The short-term sentiment in gold changed this week, particularly as
the market took out an important technical-chart level, but whether the
metal extends its losses might depend on what Asian buyers do next
week when they return from their Lunar New Year festival.
Prices were lower on the day and the week. Most-active April
gold on the Comex division of the Nymex settled at $1,609.50, down 3.4%
on the week. March silver settled at $29.869, down 5% on the week.
In the U.S., markets are closed Monday for the Presidents Day holiday. Trade resumes Tuesday.
In the Kitco News Gold Survey,
out of 33 participants, 25 responded this week. Of those 25
participants, nine see prices up, while 12 see prices down, and four
see prices moving sideways or are neutral. Market participants include
bullion dealers, investment banks, futures traders, money managers and
technical-chart analysts.
Market participants said attitudes in gold for now have
changed, pointing to an increase in open interest in Comex futures
market as prices fall. Open interest is a count of the number of
outstanding positions at the end of a trading session, and if that
tally rises when prices fall, it’s considered a sign of new bearish
positions established.
Some said news this week showing that major investors such as
George Soros and Louis Moore Bacon sold some of their gold
exchange-traded fund holdings, as listed in U.S. Securities and
Exchange Commission filings, added to the change in sentiment.
Gold’s drop under $1,627.90 pushed the market into a loss for
the year, and that move undercovered pre-placed sell orders which
exaggerated the drop.
Jimmy Tintle, owner, GreenKey Alternative Asset Services, was
impressed by the force that pushed gold through technical-chart
support. Tintle, who said he’s been bearish on gold prices lately, said
now that the yellow metal has broken through the $1,625 level that’s
been talked about as key support for a few weeks, the action might
entice some retail buying, which could slow gold’s descent.
“On a technical level, we finally closed the gap on the chart
that was left in August. This typically is a good technical buying
point. Gold is also oversold on the nearer-term charts, (but) still has
a way to go on the monthly,” he said.
While he thinks the sell-off in gold could ease a bit, his
outlook remains negative, especially since gold closed under $1,625 on
Friday. “I would be looking at gold to reach the lower end of the
congestion area from May 2012 to July 2012 (which runs from) $1,580 to
$1,525. With all the currency wars going on, I would not be a buyer at
this point, unless we get a solid close above $1,649. For the longer
term, I believe gold needs to post a new 18-month low (falling to the)
$1,400-$1,450 area or lower before seeing a run for a higher high.”
Market watchers said the short-term direction in gold will
likely be influenced by what Asian traders do when they return from
their holiday. With prices much lower than a week ago, these traders
have a decision to make. Do they see the lower price as a bargain and
load up the shopping carts, which would bring demand back to the market
and raise prices, or do they become influenced by the negative
sentiment and stay on the sidelines? If they don’t step in, prices
could tumble further, several analysts said.
Not everyone is uniformly bearish. Some market watchers who
suggested prices might rise said short-term sentiment has tilted to
negative, which might be a contrary indicator and a reason to step in
and buy. They also cited long-term support for gold from the
ultra-loose monetary policy practiced by most central banks. Still
others pointed out that short-term viewpoints and long-term viewpoints
can be, and often are, two different things.
Looking to next week, market participants will watch the
comments out of the Group of 20 meeting, which officially will be
released Saturday. With talk of “currency wars” swirling, comments are
likely to focus on influencing foreign exchange rates. Brown Brothers
Harriman said most of the comments are likely to be “boiler plate
stuff” such as saying that countries should allow foreign exchange
prices to be determined by the market and the foreign exchange market
needs to be able to clear global trade and capital flows without
excessive volatility.
Focus has been on Japan lately, as the yen has fallen as Japan
seeks another stimulus program to prop up its economy. “In most
discussions of currency wars, the focus is on the high-income
countries, yet the reluctance of large current account surplus
countries in lower-income countries to allow their currencies to
participate in the adjustment process is an important part of the
underlying tension,” BBH said.
