Base metals close higher

              Base metals on the London Metal Exchange (LME) have closed higher, after a senior Federal Reserve official said the bank may keep pumping money into the US economy beyond October.

At the close of open-outcry trading in the London ring on Friday, LME 3-month copper was 0.7 per cent higher on the day at $US7,295 a metric ton.

Aluminum rose 0.9 per cent to $US1,840 a ton, while nickel closed 1.2 per cent higher at $US13,985 a ton.

In early European trading, the metals were lifted as the US dollar weakened against other currencies including the euro, making dollar-priced assets more appealing to buyers holding the other currencies.

Analysts said book-squaring ahead of the end of the month and end of the quarter was lending support to prices.

Later, Charles Evans, president of the Federal Reserve Bank of Chicago, suggested the central bank could refrain from winding down its support for the economy until 2014.

'We could make a decision in October,' Evans said on the sidelines of a bank conference in Oslo

'We need to see further developments of the positive variety for the economy to have that added confidence. It wouldn't surprise me if we go a little bit longer.'

The Fed's bond-buying program has supported demand for base metals by stoking activity in industries that consume the metals, such as construction and manufacturing.

Some market watchers said this week's moderate price gains were likely to be short-lived. Starting October 7, the base metals industry will gather in London for the exchange's annual LME Week.

'In the run-up to LME week in London, global manufacturing is showing signs of improvement and base metals may get a short-term price lift,' noted Barclays analysts in a report on Friday.

The bank added that emerging markets, big consumers of commodities, still look fragile, with much of the improvement in Chinese growth stemming from policy support to stabilise rather than boost growth.

Recent price gains will be difficult to sustain, said the bank, without a corresponding improvement of the supply-and-demand fundamentals that underlie industrial metal prices.

'We favour selling into this price strength,' it said. - bigpondnews.com

Read More

Natural gas futures - Weekly review: September 23 - 27

                   Natural gas futures ended Friday’s session marginally higher, as investors returned to the market to close out bets on lower prices after futures bounced off a key support level on Thursday.

On the New York Mercantile Exchange, natural gas futures for delivery in November inched up 0.6% on Friday to settle the week at USD3.589 per million British thermal units. 

Nymex gas prices settled 0.6% higher on Thursday at USD3.567 per million British thermal units, as a round of bargain buying and short-covering kicked in after prices tumbled to a five-week low of USD3.450 earlier in the session.

Despite Friday’s modest gains, the November natural gas still contract lost 4.4% on the week.

Prices tumbled to the lowest level since August 27 on Thursday after the U.S. Energy Information Administration said natural gas storage in the U.S. rose by 87 billion cubic feet last week, above market expectations for an increase of 76 billion cubic feet.

Inventories increased by 79 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 75 billion cubic feet.

Total U.S. natural gas storage stood at 3.386 trillion cubic feet as of last week, nearly 1% above the five-year average for the same week and approximately 5% below last year's unusually high level.

Early injection estimates for this week’s storage data range from 82 billion cubic feet to 100 billion cubic feet, compared to a 77 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 82 billion cubic feet.

Prices turned higher towards the end of the session as market players closed out bets on falling prices to lock in gains ahead of the expiration of the October contract on Thursday.

Meanwhile, market players continued to monitor near-term weather forecasts to gauge the strength of demand for the fuel.

Updated weather forecasting models pointed to mostly normal to below-normal temperatures across most parts of the U.S. Northeast and Midwest for the next 10-to-14 days.

Demand for natural gas tends to fluctuate in the autumn based on cold weather and heating demand.

Elsewhere in the energy complex, light sweet crude oil futures for November delivery settled at USD102.87 a barrel by close of trade on Friday, losing 1.8% on the week. 

Meanwhile, heating oil for November delivery fell 0.79% on the week to settle at USD2.982 per gallon by close of trade Friday. - investing.com

Read More

Crude oil futures - Weekly review: September 23 - 27

                New York-traded crude oil futures ended Friday’s session close to an 11-week low, as growing worries over a looming U.S. government shutdown and receding fears over a disruption to supplies from the Middle East weighed. 

On the New York Mercantile Exchange, light sweet crude futures for delivery in November declined 0.15% on Friday to settle the week at USD102.87 a barrel by close of trade. 

Prices fell by as much as 0.65% earlier in the day to hit a session low of USD102.37 a barrel, close to an 11-week low of USD102.20 a barrel hit earlier in the week.

The November contract settled 0.35% higher at USD103.03 a barrel on Thursday.

