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Commodities Briefing 29.Oct 2013

Posted on 29 October 2013 by VRS |  Email |Print

The U.S. Federal Reserve may not unveil its plans for regulating Wall Street’s commodity trading business until early next year, a person briefed on the matter said, deferring a decision on the politically fraught debate into 2014.
The timing confounds any expectations that the regulator would make its views known before a second Senate hearing expected next month into the rigging of aluminum and other markets, at which Fed officials are due to testify………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Jonathan Barratt of barrattbulletin.com sees precious metal gold rallying to USD 1400 an ounce. Meanwhile, he remains bearish on Brent crude and expects it to correct to USD 100 per barrel.
If we can stay above USD 1,350 I would be looking for USD 1,375 as the next target and maybe even up to USD 1,400. Crude has been under pressure for sometime and we have seen about a 10 percent correction. So, I would think that we are due for a bounce soon………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Economic growth from China is increasing, which is leading to more demand for commodities ranging from gold to oil to natural gas to coal. China is the biggest consumer of energy in the world. It is the second biggest customer for gold, only behind India. Investors ranging from the Central Bank of the Republic of China (in Taiwan) to individuals buy the yellow metal as an asset.
By the fundamentals of supply and demand, China’s growing economy should move the prices of oil, natural gas, coal and gold higher………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

If oil prices fall by 25 percent or more, as some analysts predict they will next year, most Americans would cheer. But there’s a downside to $70 a barrel oil: At that price, it would become too expensive to pump the crude out of Texas’ Permian Basin, the second-richest oil field left in the world, thus derailing a $5 trillion energy boom. Joe Carroll and Edward Klump of Bloomberg explain what that means to us.
China’s strong growth is the biggest driver of the world economy right now: If Beijing sneezes, we’re all going to get the fiscal flu………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

OPEC, the Organization of the Petroleum Exporting Countries, said on Monday there would still be demand for its oil despite the shale oil boom in the United States, downplaying concerns the group may lose its market share.
Boom in shale oil production in the United States has changed the global energy landscape, as Washington has ceded its ranking as top global oil importer to China by cutting its import needs. Next year, the United States is set to overtake Russia as the world’s top oil producer due to the growing non-conventional oil output, the International Energy Agency (IEA) said this month………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Due to lower output from Iraq and Libya, crude oil supplies from the Organization of Petroleum Exporting Countries in September fell by 645,000 b/d to 29.99 million b/d, below the 30 million b/d threshold for the first time in almost 2 years, according to the International Energy Agency’s most recent Oil Market Report.
Non-OPEC supplies, after falling in August, inched up in September by 20,000 b/d to 54.61 million b/d, which is still significantly lower than July levels. As the steep fall in OPEC crude oil production only partially offset by the marginal increase in non-OPEC supplies, global oil supplies in September fell to 91.12 million b/d from 91.74 million b/d in August………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

The strength of gold bar, coin and jewellery demand across Asia helped gold to rebound from three-year troughs below $1,200 in the summer. Looking further ahead, in my opinion the prospect of accelerating physical demand from these regions — and in particular China — combined with enduring difficulties in the world economy, provide the perfect melting pot for gold to rise strongly.
And if, like me, you believe that gold is ready to stage another surge to the upside, in my opinion SPDR Gold Trust and Gold Bullion Securities are an excellent way to pocket gold-lined gains. These exchange-traded funds (ETFs) are designed to follow movements in the metal price………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Russia reduced gold reserves for the first time in a year in September as Mexico cut holdings for a 17th straight month, according to the International Monetary Fund. Kazakhstan expanded assets for a 12th month.
Reserves in Russia declined about 0.37 metric ton to 1,015.1 tons, data on the IMF’s website showed. Kazakhstan’s holdings expanded 2.52 tons to 137.04 tons, the data showed………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

The gold price consolidated recent gains on Monday holding firm above the key $1,350 an ounce level it scaled last week to reach a five-week high. In late afternoon trade on the Comex market in New York December gold futures changed hands at $1,353.60, a slight gain on Monday’s close, but off its highs for the day of $1,362.
The price of gold has rallied sharply from the intra-day low of $1,182.60 an ounce hit on June 28, but remains down 19% for the year………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

The line between investment and jewellery demand within India is often decidedly blurry. This is one of the many reasons why the Indian government’s quest to rein in gold imports is rather quixotic and, it begs the question, how sustainable is the current regulatory framework?
In its daily precious metals note, UBS asks exactly that, commenting that, while the situation is fluid, “There is a clear recognition of the reality that a decent portion of demand – particularly in the form of jewellery and ornaments linked to festivals and wedding traditions – will remain intact.”……………………………………….Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

