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Commodities Briefing 13.Oct 2016

Posted on 13 October 2016 by VRS |  Email |Print

Commodities remain on track to record their first year of positive returns since 2010. But with the Bloomberg Commodity index up by less than 10%, it could all still change before year-end. While the energy sector continues to stabilise following a two-year selloff, it has primarily been the precious metals sector with its 26% gain that has helped stop the commodity rout, Ole Hansen, Head of Commodity Strategy at Saxo Bank has said.
Global commodity demand has yet to recover as continued questions about global growth are being asked. Instead, most of the gains – apart from those seen in precious metals – have been due to the supply side adjusting, either through cutting production (oil and industrial metals) or through involuntary disruptions caused by weather (softs), he said in a note……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Brazil’s real advanced, dodging a global slump in emerging-market currencies, after lawmakers approved a proposal to limit growth in public spending, a key measure to trim the near-record budget deficit. Union Group Chairman and Founder Juan Sartori discusses the outlook for Brazil in relation to South Africa’s Rand with Anna Edwards and Manus Cranny on “Bloomberg Daybreak: Europe.”.……………………………………Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

On the macro front the central banks have been doing a good job of incentivising investors to increase their weightings in commodities, notably holdings in hard assets, with gold being the first and prime beneficiary.
A massive 500 tonnes of gold have been added to ETF holdings this year, and as interest rates around the world sink further into negative territory, investor commodity demand should continue to escalate. If the monetary experiment doesn’t deliver results, fiscal stimulus could begin on a global scale……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

The price of oil will not have much of an impact when it comes to the planet’s transition to new, cleaner, sources of energy, according to the CEO of the Carbon Trust. “It’s interesting – a lot of the talk around oil and gas price volatility… you’ve got to remember, fundamentally, the price of the alternatives is coming down, they’re becoming more cost competitive over time,” Tom Delay said.
“Oil price is one thing: it’s not going to make any difference to the transition to a new world order in terms of… more energy efficiency, more renewables, solar coming down in cost, wind coming down in cost, that’s a progressive that’s happening at the moment,” he added……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

The world will have need for oil and gas for long time. Because as the countries like China, Indonesia, India are developing, the people will buy car and the need for oil will increase. It’s impossible to imagine the development of the industry without natural gas.
Along with this, renewed, solar, wind and hydraulic energy are also used in the world. Further situation will make oil and gas producing countries more important. However, I want the energy importing countries, including Turkey not to depend on a single source, but buy oil and gas from different sources……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

During its heyday in the mid-1970s, OPEC supplied nearly 50% of the global oil market. In August of this year, it produced 33.47 million barrels of oil per day—its highest ever—according to the International Energy Agency.
But because of the substantial growth in global oil demand since that time, this record output only amounted to slightly more than a 30% market share. This fact and several others explains why OPEC’s recent proposal to reduce its production by 700,000 barrels per day in an attempt to raise oil prices is highly unlikely to be successful under current market conditions……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

A massive oil glut may weigh on world markets deep into next year unless the OPEC producer cartel makes good on its promise to cut output, the International Energy Agency (IEA) said. The oil price has recovered steadily since OPEC said last month that it would reduce production, with details to be hammered out at the cartel’s November meeting, and such a deal would “speed up the process” of working off global oil inventories, the IEA said in its monthly report.
“Even with tentative signs that bulging inventories are starting to decline, our supply-demand outlook suggests that the market- if left to its own devices- may remain in oversupply through the first half of next year,” the IEA said……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Demand for crude oil in 2016 is seen edging higher compared to last year, while supply is forecast to be slightly lower, according to the October OPEC market report, which highlights how money managers were caught out by a new deal to limit production.
This month’s revisions to the forecasts are minimal, with only a 0.1 million barrels per day (mb/d) rise in demand added to both annual forecasts since September’s report……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

