Zinc up 0.3% on overseas cues, spot demand

            Zinc futures edged higher by 0.28% to Rs 143.60 per kg today as speculators built-up positions amid positive cues from the global market and better domestic demand.

At the Multi Commodity Exchange, zinc for delivery in August gained 40 paise, or 0.28%, to Rs 143.60 per kg, with a business turnover of 247 lots.

The metal for delivery in September also rose 20 paise, or 0.14%, to Rs 143.85 per kg, with a business turnover of two lots.

Globally, at the London Metal Exchange (LME), zinc for delivery in three months advanced 0.90% to USD 2,359.75 per tonne.

Marketmen said besides a firming trend at domestic spot market, the metal's strength at the LME as stockpiles tracked in London and Shanghai decreased and Goldman Sachs Group projected a global deficit this year, supported the upside in zinc prices at futures trade.

LME inventories for zinc fell 1.9% in July, declining for the fourth straight month. Stockpiles monitored by the Shanghai Futures Exchange dropped 1.3% last week to the lowest level since 2009. - business-standard

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RPT-GLOBAL ECONOMY WEEKAHEAD-Central bank meetings to set stage for parting of ways

                             After the Federal Reserve maintained its path towards raising U.S. interest rates next year, other major central banks will jostle for space on a crowded stage this week.

The European Central Bank, Bank of Japan, Bank of England and the central banks of India and Australia all hold meetings. While imminent action is unlikely, the time when policy settings start pointing in different directions is nearing.

U.S. growth rebounded in the second quarter and the Fed upgraded its assessment of the economy last week. It is on course to stop creating money in October but the expectation is that there will be no interest rate rise before mid-2015.

That puts the Bank of England in pole position to be the first major central bank to push rates up from their record low 0.5 percent, perhaps before the year is out.

Although the UK economy is expanding at an annualised clip in excess of 3 percent and unemployment is tumbling, the absence of wage pressure means there is no immediate reason to act.

The consensus is that rates will not rise until early 2015 but polling by Reuters last week found economists expect a first voice or two on the nine-strong Monetary Policy Committee to call for a rate rise this week.

The last time the MPC was considering raising rates was in 2006. In May of that year, one MPC member voted for a hike and it took just three months before a majority followed suit.

"We expect the jobless rate will continue to fall rapidly, with the BoE hiking earlier and further than markets project," said Michael Saunders, chief UK economist at Citi.

The voting pattern will only become public when minutes of the meeting are released two weeks hence.

The Fed has just registered its first dissenter, with the hawkish Charles Plosser saying the commitment to keep rates near zero for "a considerable time" did not reflect the gains made by the economy.

Lack of wage inflation has been a common theme in the United States and euro zone as well, though U.S. labour costs recorded their biggest gain in more than 5-1/2 years in the second quarter. That spooked Wall Street last week as it may hasten the Fed's first move.

The European Central Bank, which also meets on Thursday, faces a very different problem to the Bank of England.

Euro zone inflation has slipped further - to just 0.4 percent in July - and if it does not start picking up soon, the pressure to start printing money will grow despite strong reservations within the ECB's Governing Council.

"(The inflation data) don't give any assurance that the euro zone is already out of the deflation danger zone," said Peter Vanden Houte, chief euro zone economist at ING.

"Moreover, with the escalating conflict with Russia dampening growth prospects, it seems unlikely that deflation fears will disappear any time soon."

Having cut all its key interest rates in June and unveiled a new scheme to prime banks with cheap long-term money from September in the hope they will lend it on, the ECB will not act until it has had time to judge the impact of those measures.

If the ECB won't consider more dramatic action until late in the year, it will have a small window of opportunity to act before U.S. rates start heading higher in 2015.

Policymakers admit there is little chance of euro zone long-term interest rates decoupling from U.S. ones if they start rising.

NO CHANGE IN ASIA

The Bank of Japan will deliver its latest policy verdict on Friday, following the sharpest fall in factory output since the devastating earthquake and tsunami of 2011.

With the BOJ already having created money at a furious rate, any policy shift is unlikely. But it may have to temper its assessment that production is "rising moderately as a trend", toning down its upbeat language on the outlook as it becomes less sure about when or even if exports will rebound.

The Reserve Bank of India will leave its key interest rate at 8 percent on Tuesday and won't ease policy until early next year on fears food inflation will spike if monsoon rains are below average, according to a Reuters poll.