So far the gold market has ignored the rhetoric of “currency wars,” most analysts said, but that could change.
Market participants will also look to the release of the
Federal Reserve’s meeting minutes on Wednesday, which can affect market
movements.
Traders could start to watch for news about the “sequester” in
the U.S., which is a self-imposed deadline to deal with $85 billion in
automatic spending cuts that would occur if Congress did not act. After
the Presidents Day holiday, talks will heat up again. This week,
Senate Democrats suggested delaying by 10 months the automatic
indiscriminate spending cuts with a combination of cuts and taxes.
“Although volatility may start to increase as we approach the
March 1st U.S. budget deadline, we don’t think we will see the kind of
big moves we saw when the fiscal cliff stand-off first captivated the
markets in December,” said Edward Meir, commodities consultant at INTL
FCStone.
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Saturday, February 16, 2013
G-20 Takes Harder Line on Currencies
Group of 20 finance chiefs sharpened
their stance against governments trying to influence exchange
rates as they sought to tame speculation of a global currency
war without singling out Japan for criticism.
Two days of talks between G-20 finance ministers and central bankers ended in Moscow yesterday with a pledge not to “target our exchange rates for competitive purposes,” according to a statement. That’s stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency’s value.
With the yen near its lowest level against the dollar since 2010, policy makers are attempting to soothe concern that some countries are trying to weaken exchange rates to spur growth through exports. The risk is a 1930s-style spiral of devaluations and protectionism if other countries retaliate to safeguard their own economies.
“Politically-motivated devaluations can’t sustainably improve competitiveness; they don’t solve structural problems and they set off reactions,” Bundesbank President Jens Weidmann said yesterday. “The clear language in the communiqué underlines this unity and will allow the debate in the future to take place with a less excited tone.”
The new commitment is probably aimed at telling the Japanese that while they can stimulate their economy, they shouldn’t point to specific yen levels as desirable, said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London. While the currency may initially climb this week, it will soon resume its slide toward 100 per dollar from 93.50 as the Bank of Japan keeps easing policy, he said.
Japan has faced suspicion it’s trying to depreciate its currency, which lost about 7 percent this year as Prime Minister Shinzo Abe, who took office in December, campaigns for looser monetary policy to end 15 years of deflation.
Japanese officials in Moscow denied driving down their currency, arguing its fall was a byproduct -- not a focus -- of their effort to revive the world’s third-largest economy.
“The Bank of Japan’s measures have been and will remain targeted at achieving a robust economy through stable prices,” Bank of Japan Governor Masaaki Shirakawa said yesterday. The G-20 statement is “absolutely in the same spirit as our monetary policy,” he said. Finance Minister Taro Aso said a stronger Japan would “have a positive impact on the global economy.”
“There was no censure of the Japanese attitude, which was considered a policy to develop its economy and not to intentionally devalue,” said Brazilian Finance Minister Guido Mantega, who popularized the term “currency war” in 2010.
“Talk of currency wars is overblown,” said International Monetary Fund Managing Director Christine Lagarde. “People did talk about their currency worries.”
The Japanese defense echoes comments by U.S central bankers, who have run into criticism from emerging market officials such as Mantega for embracing stimulus, which has then undermined the dollar and strengthened other currencies.
In a nod to such complaints, the G-20 members agreed to monitor and minimize any “negative spillovers” and said that monetary policy should always be aimed at domestic needs, according to the statement.
Federal Reserve Chairman Ben S. Bernanke said Feb. 15 in Moscow that the U.S. has deployed “domestic policy tools to advance domestic objectives,” adding that bolstering the U.S. economy will support world growth.
Unlike their American counterparts, Japanese officials including Abe have commented publicly on their exchange rate’s level, fanning speculation that they welcome its fall and that the yen’s weakness plays a part in their recovery strategy.
