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Commodities Briefing 24.Oct 2011

Posted on 24 October 2011 by VRS |  Email |Print

John StephensonHedge funds increased bullish bets on commodities by the most since August on mounting optimism the global economy will avoid another recession, boosting prospects for raw-materials demand.

Money managers raised combined net-long positions across 18 U.S. futures and options by 12 percent to 737,647 contracts in the week ended Oct. 18, Commodity Futures Trading Commission data show. Wagers increased most in energy and agriculture, led by heating oil, gasoline, coffee and soybeans………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Commodities closed a negative quarter in September, with benchmarks down an average of 11%. Losses were Lead by base metals (S&PGSCI down 22.5%) and energy (S&PGSCI down 13%), which were the sectors most exposed to the economic cycle, while precious metals and livestock were up 4.3% and 5.5%, respectively.

Volatility was the main theme in a quarter in which most of the losses were towards the end. In fact, Q3 was on track to be a positive quarter up to the end of August, driven by double-digit gains in precious metals and agriculture and moderate gains in soft commodities. But, things started to turn in early September when the worsening European debt situation weighted heavily on sentiment and markets had a fresh sell-off on risk assets………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Three conditions need to be met for commodities to make a sustained recovery from their recent losses: markets need to be convinced that the soft patch for US growth in Q2 was temporary and growth is picking up again; China successfully engineers a soft landing and avoids a steep contraction in growth; and most important of all, that Europe has a credible plan to deal with its sovereign debt and banking stability issues to avoid contagion to other parts of the global economy; said Barclays, in a report.
Increasingly, the incoming data flow suggests the first two conditions are falling into place. In the US, housing starts and home builder sentiment improved sharply in September, and the construction sector is no longer a drag on growth………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

The optimism that drove stocks and commodities higher last week has evaporated on increased concerns that European leaders at this weekend summit in Brussels will fail to deliver a workable solution to the Eurozone debt crisis. Several differences have emerged between Berlin and Paris and policymakers are working frantically to find common ground ahead of the weekend.
Failure to deliver workable solutions could reignite worries about an already fragile banking system and bring back talk of recession. Talking about the near-term direction of commodity markets is therefore very difficult at this stage and another commodity update will follow on Monday when we hopefully will be a bit wiser………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Spot gold prices edged higher on Monday, after European leaders moved closer to a concrete plan to solve euro zone’s debt crisis during a weekend meeting, lifting sentiment in commodities and equities.

Spot gold edged up 0.2 percent to $1,642.99 an ounce by 0022 GMT, after losing more than 2 percent last week………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Gold prices are mixed today as markets remain on edge due to increasing divisions amongst European leaders on how to solve the intractable euro-zone debt crisis. There continues to be very strong demand for physical bullion globally and support is strong at the $1,600 level due to this demand.
The sharp fall of copper yesterday, by 6%, is an indication that the US, Chinese and indeed global economy is very fragile and may soon begin to contract………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Gone are the days when it took months, sometimes years, for gold prices to increase by Rs1,000 per 10 gm. But it is very different now. The price of the yellow metal touched and crossed Rs24,000 per 10 gram in August 2011 and again jumped by another Rs1,000 in just a few days. In fact, in August this year, gold prices have increased twice by Rs1,000 in one day.

After a lot of volatility in prices, the yellow metal is trading at around Rs27,000 per 10 gram in Ahmedabad these days………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Persisting uncertainty about resolution to the European sovereign debt crisis and fragile market confidence in the wake of less-than-satisfactory macro picture have combined to place downward pressure on the global commodity markets.

Last week saw prices of a range of commodities covering energy, metals (precious and base) as well as agriculture decline in line with the negative sentiment………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Gold prices have always depended on economic factors in the US and abroad: When the housing meltdown occurred in 2008, for instance, the commodity’s price began its ascent to all-time highs. Despite the asset’s decline to $1,641.80 per ounce thanks to the financial woes in Europe, the best question to ask when investing in gold is this: What will happen to the US economy in the next 5 years?

