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Commodities Briefing 26.May 2016

Posted on 26 May 2016 by VRS |  Email |Print

China has put the world’s traditional financial centers on notice that it wants to develop its raw material markets as hubs for setting prices, seeking to marry the country’s commercial heft with a much greater say in determining how much commodities cost.
“We’re facing a chance of a lifetime to become a global pricing center for commodities,” Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said at the Shanghai Futures Exchange’s annual conference in the city on Wednesday. “On the way to realize this goal, we’ll see very intense competition. We have the advantage of trading size and economic growth, but our legislation is still not sound and we lack enough talent.”……………………………………….Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

China may open up its commodities futures markets to overseas and financial investors, the country’s securities regulator said, as the world’s top consumer of many raw materials seeks to play a larger role in setting global commodities prices.
China’s commodities exchanges will also maintain a close eye on movements in the futures market, China Securities Regulatory Commission (CSRC) vice-chairman Fang Xinghai told a conference. A surge in prices of China commodities futures this year followed by a rapid slide have sparked fears of a boom-and-bust cycle………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

The merger of erstwhile commodities regulator Forward Markets Commission (FMC) with the Securities and Exchange Board of India ( Sebi) was a landmark change in the regulatory sphere over the past two years, which also marked a beginning in the direction of forming a unified financial regulator.
Regulators in India’s capital markets have been the direct outcome of scams, which were the result of loopholes and the lack of an authority to enforce rules………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Oil is riding high these days, even as other commodities and emerging markets have turned lower. That may mean one of two things is taking place: Either oil prices will fall back into line, or oil will lose its place a key driver of the financial markets.
The price of West Texas Intermediate crude futures is up 0.6% on the day, on pace to settle at a new 2016 high. It’s on the cusp of climbing back over $50 per barrel, a key psychological level at which firms like Pioneer Natural Resources have said that they’ll look to ramp up production………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

The oil price broke out of a four-session mini-slump overnight and was hovering close to seven-month highs this morning after a positive report on supply boosted sentiment. US benchmark West Texas Intermediate jumped 2.5 per cent to $49.27 a barrel in afternoon trading in New York yesterday, a new 2016 peak and the highest price since October.
It was holding within 10 cents of this at around 9.45am in London this morning. International benchmark Brent crude peaked last night at around $49.24, around 25 cents below its six-month high of last Monday, and was similarly steady in early London trading………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

The oil market has given members of the Organization of the Petroleum Exporting Countries a reason to crack a cautious smile at next week’s meeting in Vienna. Signs of a more stable oil market have emerged since the cartel members last held a regularly-scheduled meeting. Oil prices have gained more than 30% so far this year, with West Texas Intermediate crude oil trading at its highest price in seven months in early trade Wednesday on the New York Mercantile Exchange, surpassing $49 a barrel.
Global production is on the decline following a larger-than-expected weekly decline in crude supplies, according to a report from the American Petroleum Institute late Tuesday………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

OPEC’s thorniest dilemma of the past year - at least from a purely oil standpoint - is about to disappear. Less than six months after the lifting of Western sanctions, Iran is close to regaining normal oil export volumes, adding extra barrels to the market in an unexpectedly smooth way and helped by supply disruptions from Canada to Nigeria.
But the development will do little to repair dialogue, let alone help clinch a production deal, when OPEC meets next week amid rising political tensions between arch-rivals Iran and oil superpower Saudi Arabia, OPEC sources and delegates say………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year they collectively added 483 tonnes—the second largest annual total since the end of the gold standard—with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council (WGC).
Not every top bank is a net buyer. The Bank of Canada has liquidated close to all of its gold, mainly in coin sales, while Venezuela is in the process of doing the same to pay off its debts………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Gold’s losing streak continued on Tuesday as the precious metal tumbled to its lowest level in more than five weeks. However, one of Wall Street’s most closely followed analysts says the dip presents a prime buying opportunity and that bears are reading the market incorrectly.
“This is just the beginning of a new bull market in the metals,” the Lindsey Group’s chief market analyst Peter Boockvar told CNBC’s “Futures Now” on Tuesday. Ultimately, Boockvar believes that the 2011 highs of around $1,900 for gold are not only reachable, but surpassable, as reasoned that bull markets historically exceed the previous bull market peak at some point………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Gold is enduring some rare price weakness thanks to dollar strength, but this should prove transient, according to Dutch bank ABN Amro. Prices fell again on Tuesday, coming under pressure from a stronger dollar amid rising expectations of an interest-rate rise this year in the US.
However, Georgette Boele, ABN’s coordinator of precious metals and FX strategy writes that there are a “wide variety of drivers” for prices, and not the dollar alone. “We think that the recent set-back in gold prices is temporary… and drivers will turn more positive again… leading to higher gold prices later this year and next year,” she says………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Every day, there are a whopping 5,500 tonnes ($212 billion) of gold traded in London, making it the largest wholesale and over-the-counter (OTC) market for gold in the world.
To put that in perspective, more gold is traded in London each day than what is stored at Fort Knox (4,176 tonnes). On a higher volume day, amounts closer to total U.S. gold reserves (8,133.5 tonnes) can change hands. How is this possible? The infographic below tells the story about gold’s foremost trading hub, as well as the paper gold market in London, England……………………………………….Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Precious metal miners gain: Since the beginning of 2016, precious metal mining shares have followed precious metal prices. Miners shed their 2015 losses and realized substantial gains during the gold and silver rally. The correlation between mining stocks and gold remains high.
However, gold has been falling during the past week. The marginal decline in precious metals could also amplify the losses in mining stocks. Miners took a comparative fall relative to gold. Gold’s overall performance in the first quarter was remarkably positive………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