Japanese ruling-party lawmaker Kozo Yamamoto, who is close to Abe, said in a Feb. 14 interview it would be “appropriate” for the yen to trade at about 95-100 to the dollar. Deputy Economy Minister Yasutoshi Nishimura said on Jan. 24 that it wouldn’t be a problem if the yen reached 100.
U.S. Treasury Undersecretary Lael Brainard used a speech in Moscow to criticize “loose talk about currencies.”
“We are determined to develop measures to address base erosion and profit shifting, take necessary collective actions and look forward to the comprehensive action plan” the Organization for Economic Cooperation and Development will present in July, the G-20 said.
The Moscow meeting finished after a week of volatility in financial markets that started when the Group of Seven rich nations said on Feb. 12 that its members won’t use policies to “target exchange rates” and would focus on domestic needs. Confusion then broke out as G-7 officials bickered over whether their first joint comment on currencies since 2011 implied irritation with Japan.
The G-20 also said that while the risks to the world economy have receded, its growth remains too weak and unemployment is too high in many countries. That requires more work to create a stronger monetary and economic union in the euro area, resolve uncertainties surrounding the budgets of the U.S. and Japan and boost domestic demand in economies with large trade surpluses.
Advanced nations accepted the U.S.’s position by not setting new fiscal targets to replace those they agreed on in 2010 and which many of them are on course to miss. They pledged instead to develop “credible medium-term fiscal strategies.”
Japanese officials aren’t alone in accepting a cheaper currency as good for growth.
Bank of England policy maker Martin Weale said in a speech yesterday that although U.K. central bankers don’t “target the exchange rate,” there is reason to tolerate any inflation resulting from the pound’s six-year decline.
Not all G-20 policy makers want a weaker currency. Weidmann said in a Feb. 13 interview that “the exchange rate of the euro is broadly in line with fundamentals” and “you cannot really say that the euro is seriously overvalued.”
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Two days of talks between G-20 finance ministers and central bankers ended in Moscow yesterday with a pledge not to “target our exchange rates for competitive purposes,” according to a statement. That’s stronger than their position three months ago and leaves Japanese officials under pressure to stop publicly giving guidance on their currency’s value.
With the yen near its lowest level against the dollar since 2010, policy makers are attempting to soothe concern that some countries are trying to weaken exchange rates to spur growth through exports. The risk is a 1930s-style spiral of devaluations and protectionism if other countries retaliate to safeguard their own economies.
“Politically-motivated devaluations can’t sustainably improve competitiveness; they don’t solve structural problems and they set off reactions,” Bundesbank President Jens Weidmann said yesterday. “The clear language in the communiqué underlines this unity and will allow the debate in the future to take place with a less excited tone.”
The new commitment is probably aimed at telling the Japanese that while they can stimulate their economy, they shouldn’t point to specific yen levels as desirable, said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London. While the currency may initially climb this week, it will soon resume its slide toward 100 per dollar from 93.50 as the Bank of Japan keeps easing policy, he said.
‘Talking’ Policies
“It makes it harder for the Japanese to talk down the yen, but they will let their policies do the talking,” said Turner.Japan has faced suspicion it’s trying to depreciate its currency, which lost about 7 percent this year as Prime Minister Shinzo Abe, who took office in December, campaigns for looser monetary policy to end 15 years of deflation.
Japanese officials in Moscow denied driving down their currency, arguing its fall was a byproduct -- not a focus -- of their effort to revive the world’s third-largest economy.
“The Bank of Japan’s measures have been and will remain targeted at achieving a robust economy through stable prices,” Bank of Japan Governor Masaaki Shirakawa said yesterday. The G-20 statement is “absolutely in the same spirit as our monetary policy,” he said. Finance Minister Taro Aso said a stronger Japan would “have a positive impact on the global economy.”
‘No Censure’
That stance won support in Moscow.“There was no censure of the Japanese attitude, which was considered a policy to develop its economy and not to intentionally devalue,” said Brazilian Finance Minister Guido Mantega, who popularized the term “currency war” in 2010.
