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Commodities Briefing 27.Nov 2013

Posted on 27 November 2013 by VRS |  Email |Print

While gold is the more high-profile commodity that has disappointed investors with its recent slump in price, others are also worrying. But there may be some bright spots. Like gold, many commodities have slumped in the past couple of years and there are mixed feelings about whether prices for oil and precious metals will manage to perform before mid-2014.
But global demand for raw materials from China is expected to increase and that, coupled with a recovering European economy, could be good news for commodities such as base metals, according to analysts………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

As the inflation from QE never arrives it actually looks like deflation might be creeping up on some of the world’s economies. And SocGen analysts think that means there could be more downside in commodities which tend to trend with inflation:
“Commodities can be seen as a leading indicator of the threat of deflation. As Fed policy is likely to change, with tapering now expected in 2014, commodity prices may correct further with the rise of US rates. And, this decline in commodity prices also reflects fears of a strong deceleration in emerging markets. Overall, “most of the emerging economies have underlying fragilities” according to the OECD………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

The U.S.-Iran pact curbing Iran’s nuclear capabilities has had an interesting impact on currencies, allowing them to diverge from their traditional correlation to monetary policy by first influencing oil prices, according to a note on Tuesday from French bank Crédit Agricole.
The U.S. dollar rallied against almost all of the G-10 currencies but declined against emerging market currencies. “The price action displayed an interesting shift away from the monetary policy outlook toward broader macro trends related to the sensitivity to oil prices,” wrote foreign exchange strategist Mark McCormick. “The outlook for oil importers and exporters terms of trade is likely the driver behind the knee-jerk market reaction to the nuclear deal.”……………………………………….Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Oil prices dipped and stocks around the world rose on Monday after the news of an agreement to temporarily freeze Iran’s nuclear program, but few specialists expected any significant change to consumer energy prices, at least in the short term.
Under the interim deal brokered between the United States and other world powers with Tehran, little has changed in market fundamentals………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Iran’s oil ministry has opened contacts with western majors as the government of Hassan Rouhani tries to capitalise on progress in nuclear talks and encourage companies to prepare for an eventual lifting of sanctions.
Bijan Namdar Zanganeh, the veteran oil minister who has returned to government after an eight-year absence, told the Financial Times he had held meetings with European companies and “indirectly” with US firms with a view to inviting them back to Iran………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

China’s aggressive quest for foreign oil has reached a new milestone, according to records reviewed by Reuters: near monopoly control of crude exports from an OPEC nation, Ecuador.
Last November, Marco Calvopiña, the general manager of Ecuador’s state oil company PetroEcuador, was dispatched to China to help secure $2 billion in financing for his government. Negotiations, which included committing to sell millions of barrels of Ecuador’s oil to Chinese state-run firms through 2020, dragged on for days. Calvopiña grew anxious and threatened to leave………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

The price-setting processes for gold and silver in the spot market are the latest to come under review from global regulators, with authorities in Europe investigating the mechanisms for both precious metals.
In the U.K., the Financial Conduct Authority is reviewing how the gold price is set, said a person familiar with the investigation, who added that it is at an early stage. In Germany, the Federal Financial Supervisory Authority, or BaFin, is looking into the rate-setting processes for gold and silver, according to a representative at the regulator………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

With regulators around the globe investigating the transparency of financial markets, some analysts and traders are wondering if it is time to transition away from the London gold price fixing.
According to a Bloomberg article on Tuesday, the UK Financial Conduct Authority is analyzing the London gold price fix to see how gold prices are set. The article went on to describe how price fixing works as five bullion banks Barclays Plc , Deutsche Bank AG , Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA. meet twice a day to determine the price of gold……………………………………….Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

There has been a lot of coverage over the phenomenon that is Bitcoin. I’m sure many of you are asking yourselves, is this online currency for real? What does it really say about our financial system?
But for those who are unaware, Bitcoin is essentially an online currency that is completely decentralized. Simply put, it is the exact opposite of the U.S. dollar, which is managed by the Federal Reserve………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Gold bulls got another shock last week (assuming they’re still watching the ‘golden anchor’). Gold has breached the neckline of a head-and-shoulders pattern which has been five months in the making. On the chart below, readers can see the left shoulder in July, the head in August, and the right shoulder in October.
Head-and-shoulders patterns are traditionally considered reversal patterns. To be considered bearish the pattern would be expected to appear at the end of a bull trend. That is not what happened here………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