In 2017 physical gold trades by LBMA members will be reported to a platform run by Boat Services. The London Bullion Market Association, which oversees the city’s $5tn gold market, has named the financial technology firms that will run its electronic platform in an effort to bolster trading transparency for the precious metal.
Starting in the first quarter of next year, physical gold trades by LBMA members will be reported to a platform run by Boat Services, a London-based company that provides financial trading technology, and its partner Autilla, another fintech start-up……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Who stole the gold? The yellow metal’s dramatic fall from $1,340 to below $1,260 is a break-and-enter theft on a grand scale. It’s going to take a while to find out who stole these profits from open long positions. But what’s more important is to assess the extent of the damage and the potential for recovery.
Let’s start with damage assessment. The fall below the historical resistance and support level near $1,290 is critical. It would be reasonable to expect that this level would provide support for any retracement but instead gold fell straight through this level. Chalk one up for the bears……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

The gold price “uptrend is over”, Dutch bank ABN Amro analyst Georgette Boele has said in a note to clients, reports BullionVault. Mounting speculation that the US Federal Reserve will increase interest rates again before the end of the year is weighing on sentiment towards the metal and Boele says a host of technical indicators suggest its 2016 rally has run out of steam.
Rising interest rates are bad news for non-yielding gold, as this boosts the attraction of alternative, income-paying assets. It also tends to help the dollar, against which gold is held as a hedge……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Gold appears to have its price hanging on a dodgy thread. Our “big picture” report back in August had proposed the possibility of weakness to $1,248 and this movement is proving rather accurate. Accurate, aside from the unpleasant detail our $1,248 was briefly broken during the Friday session.
This opens the trapdoor to incredible levels of doom. The situation now is we must regard gold as heading to a bottom of $1,163 on the current cycle. There’s a chance $1,218 will provoke some sort of bounce but, unless some miracle can get the price above ‘blue’ (Currently $1,339), we’ve little choice but to view $1,163 as very possible……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Gold prices have fallen more than 4% in October, but our latest gold price prediction shows prices climbing by the end of 2016. In fact, Money Morning Resource Specialist Peter Krauth believes gold prices will climb by double digits before 2017.
But before we share Krauth’s 2016 gold price prediction, we wanted to make sure Money Morning readers understood why gold prices are so volatile right now. On Oct. 4, gold prices dropped $43 in just one day. “Most pundits are saying gold prices dropped because the U.S. dollar rallied after Richmond Fed President Lacker made his case for raising rates,” Krauth said on Oct. 7……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Rising inflation and sagging confidence in the ability of central banks to revive global growth will drive up gold, according to Incrementum AG, which says bullion could climb to a record in the next two years.
Consumer prices are set to rise as oil rebounds, while low or negative interest rates and bond buying by central banks have failed to boost economies, said Ronald Stoeferle, managing partner at the Liechtenstein-based company, which oversees 100 million Swiss francs ($101 million). Incrementum was the top precious metals forecaster last quarter, Bloomberg-compiled data show……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Citi Research is not looking for silver to regain its highs from August any time soon. Spot silver broke below $18 an ounce on Oct. 4 for the first time in three months, following the initial European Central Bank announcement to potentially taper the bond-buying program, Citi says.
“The same day saw the gold:silver ratio jump to 71x (times) — from a 2H’16 average of 68x — during intra-day trading as silver price returns fell below 30% YTD (year to date) for the first time since June,” Citi says……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