“Talk of currency wars is overblown,” said International Monetary Fund Managing Director Christine Lagarde. “People did talk about their currency worries.”
The Japanese defense echoes comments by U.S central bankers, who have run into criticism from emerging market officials such as Mantega for embracing stimulus, which has then undermined the dollar and strengthened other currencies.
In a nod to such complaints, the G-20 members agreed to monitor and minimize any “negative spillovers” and said that monetary policy should always be aimed at domestic needs, according to the statement.
‘Pay Attention’
Developed nations should “pay attention to the effects their monetary policies have on external markets,” Chinese Vice Finance Minister Zhu Guangyao told the state-run Xinhua news service from Moscow.Federal Reserve Chairman Ben S. Bernanke said Feb. 15 in Moscow that the U.S. has deployed “domestic policy tools to advance domestic objectives,” adding that bolstering the U.S. economy will support world growth.
Unlike their American counterparts, Japanese officials including Abe have commented publicly on their exchange rate’s level, fanning speculation that they welcome its fall and that the yen’s weakness plays a part in their recovery strategy.
Japanese ruling-party lawmaker Kozo Yamamoto, who is close to Abe, said in a Feb. 14 interview it would be “appropriate” for the yen to trade at about 95-100 to the dollar. Deputy Economy Minister Yasutoshi Nishimura said on Jan. 24 that it wouldn’t be a problem if the yen reached 100.
U.S. Treasury Undersecretary Lael Brainard used a speech in Moscow to criticize “loose talk about currencies.”
Profit Shifting
The G-20 also pledged to work together to curb multinational companies’ leeway to shift profits to low-tax countries, endorsing an initiative spearheaded by the U.K, France and Germany.“We are determined to develop measures to address base erosion and profit shifting, take necessary collective actions and look forward to the comprehensive action plan” the Organization for Economic Cooperation and Development will present in July, the G-20 said.
The Moscow meeting finished after a week of volatility in financial markets that started when the Group of Seven rich nations said on Feb. 12 that its members won’t use policies to “target exchange rates” and would focus on domestic needs. Confusion then broke out as G-7 officials bickered over whether their first joint comment on currencies since 2011 implied irritation with Japan.
‘More Rapidly’
The yen fell on Feb. 15 for the first time in four days as early drafts of the G-20 statement failed to echo the G-7’s vow. Part of the pledge was added following all-night talks in the Russian capital as the club of the largest developed and emerging economies also reiterated they will move “more rapidly” toward market-determined exchange rates and “refrain from competitive devaluation.”The G-20 also said that while the risks to the world economy have receded, its growth remains too weak and unemployment is too high in many countries. That requires more work to create a stronger monetary and economic union in the euro area, resolve uncertainties surrounding the budgets of the U.S. and Japan and boost domestic demand in economies with large trade surpluses.
Advanced nations accepted the U.S.’s position by not setting new fiscal targets to replace those they agreed on in 2010 and which many of them are on course to miss. They pledged instead to develop “credible medium-term fiscal strategies.”
Japanese officials aren’t alone in accepting a cheaper currency as good for growth.
Bank of England policy maker Martin Weale said in a speech yesterday that although U.K. central bankers don’t “target the exchange rate,” there is reason to tolerate any inflation resulting from the pound’s six-year decline.
Not all G-20 policy makers want a weaker currency. Weidmann said in a Feb. 13 interview that “the exchange rate of the euro is broadly in line with fundamentals” and “you cannot really say that the euro is seriously overvalued.”
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Friday, February 15, 2013
Billionaires Soros, Bacon Cut Gold Holdings on Decline
Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.
Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.
The fourth-quarter decisions by Soros and Bacon may bolster speculation that gold’s 12-year bull-run is coming to an end as economic data from the U.S. to China show signs of recovery, curbing haven demand. Global ETP holdings have lost 0.9 percent since reaching a record on Dec. 20. UBS AG reduced its one-month price target yesterday by 6.8 percent, saying economic optimism “takes the shine off defensive assets,” including bullion. Gold futures fell to a five-month low today.
