expectations of favorable manufacturing and services PMI data from the eurozone. Markets are expecting to see a climb towards 50 for eurozone PMI’s a miss could see some volatility in the marketplace.

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News Source: www.reuters.com 

Gold hits 1-month high as dollar falls on Fed stimulus-exit prospects...

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Gold prices climbed on Monday tailing a third consecutive gain day as reduced expectations that the U.S. Federal Reserve will soon taper the bullion-friendly stimulus program boosted the metal at the expense of the U.S. dollar.As of 03:16 ET, gold for immediate delivery climbed 1.81 percent, or 23.47 points, to $ 1,317.23 after opening at $1,296.19. Earlier in the session, it hit a high of $1,322.86 and a low of $1,296.00. 

Dollar-governed gold advanced after greenback fell against key rivals as Fed Chairman Ben Bernanke’s comments on stimulus lacked confirmation on when the central bank will start scaling back its stimulus.

Expectations the Fed will pare back its $85 billion-per-month bond purchase program took the toll on bullions. The Fed`s quantitative easing schemes have boosted gold’s appeal as a hedge against inflation.

The dollar index--a gauge measuring the strength of the greenback against a bundle of major currencies--was in a jumble in line with the recent sell-off that started with Ben Bernanke’s dovish comments last week. The USDIX fell on Monday to trade around 82.57 after opening at 82.69, hitting a high of 82.72 and a low of 82.48.

Other precious metals tracked gold higher where:

- Silver gained 2.44% to trade around $ 19.98

- Platinum went up 0.59% to $ 1,438.55

- Palladium inched 0.09% up to $ 750.70

In Japan, Japanese voters handed a landslide victory to the governing Liberal Democrats in parliamentary elections on Sunday. Prime Minister Shinzo Abe was given a solid platform to continue with his aggressive monetary stimulus push to boost the world`s third biggest economy.

By securing control of both houses of Parliament for up to three years, the win offers Prime Minister Shinzo Abe the chance to end their nation’s economic slump. A victory for Abe, whose "Abenomics" program aimed at sparking an economic revival, was widely expected.

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Bernanke will try to have some cake and will eat it too...

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 Bernanke is really in the hot seat today – both in terms of potential market responses and politically, as lawmakers’ attention directed the US Federal Reserve’s way is becoming increasingly glaring. The first Bank of Canada meeting under new governer Stephen Poloz is also on tap today.

The Bank of Japan meeting minutes overnight drew yawns from the market audience as the rhetorical line seems to be “implement what we have promised and it will take some time to judge the success of our policy” while anticipation is more important on the political front with this weekend’s upcoming Upper House elections. There were minor expression of concern by some members, but the unanimous decision was to stay the course on current policy.

Equity markets finally had a negative day yesterday, after a remarkable string of positive days, and bonds are looking well supported. If Bernanke follows up with more relative dovishness today without asset markets bulling sharply higher, this would appear to be the most USDJPY negative outcome. USDJPY bottomed out – you guessed it – right near the Ichimoku cloud area overnight – triple underlining the focus on this indicator, which has dropped several pips today and is closer to the 98.85 level now.

Looking ahead Bernanke testimony

 

Remember that Fed chairman Ben Bernanke’s full testimony today will be released at 1230 GMT before he actually presents it at 1400 GMT, followed by what is likely to be a very lively Q&A session, with Bernanke in the hot seat as I’m convinced that Republicans are increasingly making it a part of their party platform to remain critical of the Fed as the “Washington enabler”, with the endless irony that it is Republican constituents (the wealthy) that have benefitted the most, relatively speaking, from Fed policy over the last several years.

What the Fed would like to communicate, in my opinion, is that it is ready to act either way depending on incoming data, but that as things stand right now, it would prefer for bond yields to come back down some while it has no interest at all in driving too much exuberance elsewhere. Can it pull this off? If this message is successfully delivered, USDJPY may offer the most volatility.