Oil futures were likely to find support at USD102.13 a barrel, the low from July 8 and resistance at USD105.09 a barrel, the high from September 23.

On the week, Nymex oil futures lost 1.8%, the third consecutive weekly decline.

Concern that U.S. lawmakers will fail to arrange a budget deal preventing a government shutdown next week dampened the appeal of growth-linked assets.

Congress must pass a short-term budget by midnight on Monday in order to avoid a government shutdown. 

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Later this month, Congress will have to extend the U.S. debt ceiling which the U.S. Treasury Department has estimated will be reached by October 17.

Meanwhile, concerns over a disruption to supplies from the Middle East continued to fade away after the U.S. and Russia agreed on a draft U.N. Security Council resolution aimed at eliminating chemical weapons in Syria.

Futures surged to a 27-month high of USD112.22 a barrel on August 28 amid indications the U.S. was close to taking military action against Syria for its alleged use of chemical weapons against civilians. 

But prices have since lost nearly 5% after the U.S. and Russia reached a diplomatic solution on how to handle Syria’s chemical weapons on September 14.

While Syria is not a major oil producer, investors fear that the two-year-old civil war could spill over to affect oil supplies in nearby countries.

Thawing tensions between the U.S. and Iran also added to the selling pressure.

The two countries began talks on Thursday to resolve their ongoing standoff over Tehran's nuclear program.

Countries in the Middle East were responsible for nearly 35% of global oil production in 2012.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for November delivery shed 0.55% on Friday to settle the week at USD108.63 a barrel.

On the week, the London-traded Brent contract lost 0.55%, while the spread between the Brent and the crude contracts stood at USD5.76 a barrel by close of trade on Friday.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for indications on whether the economic recovery is sufficiently strong for the Federal Reserve to start rolling back its USD85-billion-a-month bond-buying program. 

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Markets will also be watching developments in U.S. budget negotiations, as well as key manufacturing data out of China to gauge the economic strength of the world’s second largest oil consumer. - investing.com

Read More

Gold / Silver / Copper futures - Weekly review: September 23 - 27

                 Gold futures rallied 1% to hit a one-week high on Friday, as concerns over a possible U.S. government shutdown and hopes of continued stimulus from the Federal Reserve boosted sentiment on the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 1.15% on Friday to settle the week at USD1,339.20 a troy ounce. 

Gold futures rose by as much as 1.5% earlier in the session to hit a daily high of USD1,344.40 a troy ounce, the strongest level since September 10. 

The December contract settled 0.9% lower at USD1,324.10 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,306.20 a troy ounce, the low from September 24 and resistance at USD1,366.50, the high from September 20.

On the week, the precious metal advanced 0.5%, the second consecutive weekly gain.

Concern that U.S. lawmakers will fail to arrange a budget deal preventing a government shutdown next week boosted the safe-haven appeal of the precious metal.

Congress must pass a short-term budget by midnight on Monday in order to avoid a government shutdown. 

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Later this month, Congress will have to extend the U.S. debt ceiling which the U.S. Treasury Department has estimated will be reached by October 17.

Meanwhile, gold traders continued to watch speeches from Federal Reserve officials for clues on monetary policy.

Speaking on Friday, Chicago Federal Reserve Bank President Charles Evans said that there is a chance the central bank will not move to taper its bond-buying program until early 2014.

His comments came after three top Fed officials said on Thursday the central bank had confused markets over its policy outlook.

Mixed U.S. economic data on Friday further added to uncertainty about how quickly the Fed will scale back its USD85-billion-a-month bond-buying program. 

The Thomson Reuters/University of Michigan consumer sentiment index fell to a four-month low of 77.5 in September from 82.1 the previous month.

Separately, official data showed that U.S. personal spending rose 0.3% in August, in line with expectations, after an upwardly revised 0.2% increase the previous month.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

The precious metal is on track to post a loss of nearly 21% on the year as traders bet an improving U.S. economy would lead the Fed to unwind its stimulus program by the year's end.

The central bank is scheduled to meet October 29-30 to review the economy and assess policy.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for indications on whether the economic recovery is sufficiently strong for the Fed to start rolling back its stimulus program. 

Markets will also be watching developments in U.S. budget negotiations.

Elsewhere on the Comex, silver for December delivery inched up 0.3% on Friday to settle the week at USD21.83 a troy ounce. Silver prices settled 0.55% lower at USD21.76 on Thursday.