The largest gold exchange-traded fund (ETF) says it has the physical gold to back up every share it issues. Because investors don’t buy physical gold when they purchase shares in the ETF, there’s been concern that the fund does not.
The SPDR Gold Trust exchange-traded fund, which uses the ticker ‘GLD,’ launched in 2004. In part, it serves as a cheaper alternative to investing in the physical metal. It is sponsored by the World Gold Council, which has oversight over the Bank of New York Mellon as a trustee………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

On Wednesday, gold suffered its sixth straight day of declines as economic data out of the US made an early rate hike by the Federal Reserve more likely and large-scale futures market investors scrambled to liquidate long positions not seen since 2011.
In heavy early afternoon trading gold futures in New York for delivery in June, the most active contract, dropped as low as $1,217.70 an ounce to a seven-week low before clawing back some lost ground. The gold price is down $60 per ounce since Wednesday last week, its longest unbroken losing streak since late November……………………………………….Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Stock ETFs chugged higher Wednesday, as investors cheered strong gains in oil prices and a hard-won Greek debt accord. Energy Select Sector SPDR (XLE) popped 1.6% on the stock market today as the sector contributed the most to S&P 500 gains.
Energy stocks rallied as U.S. West Texas Intermediate crude oil futures settled at $49.56 a barrel, their highest level since October. Official crude data released this morning provided further evidence of a drawdown in stockpiles. Inventories fell by 4.2 million barrels to a total of 537.1 million barrels for the week through May 20, according to news reports………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

A vote to leave the European Union would threaten sterling’s elite status as an international reserve currency, Standard & Poor’s has warned. The credit ratings agency has claimed that withdrawing from the EU could “jeopardise the British pound sterling’s position”, as well as the associated benefits to the UK’s triple A credit rating. As such, a Brexit might lead the UK to lose its place alongside the US, eurozone, Japan and China in the reserve currency club.
Frank Gill, an S&P analyst, said that a vote to leave the EU on June 23 could deter “foreign investment and other capital inflows into the UK”. Given the size of the country’s current account deficit, described as “alarming” by one Bank of England policymaker, quitting the EU could put downward pressure on the pound, he warned………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Market commentators said the Chinese currency’s recent stability may have ended and the yuan may weaken. China’s currency — traded onshore — was stable in March and April at about 6.5 to the US dollar.
That stability was likely due to intervention from Chinese officials, Singapore-based Heng Koon How, a senior investment strategist at the private bank Asia Pacific, Credit Suisse, said. All hidden risks have the potential to derail the recent stability in the yuan and drive it lower, he said………………………………………..Full Article: Source

Posted on 26 May 2016 by VRS |  Email |Print

Government receipts from carbon pricing schemes leapt 60% to US $26 billion through 2015, a World Bank study revealed on Wednesday. The news comes amid widespread gloom over the impact of global carbon markets and pricing mechanisms, which are now operating in 40 countries.
While national coffers are swelling, there’s little sign it’s having the opposite impact on greenhouse gas emissions. According to a separate study from consultants PwC, to meet the targets laid out in last December’s UN climate deal a tonne of CO2 should be rated at US$45, far higher than prices in major markets………………………………………..Full Article: Source

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