Meanwhile, a Bernanke reminder that confirms expectations for tapering and leaves the market to take its guidance from incoming data rather than Fed signals would be more clearly USD positive, with trade selection depending on the asset market response (scary drop in equities could still push JPY higher, but EURUSD or GBPUSD might offer a more straightforward strong USD response in this instance).
Regardless of the message Bernanke delivers, the worst potential outcome in the following days would be a brief squirt of USD weakness followed by strong signs of support. If the USD is going to move to the strong side right away on the heels of the Bernanke testimony, I would look to EURUSD and GBPUSD for the most important signs of a reversal.

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News Source: www.cnbc.com 

Gold Prices May Rebound Toward Year's End...

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Gold prices could rebound toward the year’s end as the current headwinds for the metal, selling by exchange-traded-fund investors and concerns about the Federal Reserve tapering its stimulus program ease, said a German bank on Monday.

Commerzbank said that if gold can rebound, that will help silver, too. Platinum and palladium should continue to receive price support from supply risks and strong demand.
They estimated gold prices will average $1,200 an ounce in the third quarter, rising to $1,300 in the fourth quarter and to $1,400 by the first quarter of 2014. By the end of 2014 they see gold prices rising to $1,600.

For silver they see prices averaging $19 in the third quarter, $21 in the fourth quarter and $23 in the first quarter next year. For platinum they see prices at $1,350, $1,425 and $1,500, with palladium prices averaging $675, $700 and $725, respectively, in the third and fourth quarters of 2013 and first quarter of 2014.

Gold prices fell to a three-year low of $1,180 by the end of June, caused by a sharp rise in real interest rates because of speculation about an imminent reduction in the bond purchases by the Fed as part of their quantitative easing program.

Commerzbank said despite the rise in real interest rates, they still remain low. “In the past, real interest rates had to rise to more than 2% over a prolonged period to have a sustained negative impact on the gold price. We do not expect this to happen. After the current phase of adjustment in the wake of the announced scaling back of the Fed's bond purchases, the headwind affecting the gold price should therefore ease from this side,” they said.

They also said that they expect ETF outflows to be limited, even if prices fall further. “Most of the remaining ETF holdings of almost 2,000 tons are likely to be held for other reasons than short-term profit maximization, i.e. mainly to hedge against long-term financial market risks and a loss of purchasing power due to inflation and currency devaluation. These motives continue to apply given the unresolved debt crises, high sovereign debt in the industrialized countries and therefore the continuation of ultra-loose monetary policies by the major central banks,” they said.

If gold prices rise on a sustained basis, “we would also expect silver to pick up again significantly,” they said, citing a rebound in the global economy resulting in greater industrial demand.

The PGMs are likely to be supported by concerns about South Africa and the potential production shortfalls because of simmering conflicts between unions and mines. Demand for PGMs is strong on both the automotive side and from investor demand, they said.

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News Source: www.reuters.com  

Week ahead features Bernanke’s testimony, Beige Book, and corporate earnings...

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This week will feature retail sales, housing and inflation data alongside the Federal Reserve’s Beige Book. Federal Reserve Chairman Ben Bernanke`s will testify before the congress in the semiannual testimony once known as the Humphrey-Hawkins report.

Bernanke will testify before on the House side Wednesday at 10:00 a.m. ET and then on the Senate side Thursday at 10:00 a.m. ET. The remarks come on the heels of the surprising minutes of the last meeting of the Federal Open Market Committee, which showed a more sharply divided Fed on the issue of asset purchase timing than had been previously understood.

The testimony could, however, further clarify where the Fed stands on its expected path for asset purchases following the last employment report, which analysts say all but guarantees a tapering of Fed purchases in September. The Federal Reserve will also release its Beige Book report on the economy Wednesday at 2:00 p.m. ET.

Housing data to be released next week include June housing starts Wednesday at 8:30 a.m. ET and the National Association of Home Builders` July housing market index Tuesday at 10:00 a.m. ET.
Housing starts is currently the most important indicator of where the housing market is headed - supply constraints are currently holding up sales and boosting prices, so more construction is really the only way the market can move forward. Both higher construction starts and building permits are forecast for the month.