“The reduction in holdings by George Soros may unnerve the market a little bit,” said Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd. “The market may also be watching Paulson, and those are steady.”
Gold fell below $1,600 an ounce today for the first time since August. Futures for April delivery slumped 1.8 percent to $1,605.40 at 10:49 a.m. on the Comex in New York, after touching $1,596.70, the lowest since Aug. 15. The most-active contract, which has lost 4.3 percent this year, declined 5.5 percent in the final three months of 2012, the biggest quarterly decline since June 2004.
Growth will accelerate in the U.S. and China, the two largest economies, in the coming quarters, according to more than 100 economists surveyed by Bloomberg. In the U.S., claims for jobless benefits dropped 27,000 to 341,000 in the week to Feb. 9, fewer than any of the 49 economists surveyed by Bloomberg projected, the Labor Department said yesterday.
Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., and Scout Capital Management LLC sold their entire stakes in the SPDR Gold Trust in the quarter, filings showed.
The Standard & Poor’s 500 Index climbed to a five-year high yesterday and has surged 6.7 percent in 2013. The gauge has more than doubled since bottoming in March 2009 as the U.S. Federal Reserve conducted three rounds of bond buying to lower interest rates, boost growth and support the labor market.
The U.S. central bank will keep purchasing securities at the rate of $85 billion a month, according a statement from the policy-setting Federal Open Market Committee on Jan. 30. Gold may have a sharp rally as investors seek so-called real assets, Elliott Management Corp., the hedge fund founded by Paul Singer, said in a document accompanying its fourth-quarter report on Jan. 28, a copy of which was obtained by Bloomberg.
Germany’s economy, the largest in Europe, contracted 0.6 percent in the fourth quarter, and French GDP dropped 0.3 percent, according to data this week. Japan’s economy, the world’s third largest, is in recession after contracting an annualized 0.4 percent in the final quarter of 2012, following a revised 3.8 percent fall in the previous three months.
Michael Vachon, a spokesman for Soros, was not immediately available when called for comment and did not reply to an e- mail. Armel Leslie, a spokesman for New York-based Paulson & Co., which manages $18 billion, declined to comment. Kenny Juarez, a spokesman for Moore Capital, also declined to comment.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
“The economy is looking better, and people are moving to more remunerative assets like equities,” Paul Dietrich, chief executive officer of Foxhall Capital Management Inc., said in a telephone interview from Alexandria, Virginia. “A lot of people have lightened up on gold.”
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Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.
The fourth-quarter decisions by Soros and Bacon may bolster speculation that gold’s 12-year bull-run is coming to an end as economic data from the U.S. to China show signs of recovery, curbing haven demand. Global ETP holdings have lost 0.9 percent since reaching a record on Dec. 20. UBS AG reduced its one-month price target yesterday by 6.8 percent, saying economic optimism “takes the shine off defensive assets,” including bullion. Gold futures fell to a five-month low today.
“The reduction in holdings by George Soros may unnerve the market a little bit,” said Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd. “The market may also be watching Paulson, and those are steady.”
Gold fell below $1,600 an ounce today for the first time since August. Futures for April delivery slumped 1.8 percent to $1,605.40 at 10:49 a.m. on the Comex in New York, after touching $1,596.70, the lowest since Aug. 15. The most-active contract, which has lost 4.3 percent this year, declined 5.5 percent in the final three months of 2012, the biggest quarterly decline since June 2004.