On the week, silver future prices declined 0.4%, the third consecutive weekly loss.

Meanwhile, copper for December delivery advanced 0.7% on Friday to close the week at USD3.329 a pound. On Thursday, copper futures rallied 1.1% to settle at USD3.307 a pound.

Prices of the red metal advanced 0.3% on the week.

Copper traders will be closely watching key manufacturing data out of China next week, to gauge the economic strength of the world’s largest copper consumer.   - investing.com

Read More

Crude Oil falls as output increases in Libya, Texas

              Crude Oil futures traded slightly lower during Tuesday’s Asian session as some of Libya’s previously lost production came back online and on news of increased output at the Eagle Ford Shale in South Texas. 

On the New York Mercantile Exchange, light, sweet crude futures for November delivery fell 0.27% to USD103.31 per barrel in Asian trading Tuesday. The November contract settled lower by 1.11% at USD103.59 per barrel on Monday. 

Oil has declined in sharply in recent weeks has tensions in Syria have ebbed. In another sign a more docile near-term environment in the usually volatile Middle East, Iran has reportedly freed 80 political prisoners before President Hassan Rohani’s upcoming trip to the United Nations. Iran is the third-largest OPEC producer. 

Over the weekend, it was reported that Libyan output is on the rise after protesters reopened access to facilities late last week sent oil prices falling on Monday. Libyan production is expected to return to about 700,000 barrels per day in the coming weeks, well above recent levels of 243,000 barrels. 

Still, at 700,000 barrels per day, Libya’s oil output is roughly half what it was in early 2011 before the Arab Spring protests swept the Middle East. OPEC member Libya is home to Africa’s largest oil reserves. 

Elsewhere, the Texas Railroad Commission said the fields that comprise the Eagle Ford Shale are producing a combined 569,191 barrels per day, a 36% increase from last year. May output was revised to 656,853 barrels a day from the preliminary report of 617,884, according to Bloomberg. Eagle Ford is one of the largest oilfields in the U.S. 

Meanwhile, Brent crude futures for November delivery inched down 0.02% to USD107.98 per barrel on the ICE Futures Exchange. - investing.com

Read More

Gold falls again on tapering concerns

                Gold futures traded modestly lower in the early part of Tuesday’s Asian session as tapering concerns continue to loom large. 

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery inched down 0.04% to USD1,326.50 per troy ounce in Asian trading Tuesday. The December contract settled lower by 0.41% at USD1,327.00 per ounce on Monday. 

Gold futures were likely to find support at USD1,291.70 a troy ounce, Wednesday's low, and resistance at USD1,375.10, Thursday's high.

While gold rallied last Thursday on news that the Federal Reserve will not taper its USD85 billion-a-month in bond purchases, the yellow metal and other precious metals have given up all of those gains and then some. 

Ultra-loose monetary policies that include asset purchases drive down interest rates to spur recovery, weakening the dollar in the process and making gold an attractive hedge. 

Some members of the Fed are sending mixed messages regarding tapering, adding an element of confusion to financial markets. On Friday, however, St. Louis Fed President James Bullard said that the U.S. central bank could taper its stimulus program during its October meeting, which sparked a round of profit-taking that sent gold prices falling.

However, on Monday, Federal Reserve Bank of New York President William Dudley said the stimulus program would stay in place until data show that recovery will be sustained. 

"Our decisions on how to adjust our policy tools—for example, the pace of asset purchases and forward guidance with respect to the level of short-term rates—must be rooted in the ongoing flow of information that informs our judgments about the prospects for a sustainable recovery," said Dudley. 

Uncertainty appears to be what is hampering gold at the moment, though may market participants are convinced tapering will happen before year-end with some expecting it will occur next month. 

Elsewhere, Comex silver for December delivery fell 0.18% to USD21.818 while copper for December delivery dropped 0.42% to USD3.284.  - investing.com

Read More

Metals In The Morning – Chinese Data & Fed Speakers In View

           Precious metals spent last week on a roller coaster ride all on hopes and dreams of Fed tapering. Those dreams were dashed on Wednesday after Mr. Bernanke and team, held rates and policy in place for the time being. Gold is down at 1320.80 falling close to $12 in the Asian session to start the week. Silver fell harder to trade at 21.473 giving up 2% this morning. Platinum and palladium diverged with platinum trading at 1429.60 slightly in the red and palladium gaining 30 cents to trade at 717.10. Copper is the surprise this morning as industrial metals do not seem to be responding to positive data from China. Copper is down 33 points after the data release to trade at 3.272.