June`s retail sales report, to be released Monday at 8:30 a.m. ET, is expected to post another month of modest core sales, right in line with the subdued growth expectations for the second quarter. Gasoline sales will also likely boost the headline.

Regional manufacturing surveys to be released in the week ahead include the Philadelphia Federal Reserve July business outlook survey and the New York Federal Reserve`s July Empire State manufacturing survey Monday at 8:30 a.m. ET. The surveys are expected to dip slightly, though remain positive, after both posted surprise gains in June. Regional surveys, however, are very difficult to accurately forecast.

The June Consumer Price Index will also be released Tuesday at 8:30 a.m. ET, and is expected to show another modest gain in core prices. Inflation data has taken a back seat to jobs data as far as the Federal Reserve is concerned, but any further declines in the year-over-year rate could change the discussion. Initial jobless claims, to be released Thursday at 8:30 a.m. ET, should likely be disregarded due to the noted seasonal adjustment difficulties in the month of July. Department of Labor officials said the surprise jump to 360,000 in the last release is likely due to this seasonal volatility.

Other data to be released over the week include June industrial production Tuesday at 9:15 a.m. ET, June Treasury International Capital flows Tuesday at 9:00 a.m. ET, June business inventories Monday at 10:00 a.m. ET, June leading economic indicators Thursday at 10:00 a.m. ET, and the Mortgage Bankers Association`s mortgage applications index Wednesday at 7:00 a.m. ET.

Earnings

Wall Street is quietly optimistic given earnings forecasts have been knocked down quite substantially in the lead-in, suggesting the potential for upside surprise. After JP Morgan (Dow) and Wells Fargo Friday, next week we`ll see Dow components Johnson & Johnson, Coca-Cola, American Express, Bank of America, Intel, IBM, Microsoft, Verizon and General Electric along with Goldman Sachs, Yahoo, Google and Morgan Stanley.

Dell Inc. shareholders will vote on the proposed $24.4 billion buyout of the personal-computer maker by founder Michael Dell and Silver Lake Management LLC.

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News Source: www.marketwatch.com  

Crude Oil Fundamentals Should Push Prices Down...

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Crude oil prices hit a 15-month high point yesterday, boosted by signs of strengthening demand in top consumer the United States and ongoing supply fears linked to violence in Egypt. The New York’s main contract, WTI for delivery in August, spiked to $107.45 a barrel a level last seen in late March 2012. It later stood at $106.02, down 50 cents from Wednesday’s closing level. Crude futures had already scored multi-month highs on Wednesday after the US Energy Information Administration’s weekly crude stockpiles data indicated a major pickup in energy demand.


The EIA said crude oil stockpiles tumbled by 9.9 million barrels in the week ended July 5. That was more than triple the 2.9-million-barrel drop expected by analysts polled by Dow Jones Newswires, and followed the prior week’s drop of nearly 10 million barrels. Traders remain deeply concerned over potential disruption in Middle East supply following the overthrow last week of Egypt’s Islamist president Mohamed Morsi by the military. Egypt is not a major crude oil exporter but is home to key oil transit points of the Suez Canal and the Sumed Pipeline.

It was inevitable that WTI prices would climb just as operators increased pipeline capacity, easing the supply glut in Cushing, Oklahoma, where physical oil demanded from NYMEX WTI futures contracts gets delivered and sent on to refineries. BP also recently restarted full operations at its refinery in Whiting, Indiana, which boosted demand, and imports have been constrained after flooding in Canada. But the latest spike is already proving short lived, because the U.S. continues to pump out shale oil like never before. Production is now 16% higher than where it was a year ago. Traders should expect to see prices decline as production and inventory climbs.

Crude oil prices fell sharply, after International Energy Agency projected increased supply from sources outside the Organization of Petroleum Exporting Countries, which could outstrip demand. The IEA forecast showed, supply from non-OPEC countries to grow 1.3mn barrels per day next year, with supplies to rise 1.2mn barrels per day this year. The agency also lifted its global oil demand forecast for 2013 and the same is expected to grow by 1.2mn barrels per day in 2014.