Growth is slowing and has stayed below 5 percent in the past two years, well below levels needed to create enough jobs for India's young and expanding workforce.

The Reserve Bank of Australia is also expected to hold rates at 2.5 percent when it meets on Tuesday. Its next move is likely to be up rather than down, but not until next year.

Chinese trade data are due on Friday, kicking off the monthly run of indicators.

Latest survey evidence from the world's number two economy showed factories posted their strongest growth in at least 1-1/2 years in July, adding to evidence that the economy is gaining momentum after a spate of state stimulus measures. - reuters

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Freeport Indonesian Unit May Start Exporting Copper Concentrate Wednesday -CEO

                 PT Freeport Indonesia may start exporting copper concentrate on Wednesday after it reached an agreement with the government late last month to resume the exports after a six-month stalemate.

Freeport Indonesia's Chief Executive Rozik Soetjipto said that the local unit of U.S. copper and gold producer Freeport-McMoRan Inc. (FCX) may resume overseas shipments with 10,000 metric tons of the mineral bound for China.

The Indonesian government in January imposed an export ban on unprocessed ores aimed at keeping lucrative refining work within the country. In addition to the ore-export ban, the government in January imposed export duties on mineral concentrates of copper, iron, zinc, and manganese. The duties, which begin at 20%-25%, would rise to 60% before a complete ban on concentrate exports is imposed in 2017.

The government and Freeport Indonesia on July 25 struck a deal allowing the miner to pay lower export taxes as it agreed to build a smelter in Indonesia.

Director General of Coal and Mineral Resources Sukhyar said then that Freeport Indonesia's total copper-concentrate exports are expected to reach 756,300 tons by year-end, with an estimated value of $1.56 billion. - morningstar

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Gold Above One-Month Low as U.S. Economy Assessed With Rates

                   Gold traded above a one-month low after three weeks of losses as investors weighed the health of the U.S. economy against the outlook for higher borrowing costs. Silver climbed from the lowest level in six weeks.

Gold for immediate delivery was at $1,292.90 an ounce at 11:31 a.m. in Singapore from $1,293.75 on Aug. 1, according to Bloomberg generic pricing. That day the metal fell to $1,279.30 an ounce, the lowest since June 19, before rebounding to pare the third week of losses that was the longest since September.

U.S. data Aug. 1 showed that while employers added more than 200,000 jobs for a sixth month, the jobless rate rose, damping bets the Federal Reserve will raise interest rates soon after ending monthly bond purchases later this year. That buoyed bullion as the Bloomberg Dollar Spot Index snapped a six-day win streak. Gold also rose on Aug. 1 as global equities fell after Banco Espirito Santo SA, which was taken over by Portugal’s central bank yesterday, was ordered to raise capital and Argentina defaulted.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” said Zhang Lin, an analyst at Yongan Futures Co. in Hangzhou, China. “The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term.”

Gold for December delivery traded at $1,293.80 an ounce on the Comex in New York from $1,294.80 on Aug. 1, when futures climbed 0.9 percent to trim a third weekly drop. Money managers cut their net-long position 10 percent in the week through July 29, the most since June, U.S. government data show.

Silver for immediate delivery added 0.2 percent to $20.3665 an ounce, after earlier falling to $20.255 an ounce, the lowest price since June 19. The metal retreated 3 percent in July for the biggest monthly loss since March.

Spot platinum lost 0.1 percent to $1,462.88 an ounce after declining in July. Palladium decreased 0.1 percent to $863.85 an ounce after prices capped a sixth month of gains in July for the longest such run since January 2011. - Bloomberg

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Hedge Funds Cut Gold Bull Wagers by Most in Eight Weeks

        Hedge funds reduced bets that gold would rally from the longest retreat in a year as U.S. economic growth exceeded analysts’ estimates.

Money managers cut their net-long position by 10 percent in the week through July 29, the most since June, U.S. government data show. Prices dropped for a third week, the longest slide since July 2013. The decline helped to erase almost $610 million from the value of exchange-traded products backed by the metal.

Gold fell 3 percent in July, snapping a 10 percent rally in the first half of the year that outpaced gains for commodities, equities and Treasuries. Even as violence escalated in the Middle East and Eastern Europe, investors sold bullion as signs of quickening American expansion reignited concern that the Federal Reserve will raise borrowing costs. The U.S. grew 4 percent in the second quarter.