Precious metals slumped as comments from a slate of Federal Reserve officials cause traders to reassess their expectations for the duration of the central bank’s bond-buying program. Gold had surged by nearly five per cent during the previous session, the largest rally in percentage terms since March 2009.

Bearish gold traders scrambled to close out their bets on lower prices following the Fed’s decision late Wednesday to leave its $US85 billion-a-month bond-buying program unchanged.

James Bullard, president of the Federal Reserve Bank of St Louis, said on Bloomberg TV on Friday that “a small taper is possible in October”. Bullard also said the Fed’s move this week to hold to the pace of bond purchases was a “close decision”.  Also on Friday, Kansas City Fed President Esther George said she was worried that the Fed’s ongoing efforts to stimulate the economy fail to account for economic progress already made. George was the lone dissenting vote at the Fed’s policy meeting on Wednesday.

Indian gold imports could fall during this year, which may also curb down the rally of gold prices. According to one report, India’s gold imports may fall by 11% (y-o-y). Conversely, the Rupee gained more than 8.9% of its value in the recent month. If the Rupee continues its upward trend, this could pull up gold and silver prices. In China, the ongoing recovery of the economy along with the strong demand for gold and silver are likely to keep the prices of gold and silver from further falling.  China’s economy showed new signs of strength in September as an initial gauge of manufacturing activity rose to a-six month high The preliminary HSBC China Manufacturing Purchasing Managers Index rose to 51.2 in September compared with a final reading of 50.1 in August, HSBC Holdings PLC said on Monday.

Lastly gold holdings of SPDR gold trust ETF slipped again for the third consecutive week.  During the month, the ETF’s gold holdings fell by 1.18%. The ETF was also down by 32.62% since the beginning of 2013 (up-to-date). Current gold holdings are at 910.19 tons. If the ETF’s gold holdings keep falling, this will signal that the demand for gold as an investment is weakening.

Industrial metals prices edged lower after hitting their highest in almost a month as investors, following the U.S. Federal Reserve’s decision to stick to its stimulus program, shifted focus back to fragile fundamentals but declines were limited by Chinese data this showing that manufacturing rose to a six-month high in Sep, signaling that a rebound in the Chine’s economy is gaining steam. The preliminary reading of 51.2 for PMI by HSBC Holdings Plc and Markit Economics compared with a 50.9 by Bloomberg. The gauge was at 50.1 in Aug. - fxempire.com

Read More

Natural gas futures - Weekly review: September 16 - 20

                     Natural gas futures ended Friday’s session at a four-day low, as forecasts showing mild temperatures across much of the U.S. through late-September weighed.

On the New York Mercantile Exchange, natural gas futures for delivery in October fell 0.9% on Friday to settle the week at USD3.687 per million British thermal units. 

Prices declined by as much as 1.7% earlier in the day to hit a session low of USD3.656, the weakest since September 16. 

Nymex gas prices settled 0.2% higher on Thursday at USD3.720 per million British thermal units, as a round of profit taking kicked in after prices rallied to a two-month high of USD3.820.

Despite Friday’s losses, natural gas prices advanced 0.3% on the week.

Market players continued to monitor near-term weather forecasts to gauge the strength of demand for the fuel.

Updated weather forecasting models pointed to mostly normal to below-normal temperatures across most parts of the U.S. Northeast Midwest for the next ten days.

Bearish speculators are betting on the mild weather to reduce demand for the fuel with autumn’s low-demand shoulder season looming.

The shoulder season is the period in autumn when gas demand typically slackens and prices fall.

Prices rallied to the highest level since July 19 on Thursday after the U.S. Energy Information Administration said natural gas storage in the U.S. rose by 46 billion cubic feet last week, below market expectations for an increase of 56 billion cubic feet.

Inventories increased by 61 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 74 billion cubic feet.

Total U.S. natural gas storage stood at 3.299 trillion cubic feet as of last week, 0.5% above the five-year average for the same week and 5.4% below last year's unusually high level.

Early injection estimates for this week’s storage data range from 70 billion cubic feet to 80 billion cubic feet, compared to a 79 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 75 billion cubic feet.

Elsewhere in the energy complex, light sweet crude oil futures for November delivery settled at USD104.75 a barrel by close of trade on Friday, losing 2.6% on the week. 