Natural gas futures fell from its day’s high, after a weekly government report showed that US gas supplies are rising faster than normal for this time of year. Natural gas is trading at 3.608 easing 4 points this morning and continuing with a negative bias. The US Energy Information Administration said 82bn cubic feet of gas were injected into storage last week, much higher than last year’s 34bcf build for the same week and above the 5-year average injection of 74bcf for the week.

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News Source: www.wsj.com     

Gold Ends Higher, Gets Additional Boost After FOMC Minutes...

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Comex gold futures prices ended the U.S. day session with slight gains Wednesday, but then rallied to near the daily high after the release of the U.S. Federal Reserve Open Market Committee meeting minutes. Gold saw a relief rally as the FOMC minutes contained no new, hawkish information. The key “outside markets” were also in a bullish posture for the precious metals on this day: a solidly lower U.S. dollar index and sharp price gains in crude oil futures. August gold was last up $16.70 at $1,262.50 an ounce. Spot gold was last quoted up $13.40 at $1,264.50. September Comex silver last traded up $0.232 at $19.37 an ounce.

The market place was just a bit surprised by the FOMC minutes reporting that around half of the 19 committee members are in favor of starting to wind down or “taper” its monthly bond-buying program, also known as quantitative easing, by the end of this year. While that could be read as somewhat more hawkish, the minutes also said most FOMC members want to see more economic data before making any firm conclusions on ending QE. The minutes mainly discussed how Fed Chairman Ben Bernanke should articulate the Fed’s monetary policy to the public. The consensus in the market place at present is that the Fed will start to cut back its bond purchases sometime later this year. Fed Chairman Ben Bernanke will also give a speech later Wednesday, which could also be market-sensitive.

China’s latest manufacturing report was released Wednesday and it came in on the weak side. Exports fell 3.1% in June, on an annualized basis. A 3.3% gain was expected. Chinese imports were down 0.7% on the year, while a 5.5% increase was forecast. The news had a somewhat limited impact on the market place, as the Chinese premiere said Wednesday China will continue on its path of long-term reform.

European stock markets were pressured Wednesday after the Standard & Poors ratings agency lowered Italy’s sovereign credit rating. The European Union’s sovereign debt crisis has been on the back burner of the market place for several months, but the situation has never been fully cleared up and could at any time heat up to roil world markets.

The U.S. dollar index was lower Wednesday on profit taking after hitting a three-year high on Tuesday. Still, the overall strong technical posture of the dollar index remains a major bearish underlying factor for the metals. Nymex crude oil prices were sharply higher Wednesday and hit a 14-month high overnight. With Nymex crude trading over $105 a barrel, that is a bullish underlying factor for the raw commodity sector, including the precious metals.

The London P.M. gold fix is $1,256.00 versus the previous London P.M. fixing of $1,255.50.
Technically, August gold futures prices were nearer the session high late Wednesday. The gold bears still have the overall near-term technical advantage. Gold prices are still in an eight-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the June low of $1,179.40. First resistance is seen at last week’s high of $1,267.00 and then at $1,277.50. First support is seen at Wednesday’s low of $1,242.20 and then at Tuesday’s low of $1,232.00. Wyckoff’s Market Rating: 2.5
September silver futures prices closed nearer the session high Wednesday and saw more short covering in a bear market. The key “outside markets” were bullish for the silver market today as the U.S. dollar index was lower and crude oil prices were sharply higher. Silver bears still have the solid overall near-term chart advantage.

Prices are in an eight-month-old downtrend on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $20.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the June low of $18.17. First resistance is seen at this week’s high of $19.485 and then at $19.83. Next support is seen at Tuesday’s low of $19.93 and then at Monday’s low of $18.67.


September N.Y. copper closed up 255 points at 309.00 cents Wednesday. Prices closed nearer the session high on short covering in a bear market. The key “outside markets” were bullish for the copper market as the U.S. dollar index was lower and crude oil prices were sharply higher. Copper bears still have the solid overall near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at last week’s high of 317.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 298.55 cents. First resistance is seen at this week’s high of 311.60 cents and then at 315.00 cents. First support is seen at 305.00 cents and then at this week’s low of 302.50 cents.