“The economic climate has become more moderate in the U.S., and there’s no sign of inflation picking up, so the fear factor that typically drives gold has subsided,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem,Pennsylvania, said Aug. 1. “If we continue to see this reasonable growth rate, I think gold will stay in a narrow range.”

Futures fell 0.6 percent in the past 12 months to $1,294.30 an ounce in New York. The Bloomberg Spot Commodity Index of 22 raw materials rose 2 percent, while the MSCI All-Country World Index of equities climbed 11 percent. The Bloomberg Treasury Bond Index advanced 3 percent.

Short Holdings

The net-long position in gold declined to 122,092 futures and options contracts as of July 29, U.S. Commodity Futures Trading Commission data show. Short holdings betting on a drop jumped 24 percent to 26,101, the highest in five weeks.

The U.S. economy expanded after shrinking 2.1 percent in the first three months of 2014, government data showed July 30. Analysts had predicted second-quarter growth of 3 percent. Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, the Labor Department said the next day. Sales of gold coins by the U.S., Mint fell 38 percent to 30,000 ounces last month, the lowest since March.

Bullion tumbled 28 percent last year, the most in three decades, as a stronger U.S. economy and the prospect of less monetary stimulus curbed demand for alternative assets. The Fed reduced its monthly bond-buying program to $25 billion on July 30, making a sixth consecutive $10 billion cut.

Jobs Report

Even as the central bank stayed on pace to end its debt purchases by October, policy makers repeated that they’re likely to keep interest rateslow for a “considerable time” as they look for more improvement in the job market.

Employers added fewer jobs than forecast in July, and the unemployment rate climbed to 6.2 percent from 6.1 percent in June, data showed Aug. 1. Gold futures jumped 0.9 percent that day, the most in a week.

Investors boosted gold holdings through ETPs by 15.7 metric tons in July, the first gain since March and the biggest since November 2012. The appeal of the metal as a haven rose as tensions escalated between Ukraine and Russia. More than 1,500 Palestinians, most of them civilians, have been killed after Israel’s attack on Gaza. More than 60 Israelis have also died, mostly soldiers, since the conflict escalated July 8.

‘Risk Premium’

“Although the risk premium has eased, if we continue to see geopolitical unrest in Europe and the Middle East, that could certainly be a driver for gold,” Brian Hicks, who helps manage about $350 million at U.S. Global Investors in San Antonio, Texas, said July 31.

Combined net-wagers across 18 U.S. traded commodities dropped 9.1 percent to 822,001 contracts as of July 29, the lowest since January, the CFTC data show.

Analysts at Goldman Sachs Group Inc. last week kept their 12-month recommendation for commodities at neutral. Citigroup Inc. said in June that interest is returning to the asset class as Societe Generale SA called raw materials a “really mixed bag” across the sectors.

Bets on higher oil prices slid 0.5 percent to 276,741 contracts last week, the government data show. Copper holdings dropped 12 percent to 38,859. Inventories tracked by the Shanghai Futures Exchange climbed 37 percent in July, the most since February 2012.

Farm Bets

A measure of net-long positions across 11 agricultural products declined 11 percent to 303,637, the smallest since January, the CFTC data show.

Investors cut bullish bets on cotton by 75 percent to the lowest since December 2012. Prices have fallen for 13 straight weeks, the longest slump since at least 1959.

Bullish bets on corn fell for a third straight week to 63,024, the lowest since February. The grain slumped 14 percent in July, the most since September 2011. U.S. production will climb 4.3 percent to a record 14.518 billion bushels, The Linn Group said Aug. 1.

“There is abundant supply of grains, and we just have a lot of corn,” Shonda Warner, the managing partner of Chess Ag Full Harvest Partners in Clarksdale, Mississippi, which oversees about $150 million, said July 31. “The price could drop another 10 to 15 percent. The only thing that could reverse the trend would be a surge in demand, or something that would reduce supply, like a weather event.” - Bloomberg

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WTI Trades Near Six-Month Low Before Economic Data; Brent Holds

                  West Texas Intermediate crude traded near the lowest price in six months before data that will signal the strength of the economy in the U.S., the world’s biggest oil consumer. Brent was steady in London.