China accounts for about 40% of the global copper consumption and hence has a great influence on prices. China refined copper consumption rose to record levels in September and a modest uptick in sHFE stocks may suggest a supply surplus dynamics evolving, according to Barclays Research.
The critical question for the copper market and price performance is whether the strength of September’s apparent consumption can be sustained into Q4 2013. From a refined production perspective, September’s 45% y/y surge in copper concentrate imports, surpassing 1Mt to a new record, would suggest support for continuation of this trend………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Aluminium touched the highest level in two months on Monday as traders said investors were betting that the London Metal Exchange (LME) would make changes to warehouse rules that would boost the price of the metal.
Zinc and lead also hit the strongest levels since August on fund buying, while copper was steady. Three-month aluminium on the LME climbed to a session high of $1,900 a tonne, the highest since Aug. 23. It failed to trade in closing open outcry activity but was last bid at $1,895, up 0.8 percent………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Data from Barclays Stockbrokers, a leading execution-only broker, has revealed that while UK-focused exchange-traded funds (ETFs) continued to dominate client ETF purchases in September, the month also saw an increase in demand for commodities-based products.
During the month, 50% of the top ten ETF purchases made by clients of Barclays Stockbrokers were UK focused. Impressively, the £4.9 billion iShares FTSE 100 ETF (ISF), issued by ETF juggernaut iShares, part of investment giant BlackRock, stayed in top spot as the most purchased ETF for the month – a position it has been in for the 18th week in a row this year………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

After losing as much as 50% of their value in the first half of 2013, gold miners have seen some respite in recent weeks on rising gold prices. Gold has rallied from just about $1,250/oz. to its current level above $1,350/oz., suggesting strong sentiment in the space.
This increase is also being felt in the ETF space with key products like GLD , IAU and SGOL adding as well in recent sessions. While these performances have been good, events have been even better in the gold mining ETF space……………………………………….Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

More foreign hedge funds are devoting resources to China, attracted by strong returns, the potential for growth and signs that the country will continue to develop its financial markets.
China-focused hedge funds managed $12.9 billion in assets as of the end of September, exceeding levels before the global financial crisis, according to Eurekahedge, which tracks the industry. In the nine months ended Sept. 30, average returns from China-focused hedge funds eclipsed those in neighboring countries, with the exception of Japan………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

There is no merit in holding commodities funds in the current environment, according to Andy Merricks, who says they offer little in the way of diversification benefits.
The majority of commodities and mining funds have had a torrid time recently as headwinds such as falling prices, a slowdown in the emerging markets and the strengthening of the US dollar have all caused sentiment to turn against the asset class………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

For the world financial markets, an exposure in a regulated market has always been the safest investment choice. Though, currently, there are concerns about commodities in the Indian market, these can be addressed by taking a closer look at the scenario. A comparison of the regulated and unregulated marketplace will help us understand how risk can be avoided.
India has come a long way in the commodities space, turning into a stable and structured marketplace. With a well-established commodity futures platform and exchange, the scope of losses due to quality or physical deliveries is negated………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

The euro is only set to get stronger this week, according to currency analysts, with the dollar weakening further against the single currency as the U.S. Federal Reserve is poised to put delay “tapering” its bond-buying program.
The euro was trading at 1.3808 against the dollar on Monday morning, its highest level for nearly two years and testing resistance at the $1.3830 mark. According to Kit Juckes, global head of foreign exchange strategy at Societe Generale, the euro’s buoyancy looks set to continue for some time………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

The recent decision of Cuba’s Council of Ministers to re-establish a single currency system in the country has, first of all, a psychological aim with a clear political motivation: getting us used to the high retail prices we will be seeing when this one currency, most likely the Cuban Peso (the “CUP”, in bank jargon), becomes generalized.
In practice, however, it makes no difference whether one pays 500 Cuban Pesos (CUP) or 20 Convertible Pesos (CUC) for a pair of shoes. The self-employed, in fact, do not object to being paid in pesos. They even exchange the CUC for 24 pesos and, after some haggling, they may end up selling the article in question for a few less CUP so as to end the day with a good sale………………………………………..Full Article: Source

Posted on 29 October 2013 by VRS |  Email |Print

Years of bitter political combat over climate change policy has left the economics profession unmoved. Despite Prime Minister Tony Abbott’s plans to rid Australia of what he calls the “toxic” carbon tax, the poll by Fairfax Media shows there is near-unanimity among economists that a market-based solution, such as a carbon tax or an emissions trading scheme, is the best policy option to reduce carbon pollution.
This echoes similar surveys taken in past years. Economists are convinced that carbon pricing will yield the greatest environmental bang-for-buck at the lowest economic cost………………………………………..Full Article: Source

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