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News Source: www.marketwatch.com     

US Stock Futures Point To Lower Open Ahead Of FOMC Minutes...

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It's a busy calendar on Wednesday as markets look to parse what was said at the FOMC meeting on June 18-19 to gauge the future of the U.S. Federal Reserve's bond-buying program. Investors will also have wholesale inventories data and corporate earnings figures to digest before Fed Chairman Ben Bernanke's speech, which is scheduled for later in the day.

Futures on the Dow Jones Industrial Average were down 0.09 percent, while futures on the Standard & Poor's 500 Index were down 0.15 percent and those on the Nasdaq 100 Index were down 0.14 percent.

Investors await the release, at 2:00 p.m. EDT, of the minutes of the FOMC meeting, and are likely to scour its contents for hints about the Fed's plans for its quantitative easing, or QE, program, and for insights into how much longer the current low interest-rate scenario would continue. Investors also eagerly await Bernanke's speech at the NBER Summer Institute in Boston at 4.10 p.m. EDT for direction on monetary policy decisions.

The U.S. Department of Commerce will release its wholesale inventories report, which measures the change in the total value of goods held in inventory by wholesalers, at 10.00 a.m. EDT. Inventories are expected to increase by 0.3 percent in May after a 0.2 percent growth in April.

Also, investors will continue to focus on earnings reports on Wednesday, with Fastenal Co.  and Family Dollar Stores Inc.Releasing their earnings reports before the market opens, and Yum Brands Inc. reporting its quarterly earnings after market hours.A record number of S&P 500 companies have issued negative earnings guidance for the second quarter. So far, S&P 500 companies have issued 97 negative earnings pre-announcements and only 15 positive ones, for a negative-to-positive ratio of 6.5, according to Thomson Reuters. The guidance has contributed to a downward slide in second-quarter growth estimates, with earnings per share, or EPS, currently estimated to grow 3.0 percent, down from the 8.4 percent estimated at the beginning of the year.

Elsewhere, European markets were trading down Wednesday after disappointing trade data from China reinforced signs of a slowdown in the world’s second-largest economy and investors chose to tread cautiously ahead of the release of the FOMC minutes and the Fed chairman’s speech.
The Stoxx Europe 600 index traded down 0.32 percent, London’s FTSE 100 was down 0.43 percent, Germany's DAX-30 was down 0.35 percent and France's CAC-40 was trading down 0.43 percent.
In Asia, markets ended mixed while Chinese markets ended higher, despite China's disappointing trade data, which missed analyst expectations by a wide margin and showed a steep decline in the country’s exports and imports for the month of June.

Data released by the Chinese government on Wednesday showed that exports were down 3.1 percent from a year earlier and imports were down 0.7 percent. In contrast, economists had expected exports to have grown 4.0 percent and imports to have risen 8.0 percent in June.

China's Shanghai Composite index rallied up 2.17 percent while Hong Kong’s Hang Seng Index gained 1.07 percent. Japan’s Nikkei ended down 0.4 percent, retreating from a six-week high registered in the previous session, while Australia’s S&P/ASX 200 ended up 0.4 percent. South Korea’s KOSPI Composite index lost 0.34 percent while India’s BSE Sensex ended the day down 0.79 percent.

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News Source: www.reuters.com      

Egypt counts on dead after Islamist protest violence...

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Egypt counted its dead on Saturday after Islamists enraged by the overthrow of President Mohamed Mursi took to the streets in an explosion of violence against what they denounced as a military coup.
At least 30 people died and more than 1,000 were wounded after Mursi's Muslim Brotherhood movement called "Friday of Rejection" protests across the country and tried to march on the military compound where the ousted president is held.

The most deadly clashes were in the Mediterranean city of Alexandria, where 14 people died and 200 were wounded. In central Cairo, pro- and anti-Mursi protesters fought pitched battles late into the night with stones, knives, petrol bombs and clubs as armored personnel carriers rumbled among them.It took hours to restore calm. The Nile River bridges around the landmark Egyptian Museum where the street fights raged were still covered with the debris of rocks and shattered glass on Saturday morning. Both pro- and anti-Mursi activists remained encamped in different squares in the capital.The Health Ministry said 30 people were killed throughout Egypt on Friday, and 1,138 injured, state media reported.