With the US showing little to no sign of recovery, gold prices are likely to stay high………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Among the various asset classes, gold has probably been the most secured one. Investments in gold have yielded consistent and assured returns, especially in volatile times. Gold has always come out as a trusted pillar to fall back on.
During the recent upheavals in the global markets, including the US downgrading and the Euro zone issues, investors started ploughing money into gold. Consequently the demand for gold went up. Also, as there were no other comparably safe assets to invest in, the price of gold skyrocketed. Gold has been up for 10 years in a row………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

How investment in selected gold and silver mining shares can help take care of your In a series of articles on portfolio re-organisation in the light of the current global economic downturn, we’ve been made aware of the unseen dangers lying ahead for investors and realized that the days we live in push us to design our investment portfolio to withstand the dangers of bad times.

One of the hardest tests for an investor is to be able to overcome emotions and loyalties to an investment whose fortunes may have changed………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Russia, with as much as a third of the world’s rare earth deposits, will take at least a decade to develop them and step into the breach that has been created since China chopped supply of the metals to the rest of the world.

China controls about 95 percent of the market for the 17 elements in demand by manufacturers of everything from hybrid autos to wind power stations and has cut its export quota by about 40 percent in the past two years, sending prices soaring………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

The answer to where the global economy is headed may well be found in the piles of trash towering above the brick and tin shacks belonging to Beijing’s army of garbage recyclers.

On the northeastern edge of sprawling Beijing, the hardscrabble neighbourhood of Dongxiaokou is some 20 kilometres from the glittering skyscrapers that provide this community’s livelihood. Here, virtually every scrap left over from a modern life – used computers and mobile phones, household appliances, furniture, clothing, even paper and plastic bottles – is collected, sorted, broken down and sold for cash………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

In the current macro environment, Barclays believes Aluminium can offer a good defensive position, given that further price downside is likely limited by the proximity of prices to production costs. At current prices, we estimate as much as 25-30% of global production is losing money. We are neutral on Nickel fundamentals on the view that recent price weakness is overdone but that recovering production will ease market tightness progressively into 2012.

Finally, Lead prices should gain some support if there is a solid recovery in the Chinese battery sector activity in Q4, although evidence is lacking so far………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Four months ago, the world’s energy watchdog took historic action to reduce oil prices. Since then, the financial outlook has considerably worsened and some Libyan oil has returned to the market. But the price has remained above $100 a barrel.
Releasing 60m barrels of reserves was meant to dampen the high price of $113 per barrel, attributed to lost ouput from war-torn Libya and worries that the Arab Spring could spread to more oil producers………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

With festival season around the corner, it is not just the jewellers who are encouraging customers to buy gold during this time. Stock-broking companies, too, are offering special discounts and offers for those buying and trading in gold. For those who are not interested in buying gold in the physical form, gold exchange-traded funds (ETFs) are attractive options. Here is more on what you need to know about gold ETFs.

How it works: Gold ETFs are like mutual funds that track a specific sector or commodities. Gold ETFs track the prices of gold and the value of the funds is dependent on the price movement of gold. Each gold ETF unit is almost equal to 1 gm of gold. These units are traded on the exchanges like stocks of companies. Gold ETFs can be purchased and traded online………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Attempts to provide clear definitions for different exchange-traded funds are being undermined by commercial considerations, which is creating further confusion, according to analysts.

Last week, State Street, iShares and Lyxor - Europe’s three largest ETF providers - all published guidelines about their products. But these separate initiatives have highlighted the lack of standardisation in the sector. The three firms have come up with different and conflicting definitions for the main types of ETF. Gordon Rose, an ETF analyst at data provider Morningstar, said that ETF providers are reluctant to standardise the definition of products for competitive reasons………………………………………Full Article: Source

Posted on 24 October 2011 by VRS |  Email |Print

Chemical, metal and agricultural companies around the world have fallen to valuations whose only precedent came in the last recession.

Commodity producers in the MSCI All-Country World Index lost 21 percent since the second quarter and trade for 10.6 times reported income, cheaper than 96 percent of days since 1995, according to data compiled by Bloomberg. In Canada, where stocks get more value from producers of fuels and minerals than any other major developed market, losses in energy shares are exceeding oil prices for the first time in 17 years………………………………………Full Article: Source

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