Meanwhile, heating oil for October delivery fell 3.49% on the week to settle at USD3.006 per gallon by close of trade Friday. investing.com

Read More

Crude oil futures - Weekly review: September 16 - 20

                       New York-traded crude oil futures fell to a one-month low on Friday, amid lingering uncertainty over the future of the Federal Reserve's stimulus program and as fears a disruption to supplies from the Middle East continued to fade away.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November declined 1.05% on Friday to settle the week at USD104.75 a barrel by close of trade. 

Prices fell by as much as 1.3% earlier in the day to hit a session low of USD104.51 a barrel, the weakest level since August 23. The November contract settled 1.3% lower at USD105.86 a barrel on Thursday.

Oil futures were likely to find support at USD103.56 a barrel, the low from August 22 and resistance at USD108.14 a barrel, the high from September 19.

On the week, Nymex oil futures lost 2.6%, the biggest weekly decline since the week ended July 26.

Oil prices rallied more than 2% on Wednesday after the Fed decided to leave its USD85 billion-a-month asset purchase program unchanged.

The decision surprised markets, which had been expecting the central bank to taper its monthly stimulus program by USD10 billion to USD15 billion.

In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress.

The central bank also repeated its ongoing goal to keep low interest rates in place until the unemployment rate falls to around 6.5%, as long as inflation doesn't accelerate beyond 2.5% a year.

However, traders reassessed their expectations regarding the duration of the central bank’s bond-buying program on Friday after St. Louis Fed President James Bullard said the decision not to taper in September was “close” and did not rule out a small reduction in the central bank's bond purchases in October. 

The Fed will hold its next monetary policy meeting on Oct. 29-30.

The Federal Reserve’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

The dollar strengthened against the euro and the yen following Bullard’s comments, further weighing on oil prices.

A stronger dollar makes U.S. commodities more expensive for importers holding other currencies.

Meanwhile, receding fears over Middle East supply disruptions continued to weigh.

Oil prices surged to a 27-month high of USD112.22 a barrel on August 28 amid indications the U.S. was close to taking military action against Syria for its alleged use of chemical weapons against civilians. 

But prices have since lost nearly 6% after the U.S. and Russia reached a diplomatic solution on how to handle Syria’s chemical weapons last week.

While Syria is not a major oil producer, investors fear that the two-year-old civil war could spill over to affect oil supplies in nearby countries.

Reports that Libyan oil production is on the rise after protesters reopened access to facilities also added to the selling pressure, as did talk that oil output in Iraq is recovering.

Countries in the Middle East were responsible for nearly 35% of global oil production in 2012.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for November delivery inched up 0.4% on Friday to settle the week at USD109.22 a barrel.

Despite Friday’s modest gain, the London-traded Brent contract still lost 2.25% over the week, while the spread between the Brent and the crude contracts stood at USD4.47 a barrel by close of trade on Friday.

In the week ahead, uncertainty over the direction of the Fed’s monetary policy and the decision over Chairman Ben Bernanke’s eventual successor look likely to influence commodity prices. 

Oil traders will be closely watching a preliminary reading of China’s HSBC manufacturing index on Monday, to gauge the economic strength of the world’s second largest oil consumer.   - investing.com

Read More

Gold / Silver / Copper futures - Weekly review: September 16 - 20

             Gold futures plunged nearly 3% on Friday, amid ongoing uncertainty over the future of the Federal Reserve's stimulus program.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery tumbled 2.7% on Friday to settle the week at USD1,332.50 a troy ounce. 

Gold futures fell by as much as 3.2% earlier in the session to hit a daily low of USD1,325.10 a troy ounce. The December contract settled 4.7% higher at USD1,369.30 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,291.70 a troy ounce, the low from September 18 and resistance at USD1,375.10, the high from September 19.

Despite Friday’s sharp decline, gold prices still ended the week with a 0.5% gain, due to Thursday’s sharp rally. 

Gold prices soared by as much as 4.5% on Thursday after the Fed decided to leave its USD85 billion-a-month stimulus program unchanged.

The decision surprised markets, which had been expecting the central bank to taper its monthly stimulus program by USD10 billion to USD15 billion.

In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress.

The central bank also repeated its ongoing goal to keep low interest rates in place until the unemployment rate falls to around 6.5%, as long as inflation doesn't accelerate beyond 2.5% a year.

But the precious metal came under heavy selling pressure on Friday after St. Louis Fed President James Bullard said the decision not to taper in September was “close” and did not rule out a small reduction in the central bank's bond purchases in October. 