‘Downside Risks’
Hedge funds have cut bets on a gold rally by 56 percent since reaching a 13-month high in October as manufacturing rebounded from the U.S. to China. It’s increasingly probable that prices peaked in 2011 and so-called downside risks are building as the world expands, Tom Kendall, an analyst at Credit Suisse Group AG in London, said in a report e-mailed Feb. 1. Futures rallied to $1,923.70 on Sept. 6, 2011.Growth will accelerate in the U.S. and China, the two largest economies, in the coming quarters, according to more than 100 economists surveyed by Bloomberg. In the U.S., claims for jobless benefits dropped 27,000 to 341,000 in the week to Feb. 9, fewer than any of the 49 economists surveyed by Bloomberg projected, the Labor Department said yesterday.
Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., and Scout Capital Management LLC sold their entire stakes in the SPDR Gold Trust in the quarter, filings showed.
‘Looking Better’
Global gold investment, including bars, coins and ETPs, dropped 8.3 percent to 424.7 tons in the fourth quarter from a year earlier, the World Gold Council said in a report yesterday. Full-year investment slid 9.8 percent to 1,534.6 tons, it said.The Standard & Poor’s 500 Index climbed to a five-year high yesterday and has surged 6.7 percent in 2013. The gauge has more than doubled since bottoming in March 2009 as the U.S. Federal Reserve conducted three rounds of bond buying to lower interest rates, boost growth and support the labor market.
The U.S. central bank will keep purchasing securities at the rate of $85 billion a month, according a statement from the policy-setting Federal Open Market Committee on Jan. 30. Gold may have a sharp rally as investors seek so-called real assets, Elliott Management Corp., the hedge fund founded by Paul Singer, said in a document accompanying its fourth-quarter report on Jan. 28, a copy of which was obtained by Bloomberg.
‘Come Back’
While people would rather invest in “economically sensitive commodities and equities” as data improved, “we may see people come back to gold if troubles in Europe get worse and problems in the U.S. reappear,” said Adrian Day, who manages about $160 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland.Germany’s economy, the largest in Europe, contracted 0.6 percent in the fourth quarter, and French GDP dropped 0.3 percent, according to data this week. Japan’s economy, the world’s third largest, is in recession after contracting an annualized 0.4 percent in the final quarter of 2012, following a revised 3.8 percent fall in the previous three months.
Michael Vachon, a spokesman for Soros, was not immediately available when called for comment and did not reply to an e- mail. Armel Leslie, a spokesman for New York-based Paulson & Co., which manages $18 billion, declined to comment. Kenny Juarez, a spokesman for Moore Capital, also declined to comment.
Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.
“The economy is looking better, and people are moving to more remunerative assets like equities,” Paul Dietrich, chief executive officer of Foxhall Capital Management Inc., said in a telephone interview from Alexandria, Virginia. “A lot of people have lightened up on gold.”
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Gold Dips Below $1,600 First Time Since Summer As Sell Stops Triggered
Gold fell below $1,600 an ounce Friday for the
first time since August as sell stops were activated when prices fell
below prior chart support around the previous lows for the year,
traders and analysts said.
As of 11:05 a.m. EST, spot gold was $29.70, or 1.8%, lower to $1,605.20 an ounce and has been as weak as $1,598.20. The most-active April futures contract on the Comex division of the New York Mercantile Exchange was down $31.30, or 1.9%, to $1,604.20, bottoming at $1,596.70.
“We reached some long-standing support at $1,625-30,” said Robin Bhar, metals analyst with Societe Generale. “We moved through there, and that set off some more momentum-based selling.”
Afshin Nabavi, head of trading with MKS (Switzerland) SA, also cited technical stop-loss selling around $1,625-30, coupled with the continued absence of potential Chinese buying this week due to Lunar New Year holidays. Further stops were hit around $1,615, he added.
Stops are pre-placed orders automatically activated when certain price points are hit. Traders use them to kick themselves out of trades to either capture a profit or limit losses, or else to open new positions to capitalize on a short-term move.
Sentiment toward gold has been hurt lately by improved optimism about a global economic recovery, Bhar said. As a result, he continued, some market participants have exited gold as a hedge and are instead chasing equities and other commodities.