London zinc partly recovered on Wednesday after posting its sharpest daily fall in more than 10 months after a major miner said it planned to double output next year, which pummelled zinc prices in Shanghai.
Zinc prices have been expected to climb into next year, after large mines such as Century in Australia and Lisheen in Ireland dried up, with no major new projects on the horizon……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Supply disruptions and increased seasonal demand has helped bolster the commodities space while global central bank policies may support returns through the rest of the year. Investors interested in gaining exposure to the commodities market have a number of exchange traded fund options available.
For instance, the recently launched Elkhorn Commodity Rotation Strategy ETF, an actively managed commodity ETF that tracks Dorsey Wright & Associates momentum-based investing style, recently caught the eye of a large investor, seeing trading volumes spike to 90,000 shares Tuesday, compared to its average volume of 14,600 per day, according to Morningstar data……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Heightened volatility in the financial markets has many investors concerned about the uptrends of many assets types. We’ll take a look at the charts of key commodity-related products and try to determine if they can withstand the selling pressure.
One of the funds of choice amongst active traders for gauging the direction of the broad commodities market is the PowerShares DB Commodity Index Tracking Fund (DBC). In case you aren’t familiar, the managers of the DBC fund seek to track the performance of a diversified commodity index and is comprised of futures contracts on fourteen of the most heavily traded and important physical commodities in the world……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Deutsche Bank (DB) has other problems these days. On top of a pending multi-billion dollar settlement with the U.S. Department of Justice and speculation about a government bailout, the future of its ETF business is uncertain following billions in outflows this year.
“The future of Deutsche Bank’s ETF line of business is uncertain,” says Robert Clark at S&P Global Market Intelligence. “Depending on the bank’s capital position, Deutsche Bank may be forced to consider selling its asset management division.”…………………………………….Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Guo Xiaoli will serve as the new Chief Executive of the upcoming Qianhai commodity-trading platform. Hong Kong Exchanges and Clearing Limited (HKEX) has introduced its Qianhai commodities platform, which will help the group compete with other global exchanges, simultaneously servicing a clientele in Mainland China, according to an HKEX statement.
Hong Kong Exchanges and Clearing Limited (HKEX) has introduced its Qianhai commodities platform, which will help the group compete with other global exchanges, simultaneously servicing a clientele in Mainland China, according to an HKEX statement……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

The pound touched a historic low against a basket of global currencies, meaning it has likely never been weaker when measured against those of Britain’s trading partners. While the pound recently traded at a 31-year low against the dollar, and a six-year low against the euro, on Tuesday it hit its weakest level ever against a trade-weighted basket of currencies.
The Bank of England’s Broad Effective exchange-rate index for the pound shows that the currency is worth less now than it was at the height of the 2008-2009 financial crisis or in 1992 and 1993, in the aftermath of Black Wednesday, when sterling left the European Exchange Rate Mechanism……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

A top Bank of England official dismissed concerns about falls in the value of the pound yesterday as Remain campaigners claimed Brexit was making Britain ‘poorer’. Michael Saunders, a member of the bank’s Monetary Policy Committee, which sets interest rates, said the reduced value of sterling was ‘not a cause for concern’, and simply reflected the currency adjusting to life after the Brexit vote.
‘If all that is happening is that we are adjusting quickly to a new equilibrium, to me that is not a cause for concern,’ he told MPs. Mr Saunders said it would not be a surprise to see the pound fall further given the size of Britain’s current account deficit……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Renminbi (RMB) is fast emerging as trading currency of choice among the UAE based businesses, according a study by HSBC Commercial Banking. Nearly half of businesses (49 per cent) surveyed in the UAE forecast that the RMB will become an international trading currency in the next 5 years, up 5 per cent from 2015.
In the poll of 1,600 decision-makers across 14 countries, the UAE’s increased confidence in the future of the currency places it just third after China and Taiwan……………………………………..Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Carbon pricing is the headlines again. Last week Prime Minister Justin Trudeau told premiers they could impose carbon pricing themselves or Ottawa would impose it for them. Yet, misunderstandings abound about what carbon pricing can and cannot do. The confusion comes from supporters and opponents alike. Even some economists, for whom prices are second nature, seem confused.
Generally, carbon pricing comes in two varieties. The first is a carbon tax, which sets a price on carbon directly and lets individuals and companies decide how much carbon to produce. …………………………………….Full Article: Source

Posted on 13 October 2016 by VRS |  Email |Print

Global foreign direct investment flows are set to fall by 10-15% to $1.5 to $1.6 trillion this year, according to United Nations data. “Business are very reluctant to invest [cross-borders],” said James Zhan, director of investment and enterprise at the United Nations Conference on Trade and Development, based in Geneva, Switzerland.
“This is due to sluggish economic growth and the fragility of the global economy.” He also said upcoming political elections in various countries this year adds extra uncertainty. Global foreign direct investment flows are expected to rebound in 2017 and 2018, as global economic growth is expected to accelerate……………………………………..Full Article: Source

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