The Fed will hold its next monetary policy meeting on Oct. 29-30.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

The dollar strengthened against the euro and the yen following Bullard’s comments, further weighing on gold prices.

Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.

In the week ahead, uncertainty over the direction of the Fed’s monetary policy and the decision over Chairman Ben Bernanke’s eventual successor look likely to influence gold prices. 

The precious metal is on track to post a loss of nearly 22% on the year as traders bet an improving U.S. economy would lead the Fed to unwind its stimulus program by the year's end.

Elsewhere on the Comex, silver for December delivery plummeted 5.85% on Friday to settle the week at USD21.92 a troy ounce. Silver prices settled 8% higher at USD23.29 on Thursday.

On the week, silver future prices declined 1.45%.

Meanwhile, copper for December delivery dropped 0.8% on Friday to close the week at USD3.320 a pound. On Thursday, copper futures rallied 2.1% to settle at USD3.347 a pound.

Prices of the red metal advanced 3% on the week.

Copper traders will be closely watching a preliminary reading of China’s HSBC manufacturing index on Monday, to gauge the economic strength of the world’s largest copper consumer.   - investing.com

Read More

Reasons for short term volatiltiy in Gold and Silver

By Dr Jeffrey Lewis
After years of paying attention to the price action and not the mainstream market commentary. — Thanks in large part to Ted Butler and GATA — here are some of the dominate forces that currently seem to be determining price movements in the 

precious metals:

Downside probability
Jobs data comes out every few weeks. This almost always puts downside pressure on the market, with about a 90% probability. Also, presidential press conferences tend to have a 70% downside probability.  The powers that suppress the precious metals prices cannot have metals surging while the president speaks.

The Fed’s FOMC meetings and the following minutes have greater than a 90 percent downside probability, unless a surprise QE announcement is made. The surprise has been effectively quelled by taper signaling and the summers versus Yellen issue.

The beat of war drums is another factor. Interestingly, the closer that the country gets toward war or crisis, the more likely precious metals are to head counter-intuitively lower.

Options expiration dates are also notable, as well as the times immediately before or after they occur. Rarely do precious metals options expire for the benefit of the buyers.

Whenever the price of gold is strong, but the price of silver is weak the day before, this is another pending downside signal.

The performance of the NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index or HUI Index (an index of the stocks of companies engaged in gold mining) also seems to be influential. Gold shares may lead the way up or down. If PM shares are weak on an up day for the precious metals, the next day’s follow through is rare, and the subsequent price action is often downward.

Daily Gold price movements
The downside for assets like silver and gold may be unlimited, but true upside potential of these assets is rarely demonstrated. The upside is rarely more than 2%, and often reverses lower on the nose or just below that percentage gain. (The gain and intraday moves on Wednesday, September 18th, 2013 were of the largest ever).

In sideways rather than trending markets, the upside it typically limited to only 1%. Also, intraday upside reversals seem extremely rare.

Furthermore, the phenomenon of “overnight dumping” is almost always synonymous with New York selling pressure. This can occur in a bull market unless recent support levels were already cleared out in a technically oversold period.

The Technical are secondary
Resistance levels seem to be the most reliable technical factors, and everything else seems not to matter so much.

The most closely watched medium term moving averages include the 20 day, 50 day, 100 day and 200 day. Also technical traders watch the RSI indicator for overbought versus oversold indicators and divergence in extreme territory. This is not necessarily a strong signal for the precious metals due to the underlying price manipulation.

With respect to how chart formations impact the precious metals market, the longer term price patterns seem to be the most useful in terms of their predictive value.

Market sentiment
The worse the media controlled current sentiment seems to be in the precious metals market, the better the medium term outcome for prices tends to become.

The COT is the main sentiment indicator and seems to help determine market direction, although it does not seem to be a predictor in and of itself.

When all swaps are removed, if the big bullion banks still control at least 5-10 percent of the short side, then the PM market is always about to have an economically significant sell off.

Furthermore, when hedge funds start to enter the PM market on the long side as they begin following an upwards trend, the fruit is ripe for the picking and a sharp sell off soon commences.

The bottom line
The bottom line about all this is that by definition these are not actual markets where prices are fairly discovered by supply and demand factors. Instead, they are profit centers which the bullion banks regularly milk for their own benefit and profit.

The futures markets also act as displays or window dressing for a much larger underlying fiat currency crisis that remains hidden just beneath the surface.

How long this manipulative charade can go on is up to the thinnest sentiment in existence — confidence underpinned by human emotion. - bullionstreet.com

Read More