Futures were little changed in New York after capping the biggest weekly decline in seven months on Aug. 1. The Markit Economics purchasing managers index for U.S. services is due tomorrow, while factory order data is also scheduled this week. In Iraq, militants took control of two oil fields in the north after clashes, according to the Northern Oil Co.

“There is no fear about supply,” said Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo. “On technical charts, we saw big drops last week, and both WTI and Brent are down to one of the support levels. WTI is very close to $97.50 a barrel and Brent to $104 a barrel. If those levels hold, the market will rebound.”

WTI for September delivery was at $98 a barrel in electronic trading on the New York Mercantile Exchange, up 12 cents, at 1:15 p.m. Singapore time. The contract slid 0.3 percent to $97.88 on Aug. 1, the lowest close since Feb. 6. The volume of all futures traded was about 1.3 percent above the 100-day average. Prices are down 0.5 percent this year.

Brent for September settlement rose 21 cents, or 0.2 percent, to $105.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.08 to WTI. It closed at $6.96 on Aug. 1.

Fuel Demand

WTI declined 4.1 percent last week amid signs of weaker U.S. fuel demand. Gasoline supplies rose to the highest level in four months as average consumption of the fuel dropped to the lowest since May, even after the country’s peak driving season started with the Memorial Day holiday on May 26.

Markit’s final reading of a gauge for U.S. services is projected to be 60.8 in July, down from 61 in June, according to a Bloomberg News survey. Factory orders probably rose to 0.6 percent in June, a separate survey shows.

Hedge funds and other money managers trimmed their bullish bets on WTI, extending the drop from this year’s peak in June to 22 percent, U.S. Commodity Futures Trading Commission data show. Net-long positions fell 1,375 to 276,741 futures and options combined in the week ended July 29, according to the CFTC.

Mideast Unrest

In Iraq, the Ain Zala and Batma oil fields are under full control of Islamic State, a breakaway al-Qaeda group, according to the state-run Northern Oil Co. Together they have an output of 30,000 barrels per day. The Sunni Islamist militants last month occupied the Qayyara field north of Baghdad.

Fighting has spared supply from Iraq’s south, home to more than three-quarters of its crude output. The nation is the second largest producer in the Organization of Petroleum Exporting Countries, pumping 3 million barrels a day in July.

In Libya, Britain dispatched its navy to evacuate its nationals as 22 other people were killed as a result of militia feuds near Tripoli’s international airport. The nation is the holder of Africa’s biggest oil reserves.

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Crude oil futures - weekly outlook: August 4 - 8

                   

West Texas Intermediate oil futures tumbled to a six-month low on Friday, as concerns over U.S. demand for oil and fuel products like gasoline drove prices lower.

On the New York Mercantile Exchange, crude oil for delivery in September fell to a session low of $97.09 a barrel on Friday, the weakest since February 5, before coming off the lows to settle at $97.88, down 0.3%, or 29 cents.

Nymex oil prices were likely to find support at $96.80, the low from February 5 and resistance at $99.85, the high from July 31.

The U.S. Department of Labor said Friday that non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

For the week, Nymex oil futures plunged 4.12%, or $4.21, the worst weekly decline since January.

U.S. oil futures lost more than $2-per-barrel on Thursday as bearish inventory data and heavy losses on Wall Street sent oil below the $100-level.

Weekly supply data showed that total motor gasoline inventories in the U.S. increased by 0.4 million barrels last week to 218.2 million, the highest level in four months.

The ongoing buildup in gasoline stocks during the peak summer driving season in the U.S. was seen as bearish for oil prices, amid speculation of slowing demand.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in New York-traded oil futures in the week ending July 29.

Net longs totaled 276,741 contracts as of last week, down 0.49% from net longs of 278,116 in the preceding week.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for September delivery fell to a daily low of $104.39 a barrel on Friday, the weakest level since April 2, before settling at $104.84 by close of trade, down 1.11%, or $1.18.

The September Brent contract lost 3.27%, or $3.55, on the week, as global supplies were seen as ample despite ongoing violence in Iraq, Libya and Eastern Europe.

Meanwhile the spread between the Brent and the WTI crude contracts stood at $6.96 a barrel by close of trade on Friday, compared to $6.30 in the preceding week.

In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the European Central Bank, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments. - investing.com

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Natural gas futures - weekly outlook: August 4 - 8

                     U.S. natural gas futures lost more than 1% on Friday, as demand for the fuel was likely to remain limited after meteorologists predicted mild summer weather in much of the U.S. through the next few days.