Both Nabavi and Bhar see potential for gold to bounce next week, however. Participants in China will be back in the markets, plus buying can be expected in India ahead of another wedding season. A World Gold Council report this week listed these as once again the world’s two largest consuming nations in 2012.
“There might be a corrective bounce higher…on some physical buys,” Bhar said.
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As of 11:05 a.m. EST, spot gold was $29.70, or 1.8%, lower to $1,605.20 an ounce and has been as weak as $1,598.20. The most-active April futures contract on the Comex division of the New York Mercantile Exchange was down $31.30, or 1.9%, to $1,604.20, bottoming at $1,596.70.
“We reached some long-standing support at $1,625-30,” said Robin Bhar, metals analyst with Societe Generale. “We moved through there, and that set off some more momentum-based selling.”
Afshin Nabavi, head of trading with MKS (Switzerland) SA, also cited technical stop-loss selling around $1,625-30, coupled with the continued absence of potential Chinese buying this week due to Lunar New Year holidays. Further stops were hit around $1,615, he added.
Stops are pre-placed orders automatically activated when certain price points are hit. Traders use them to kick themselves out of trades to either capture a profit or limit losses, or else to open new positions to capitalize on a short-term move.
Sentiment toward gold has been hurt lately by improved optimism about a global economic recovery, Bhar said. As a result, he continued, some market participants have exited gold as a hedge and are instead chasing equities and other commodities.
Both Nabavi and Bhar see potential for gold to bounce next week, however. Participants in China will be back in the markets, plus buying can be expected in India ahead of another wedding season. A World Gold Council report this week listed these as once again the world’s two largest consuming nations in 2012.
“There might be a corrective bounce higher…on some physical buys,” Bhar said.
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Thursday, February 14, 2013
Who Holds the Most Gold?
In addition to Russia, many countries hold the precious metal.
According to the official gold holdings by the World Gold Council, the
United States holds the most at 8,133.5 tonnes, representing 75.7
percent of reserves. A large portion of this gold is held at Fort Knox
in Kentucky and the West Point depository in New York. The U.S. has
possession of even more gold via the Federal Reserve, but it technically
belongs to other nations. Germany has nearly 3,400 tonnes, the second
highest total in the world and representing 72.8 percent of its
reserves.
The top 10 gold holders are listed below, along with the percentage of reserves:
Chinese imports in December increased to a fresh monthly record of 114,405 kilograms, compared to 90,764 kilograms in November and 38,650 kilograms in the same period a year earlier. It should also be noted that the imports only represent private demand and does not account for official sector Chinese purchases.
Although the People’s Bank
of China has not officially disclosed any changes to its gold holdings
in years, it is widely believed that the central bank is purchasing gold
to diversify its reserve holdings. The next time China reveals its
official gold holdings, it could easily be in the 2,000 to 3,000 tonne
range.
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The top 10 gold holders are listed below, along with the percentage of reserves:
- United States: 8,133.5 tonnes, 75.7 percent
- Germany: 3,391.3 tonnes, 72.8 percent
- IMF: 2,814 tonnes
- Italy: 2,451.8 tonnes, 72.1 percent
- France: 2,435.4 tonnes, 70.5 percent
- China: 1,054.1 tonnes, 1.7 percent
- Switzerland: 1,040.1 tonnes, 10.6 percent
- Russia: 957.8 tonnes, 9.5 percent
- Japan: 765.2 tonnes, 3.2 percent
- Netherlands: 612.5 tonnes, 59.7 percent
Chinese imports in December increased to a fresh monthly record of 114,405 kilograms, compared to 90,764 kilograms in November and 38,650 kilograms in the same period a year earlier. It should also be noted that the imports only represent private demand and does not account for official sector Chinese purchases.