UBS on Tuesday downgraded their short-term gold price targets to $1,180 an ounce for one month and $1,100 for three months. Joni Teves, UBS analyst, said their revision focuses on three points. First, gold sentiment is much weaker than initially thought as evidenced by gold’s inability to rise even in the face of U.S. dollar weakness.
Second, market participants are focusing on the expected tapering of the Federal Reserve’s quantitative easing program, and third, physical buying is subdued, with buying less seasonal this year and Indian buying curbed by the restrictions placed on the market by the country’s government and central banks………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

The Gems and Jewellery Export Promotion Council (GJEPC) has released the details of imports of raw materials for gems and jewellery for the month of October. According to the data, the gold bar imports by the country in October this year witnessed a huge fall of 42.07% over the previous year.
The provisional figures released by GJEPC suggests that the total gold bar imports by the country in October amounted to INR 2,940.93 crores (USD 477.27 million).In rupee terms, the gold bar imports have declined sharply by 42.07%. The decline in dollar terms stood at 50.15%. It must be noted that the country’s gold bar imports during October last year were INR 5,076.56 crores (USD 957.48 million)………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Gold ETFs have become very popular as an investment option. However, the recent slump in prices has affected the demand for gold ETFs and also somewhat tarnished its image as a gold haven. To date, gold has dipped almost 35% from its all-time high in Sep 2011 when it touched $1,921 per ounce. This drop has technically put the yellow metal into the quagmire of a bear market.
In 2013, it was not one event that affected the gold market. A combination of factors - the Federal Reserve’s taper or no taper confusion, conflict in Syria and slowdown in Indian and Chinese demand - affected gold prices………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Foreign-exchange funds gained 0.3 percent last month as a political impasse over the U.S. debt limit that led to a partial government shutdown affected returns, according to Parker Global Strategies LLC.
Among the 37 programs that reported results, performances ranged from a return of about 3.6 percent to a loss of 2.1 percent, the company said today in a statement. Twenty-one funds gained money and 16 reported a loss in October, when Federal Reserve officials maintained their $85 billion-a-month bond-buying program, known as quantitative easing, while signaling they may taper “in coming months.”……………………………………….Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Hedge funds are betting on another run of yen weakness, a trade that made money earlier this year for billionaire George Soros, putting them in opposition to economists who see Japan’s currency little changed into 2014.
Futures traders pushed net shorts, or wagers the yen will fall versus the dollar, to the highest since July 2007, according to the Commodity Futures Trading Commission. That contrasts with the median estimate of more than 50 analysts surveyed by Bloomberg, which puts the currency at 102 per dollar at the end of the first quarter of 2014, from 101.47 today………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Scottish deputy first minister Nicola Sturgeon issues warning before launch of her government’s white paper on independence. An independent Scotland may refuse to accept its share of the United Kingdom’s liabilities if London refuses to allow Edinburgh to form a sterling currency union with the remainder of the UK, the deputy first minister of the Scottish government has warned.
Hours before the launch of the Scottish government’s 670-page white paper on independence, Nicola Sturgeon said a shared currency would be in the interests of Scotland and the rest of the UK………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

China launched its second pilot carbon trading platform on Tuesday in Shanghai, as the world’s largest emitter of greenhouse gases experiments with market-based systems for reducing pollution.
Almost 200 local companies have signed up to participate in the Shanghai Environment and Energy Exchange. Rules signed into effect by the city’s mayor earlier this month threaten fines of up to Rmb100,000 ($16,400) for companies that did not comply with emissions limits………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Shanghai launched carbon emission trading today, carrying out three transactions on the first day. The commercial hub became the country’s second market for compulsory carbon trading. Initially 191 companies from industries such as iron and steel, chemical engineering and aviation began trading.
Companies that belch out more than their fare share of emissions will be able to buy unused quotas on the market from companies which pollute less. The quotas for 2013 to 2015 have already been allotted to the companies………………………………………..Full Article: Source

Posted on 27 November 2013 by VRS |  Email |Print

Among the alternative financial press (the so-called bloggers of finance) there is a renewed buzz regarding a slowly unfolding crisis. Many believe we are near an inflection point.
The fear is certainly justified. Money or credit creation is now exponential. The US Federal Reserve is on a path toward monetizing anything and everything, while the European Central Bank is about to unleash its own bond buying program………………………………………..Full Article: Source

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