On the New York Mercantile Exchange, natural gas for delivery in September dropped 1.12%, or 4.3 cents, on Friday to settle the week at $3.798 per million British thermal units by close of trade.

Futures were likely to find support at $3.725 per million British thermal units, the low from July 28 and resistance at $3.890, the high from July 31.

Natural gas prices have been under heavy selling pressure in recent sessions after updated weather-forecasting models called for mild summer weather across much of the U.S. over the next several days.

Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.

Despite Friday’s losses, Nymex natural gas prices tacked on 0.44%, or 1.7 cents, on the week, the first weekly gain in seven weeks.

Natural gas futures rallied almost 1.5% on Thursday after the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. rose by 88 billion cubic feet, below expectations for an increase of 93 billion cubic feet.

Total U.S. natural gas storage stood at 2.307 trillion cubic feet as of last week, narrowing the deficit to the five-year average to 21.7% from 23.5% a week earlier and down from a record 54.7% at the end of March.

The EIA's next storage report is slated for release on Thursday, August 7, with analysts expecting a build of 87 billion cubic feet for the week ending August 1.

Inventories rose by 90 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 49 billion cubic feet.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers significantly decreased their bullish bets in natural gas futures in the week ending July 29.

Net longs totaled 16,060 contracts, down 42.1% from net longs of 27,748 in the previous week.

Elsewhere on the Nymex, U.S. crude oil for September delivery settled at $97.88 a barrel by close of trade on Friday, down 4.12%, or $4.21, on the week.

Meanwhile, heating oil for September delivery slumped 1.57% on the week to settle at $2.866 per gallon by close of trade Friday. - investing.com

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Gold / Silver / Copper futures - weekly outlook: August 4 - 8

                                     Gold futures bounced off a six-week low to end Friday’s session almost 1% higher, following the release of weaker than expected U.S. nonfarm payrolls data for July.

On the Comex division of the New York Mercantile Exchange, goldfor December delivery jumped 0.94%, or $12.00, on Friday to end the week at $1,294.80 a troy ounce.

Prices fell to a session low of $1,281.00 an ounce earlier Friday, the weakest level since June 19.

Gold prices were likely to find support at $1,276.20, the low from June 19 and resistance at $1,314.60, the high from July 29.

Gold regained strength after the U.S. Department of Labor said non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.

The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.

The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.

Despite Friday’s strong gains, Comex gold prices declined 0.65%, or $8.50, on the week, the third consecutive weekly loss, as strong U.S. economic data underlined the view that the recovery is gaining momentum.

Official data on Wednesday showed that U.S. economy grew at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0% and following a contraction of 2.1% in the first three months of the year.

Meanwhile, the Fed cut its asset purchase program by $10 billion to $25 billion per month at the conclusion of its two-day meeting on Wednesday, staying on course to end the bond-buying program in October.

Gold has been under heavy selling pressure in recent weeks as an improving U.S. economy fuelled speculation that the Fed will hike interest rates sooner than expected, which would reduce the need for gold for use as a hedge against loose monetary policy.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers decreased their bullish bets in gold futures in the week ending July 29.

Net longs totaled 122,092 contracts, down 10.3% from net longs of 136,120 in the preceding week.

Also on the Comex, silver for September delivery shed 0.2%, or 4.1 cents, on Friday to settle the week at $20.37 a troy ounce. Prices slumped to a daily low of $20.24 earlier in the session, the cheapest since June 19.

On the week, the September silver futures contract lost 1.26%, or 26.0 cents, the third straight weekly decline.

Data from the CFTC showed that net silver longs totaled 41,699 contracts as of last week, compared to net longs of 46,221 contracts in the preceding week.

Elsewhere in metals trading, copper for September delivery declined 0.51%, or 1.6 cents, on Friday to end the week at $3.214 a pound by close of trade.

On the week, Comex copper prices fell 0.8%, or 2.9 cents a pound, as investors gauged the health of China’s manufacturing sector.

Official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.

Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.

China is the world's biggest buyer of copper, accounting for roughly 40% of the market.

According to the CFTC, net copper longs totaled 38,859 contracts as of last week, down from net longs of 44,107 contracts in the preceding week.

In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the European Central Bank, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments. - investing.com

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