State-owned newspapers said the army-backed authorities that took power on Wednesday and suspended the constitution, would announce the appointment of a prime minister on Saturday to run the country during a transition period.Former U.N. nuclear agency chief Mohamed ElBaradei, 71, a leading liberal politician, was seen as the most likely candidate to lead an administration focused on reviving a shattered economy and restoring civil peace and security. In an interview with Reuters, the country's main leftist leader, Hamdeen Sabahi, endorsed ElBaradei for the tough job, saying the transition should be short to amend the constitution and elect a new president and parliament.

The military has given few details and no timeframe for a new ballot - adding to political uncertainty at a time when many Egyptians fear violence could polarize society even further.
Egypt's first freely elected president was toppled after mass demonstrations against Muslim Brotherhood rule, the latest twist in a tumultuous two years since the fall of Hosni Mubarak in the Arab Spring uprisings that swept the region in 2011.

SINAI VIOLENCE

Five police officers were gunned down in separate incidents in the North Sinai town of El Arish, and while it was not clear whether the attacks were linked to Mursi's ouster, hardline Islamists there have warned they would fight back.There more attacks on army checkpoints in the lawless Sinai peninsula overnight and gunmen fired on central security building in the town of El-Arish, security sources said.
A new Islamist group announced its formation in the lawless Sinai peninsula adjoining Israel and the Gaza Strip, calling the army's ousting of Mursi a declaration of war on their faith and threatening violence to impose Islamic law.

The group, calling itself Ansar al-Shariah in Egypt, said it would gather arms and start training its members, in a statement posted on an online forum for militants in the country's Sinai region recorded by SITE Monitoring.The events of the last week have aroused concern among Egypt's allies in the West, including key donors the United States and the European Union, and in Israel, with which Egypt has had a U.S.-backed peace treaty since 1979.

Egyptian newspapers quoted ElBaradei as saying he expected Gulf Arab monarchies that were hostile to the Brotherhood's rule to pile in with financial support for the new authorities.
Only gas-rich Qatar provided substantial funds to Mursi's government with a total of $7 billion in loans and grants. Turkey and Libya also provided smaller loans and deposits.
Mursi's overthrow was greeted with wild scenes of celebration but infuriated supporters who fear a return to the suppression of Islamists they endured under military rule.
It has deepened Egypt's crisis. The Brotherhood has spurned army invitations to join an inclusive transition plan, culminating in fresh elections, saying it will not recognize the "usurper authorities".

RISING TENSIONS

Early on Friday, three protesters were shot dead outside the Republican Guard barracks where deposed Mursi is being held, security sources said.The army denied responsibility for the shootings. An army spokesman said troops did not open fire on the demonstrators and soldiers used blank rounds and teargas to control the crowd. It was unclear whether other security forces were present.
Later, tens of thousands of cheering Islamists gathered near a mosque in a Cairo suburb where they were addressed by Brotherhood leader Mohamed Badie, free to address them despite reports on Thursday that he had been arrested.

Badie, like some other leaders, pledge that it was worth "our lives" to restore Mursi to the presidency. But Brotherhood officials have also insisted they will not resort to violence.
After dark, running battles broke out in the area between Tahrir Square, scene of the demonstrations that toppled Mubarak, and the state broadcasting headquarters. Reuters journalists saw hundreds of youths from either side skirmish around the highway ramps of a major bridge over the Nile.
The violence will ring alarm bells in the United States. Washington has so far avoided referring to the army's removal of Mursi as a "coup", a word that under U.S. law would require a halt to its $1.5 billion in annual aid.

But many Egyptians see the army as a guarantor of stability at a dangerous time for the world's most populous Arab nation. "Maybe they will need to issue a curfew. Maybe the trouble will last a few days," said Said Asr, 41, sitting with friends outside a Cairo cafe smoking a cigarette. "But the army is everything in this country. And they are taking control."

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News Source: www.reuters.com