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Commodities Briefing 26.Mar 2012

Posted on 26 March 2012 by VRS |  Email |Print

A slowdown in manufacturing growth numbers in Europe and China led to across the board weakness in commodities. The sentiment improved a bit ahead of the release of US housing data.
A gauge of European manufacturing shrank on back of an unexpected drop in factory output in Germany and France in March. A preliminary measure of Chinese manufacturing slipped to its lowest level in four months. These signs of slowdown turned the trading sentiment to bearish in most commodities………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Nouriel RoubiniLast week Nouriel Roubini, the economist who predicted the world financial crisis, said he considers high oil prices the number-one threat to the global economic recovery. The price of crude has jumped 36% in the last five months to $106 a barrel, stoking inflation.
But it’s not just oil: Growth and industrialization in emerging economies have greately spurred demand for commodities and raw materials, driving prices up. These increases have now slowed, partly due to the Western world’s economic crisis………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

The good news: China’s government will engineer a soft landing. The bad news: Even a soft landing is painful for industries that have become dependent on the world’s fastest-growing major economy as their main profit engine.
Analysts at Deutsche Bank AG, Nomura Holdings Inc. and Daiwa Capital Markets raised forecasts this month for 2012 expansion to as high as 8.6 percent, partly on anticipation of looser monetary policy………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Given the recent ramp up in oil prices, Barclays Capital have explored the impact on oil demand – and in turn economic growth. They have constructed a set of scenarios (at prices of $100, $125 and $150 per barrel) around their base-case oil price forecast for this year ($115 per barrel), and quantified the implications for oil demand – Commodities Now.
Under the base case (factoring in tightening fundamentals and limited spare capacity, with very little geopolitical tension) US oil demand falls by 1.3% and European oil demand by 2.1%………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Crude consumers and producers are rarely on the same page — hand in hand — together. They occupy the opposite sides of the table and the difference is understandable. Their interests, mostly, diverge.
Yet for a change now, the International Energy Agency, the consumers’ watchdog, and major crude producers seem converging on the moot point — there is enough capacity to meet the emergency — in the event Iran sanctions start to bite………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Peak Oil can be defined at least 4 ways but one way is simple: Peak Oil is when supplies and stocks are enduringly tight relative to demand, and price slides are short but price hikes are long - until and unless the economy tilts into steep recession.
The most recent example of this was in 2005-2008 culminating in US Nymex oil prices at around $145 a barrel in July 2008, with little difference between Brent and WTI grades………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Gold prices may break through the $2000/oz in the third quarter of this year, a latest report from Societe Generale stated. Benchmark COMEX gold is currently trading around $1650/oz level.
The bank forecasts that gold prices will jump to $2050/oz in Q3 2012, thanks in large to a weaker US Dollar and higher oil prices. On silver prices, the bank advises investors to be “wary”………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Global commodity markets have come under increased pressure for a variety of reasons including weak manufacturing data flowing from China and Euro zone, geopolitical tensions once again coming to the fore and currency market gyrations.
The choppy movements in the market culminated in broad-based weakness in commodity prices last week. China is the focus of attention with January and February trade data coming under close scrutiny for new signals………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Gold prices may be susceptible to further losses in the near term, even if weaker-than-expected economic data results in maintenance or more monetary policy easing, said HSBC in a briefing.
According to HSBC, Investor sentiment is currently not positive and listing several reasons. U.S. Treasury yields are rising and are lifting the U.S. dollar, further stock market losses could weigh on gold, physical Asian demand has been dulled in China and from the jeweler protests in India………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

In Warren Buffett’s letter to Berkshire Hathaway shareholders released in late February, 2012, Mr. Buffett expressed his skepticism with respect to the investment merits of gold. He stated that gold is a favorite of investors who fear almost all other assets, especially paper money.
What motivates most gold purchasers is their belief that the ranks of the fearful will grow. As “bandwagon” investors join any party, they create their own truth - “for a while“. “What the wise man does in the beginning, the fool does in the end.”……………………………………….Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

The dollar was sent higher by the weaker economic data out of China and Europe and gold suffered again given its relatively high reverse correlation to the greenback during the past couple of weeks, said Saxo Bank in a research note.
According to Saxo Bank, the Eurozone debt crisis seems to be re-igniting with Spanish benchmark 10-year bond yields rising back above 5.5 percent for the first time since January………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Throughout these past several turbulent years, you have likely heard about investing in gold. Even with the increased exposure gold investments have received - as well as its place as one of the oldest ways people have accumulated and protected wealth - many Americans are still in the dark about the basic reasons why investing in this precious metal is important to their future.
A substantial number of Americans own gold in some form, but few are aware of the benefits of investing in it………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

As is well known now, the Obama administration recently joined the EU and Japan in a lawsuit filed at the World Trade Organization over China’s alleged restrictions on the export of rare earth elements.
For those who’ve properly ignored what until now should have been a non-story, “rare earths” are metals essential for the production of everything from smart phones, to hybrid cars, to military equipment………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

A dispute has developed between China, the US, EU and Japan over Rare Earth exports, this dispute, simmering below the surface for some time now, has come to the surface as a full fledged feud, and has escalated to the WTO.
The United States, European Union and Japan recently filed a joint complaint before the WTO, accusing China of rationing exports of 3 Key raw materials, including Rare Earth metals………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Hope you made the most of it, because the resources boom is losing its mojo for anybody who holds mining shares. Commodity prices are down, though, as the Reserve Bank keeps insisting they’re still ”elevated”, which doesn’t sound too reassuring.
The sharemarket is telling BHP Billiton and Rio Tinto, in that subtle way it has of slashing prices, to stop digging and pay bigger dividends………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

Hedge funds wagered the wrong way on commodity prices for a fourth consecutive week, boosting bullish holdings just before reports showing a contraction in manufacturing from China to Europe drove prices lower.
Money managers lifted combined net-long positions across 18 U.S. futures and options by 2.9 percent to 1.17 million contracts in the week ended March 20, Commodity Futures Trading Commission data show………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

The euro rose for a second day against the yen on prospects the single-currency region may agree to combine two rescue funds to halt the spread of its sovereign-debt crisis.
The 17-nation euro gained before a report forecast to show German business confidence held at the highest level since July. The greenback gained against the Japanese currency before a U.S. report this week that may show manufacturers probably received more orders for durable goods in February………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

The South African government will endorse the Chinese renminbi as the new global currency during the incoming BRICS Summit in India, media reports said Sunday.
The South African government will take some steps in the BRICS Summit to challenge the US dollar’s supremacy in the world financial structure, especially in the trade and investment in the emerging markets, reported Xinhua, citing the South African Sunday newspaper City Press………………………………………..Full Article: Source

Posted on 26 March 2012 by VRS |  Email |Print

A counteroffensive of sorts may be underway this year in what has seemed like a one-sided “global currency war” as developing economies slow, western money-printing pauses and the heat comes out of pumped-up emerging market currencies.
The three-year-old “war”, as Brazil dubs the devaluationist policies of developed nations seeking relief from home-grown credit crunches, may well just come full circle and burn itself out as a result………………………………………..Full Article: Source

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