Although the People’s Bank
of China has not officially disclosed any changes to its gold holdings
in years, it is widely believed that the central bank is purchasing gold
to diversify its reserve holdings. The next time China reveals its
official gold holdings, it could easily be in the 2,000 to 3,000 tonne
range.Contact Us:
Asad Rasheed
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News Source: www.marketwatch.com
Wednesday, February 13, 2013
Wall Street pauses after rally to five-year high
The S&P 500 was buoyed by General Electric (GE.N) after cable company Comcast Corp (CMCSA.O) said it will buy from GE the the part of NBCUniversal it didn't already own for $16.7 billion.
Comcast's stock hit the highest since 1999 before closing up 3 percent at $40.13 and GE gained 3.6 percent to $23.39.
The S&P 500 is up 6.6 percent so far this year, partly due to stronger-than-expected corporate earnings and a better economic outlook. The Dow industrials is about 1 percent away from an all-time intraday high, reached in October 2007.
Volume has been weak in recent days with the S&P moving sideways around 1,520. The index is about 3 percent away from closing at a record high.
A scarcity of sellers after a consistent string of gains is a positive sign and shows the uptrend is intact, King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco, said.
"Last year we had double-digit returns in the first quarter. It's fairly possible we can move higher from here," he said.
The Dow Jones industrial average .DJI fell 35.79 points or 0.26 percent, to 13,982.91, the S&P 500 .SPX gained 0.9 point or 0.06 percent, to 1,520.33 and the Nasdaq Composite .IXIC added 10.38 points or 0.33 percent, to 3,196.88.
The S&P gained 12 percent in the first three months of 2012.
Deere & Co (DE.N), the world's largest farm equipment maker, forecast a modest increase in sales this year despite the prospect of the biggest corn crop in U.S. history. The forecast fell short of analysts' expectations, sending shares of Deere down 3.5 percent to $90.68.
In extended trading, shares of technology bellwether Cisco Systems (CSCO.O) fell 2 percent after it posted results.
Dr Pepper Snapple (DPS.N) fell 5.8 percent to $42.69 after it forecast profit for the current year below analysts' estimates.
Cliffs Natural Resources (CLF.N) lost a fifth of its market value a day after the miner reported a quarterly loss and slashed its dividend by 76 percent. Its shares fell 20 percent to 429.29.
According to the latest Thomson Reuters data, of the 364 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.
About 5.9 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average in February last year of 6.94 billion.
On the NYSE, roughly seven issues rose for every five that fell and on Nasdaq more than six rose for every five decliners.
Contact Us:
Asad Rasheed
Direct:04-3841906
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News Source: www.reuters.com
Tuesday, February 12, 2013
What do Apple investors want?
Cook also countered Einhorn’s accusation that Apple has a
“Depression-era mentality” and rattled off all the things Apple has done
to return shareholder value.
Read what Cook says about the Einhorn “sideshow,” Apple’s margins and products.
There was even chatter that Apple might hike its dividend. Immediately
after the meeting, Piper Jaffray analysts told clients they expected
Apple to slightly increase its dividend, after hearing Cook’s comments.
Read about Wall Street’s prognosis for Apple’s dividend hike.
This wasn’t Cook’s first time at the Goldman Sachs conference. This
year, however, his appearance came after the company’s shares have
tumbled from a high of $700 last year, as worries about whether its
hyper-growth era is over persist, and as competitors get closer to its
heels, and in some cases, like Samsung, are surpassing Apple in the
smartphone market.
For one thing, investors might be comparing Cook, who is much more
engaged with the investment community, to co-founder and former CEO
Steve Jobs. Jobs was known for not talking much to Wall Street — he only
spoke on company earnings conference calls a handful of times.
So why when Cook talks about possibly returning more cash to
shareholders and giving them a say in whether or not Apple issues a new
class of stock, do its shares fall?
Perhaps, in the most cynical view, they feel that Cook is trying too
hard to win their approval at a moment when its valuation has plummeted
and no one knows what will be its next big thing. Maybe shareholders
would be happier with a CEO who just isn’t that into them.
Contact Us:
Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
For more information please visit our website: www.cfb.ae
News Source: www.marketwatch.com
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