Metals Fall on Spending Cuts, Economy as Stocks Decline

Commodities dropped for a fourth day and stocks fell as $85 billion of spending cuts were set to be triggered in the U.S. and manufacturing slowed in China and the euro area. The 17-nation shared currency and the pound weakened while the Swedish krona strengthened.

The Standard & Poor’s GSCI gauge of 24 raw materials dropped 1 percent at 8:40 a.m. in New York as lead, aluminum and copper fell at least 1.7 percent and oil sank 1.3 percent. The StoxxEurope 600 Index slid 0.9 percent and S&P 500 Index futures lost 0.4 percent. The euro dropped below $1.30 for the first time in eight weeks. The pound tumbled 1 percent to $1.5018, whileSweden’s currency climbed at least 0.4 percent against its 16 major peers as fourth-quarter gross domestic product exceeded analyst estimates.

“Risk assets underperformed as data such as PMIs reinforced a view that we are in a low growth environment,” said Michael Quach, investment strategist in London at Smith & Williamson Investment Management, which has $19 billion in assets. “Stimulus and other confidence boosting measures provided by central banks around the world have helped to reduce systemic risk, but there are still a lot of headwinds in the economy.”The U.S. Senate rejected a pair of partisan proposals to replace the automatic across-the-board spending reductions which the International Monetary Fund says will hurt global growth. Consumer spending rose in America in January, the Commerce Department said before reports on manufacturing and construction. Data showed China’s manufacturing slowed for a second month while factory output in the euro area contracted for the 19th straight month.

Dollar Gains

The dollar led gains in world markets last month, beating global measures of bonds, stocks and commodities, as the threat of U.S. budget cuts proved no barrier to investors snapping up American assets. Japan overtook China last year as the largest foreign holder of U.S. securities, including equities, asset- backed debt and Treasuries, the U.S. Treasury Department said.

The Dollar Index, which tracks the currency against six U.S. trading partners, climbed 0.5 percent today. Treasuries advanced for a second day, with the yield on 10-year notes falling three basis points to 1.85 percent.

The S&P GSCI of commodities fell to a two-month low and is heading for a fourth weekly decline, the longest streak since June. West Texas Intermediate oil dropped to $90.84 a barrel. Copper slipped 1.7 percent to the lowest since Nov. 28 and aluminum retreated for a 10th day, the longest slump since June. China is the biggest buyer of energy and industrial metals.

European coal for 2014 fell to a record $97.50 a ton.

Earnings Disappoint

The Stoxx 600 erased this week’s advance. The gauge climbed for nine months through February, the longest run of gains since 1997. Two shares fell for every one that gained in the Stoxx 600 today, with a gauge basic-resource stocks dropping 2.5 percent, the biggest decline among 19 industry groups.

Belgacom SA (BELG), the largest phone company in Belgium, fell 8.7 percent to a record low after forecasting earnings that trailed analyst estimates. Royal Vopak NV, the world’s biggest chemical and oil storage company, tumbled 15 percent as operating profit declined.

Thales SA surged 12 percent as Europe’s biggest maker of defense electronics reported earnings that topped estimates and started a review of regional and product focus to improve profitability.

The cost of insuring against default on corporate debt increased, with the Markit iTraxx Europe index of credit-default swaps linked to 125 investment grade companies rising 3.5 basis point to 120, the highest in three days.

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Gold price surge as Bernanke’s doves fly again

             

                Markets have been roiled over the last 48 hours by the three B’s: Berlusconi, Bernanke and Boehner. The indecisive Italian election outcome and the strength of the anti-austerity vote has many traders thinking that the whole eurozone issue is not receding in the rear-view mirror quite as quickly as some had hoped. EURUSD fell by more than two cents on Monday afternoon as news from Italy was digested. Stock markets also fell sharply, along with industrial commodities. In contrast, gold held onto its early-day gains.

Ben Bernanke therefore had an important task to do in his Congressional testimony yesterday: reassuring markets that, contrary to the head fake in the last batch of FOMC minutes, easy money policies will last for a long time to come yet.

He didn’t disappoint – noting “we [the FOMC] do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery… Inflation is currently subdued, and inflation expectations

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Bernanke defends low rates in House hearing

                   The policy is needed “to keep interest rates a little bit lower to help support housing, automobiles and other parts of the economy that need support,” Bernanke said during his second day of his testimony to Congress on the economy and monetary policy.

Investors were pleased with Bernanke’s stance. The Dow Jones Industrial Average rose to its highest levels in the late afternoon, up almost 200 points to 14,098.Read Market Snapshot.

In January, the Fed decided to keep buying $85 billion worth of Treasury bonds and mortgage-backed securities a month until it saw a substantial improvement in the labor market. The Fed has also kept interest rates close to zero since December 2008.

For the second day, Bernanke strongly defended the bond-buying program and repeating that the potential costs don't outweigh the benefits. Read about first day’s testimony.

Some Fed officials are worried that the program will create financial instability and could foster inflation if the central bank has difficulty engineering a smooth exit strategy.

The Fed will review its bond-buying program at its next meeting on March 19-20.

Bernanke said results of the easy policy stance are starting to emerge.

“We are getting some traction in the housing market, which has shown some strength in the last few days, some of the data most recently. In automobiles and other durable goods, to some extent in investment, to some extent, perhaps, in commercial real estate we’ve seen some signs of improvement,” Bernanke said.

Republicans on the House panel were skeptical.

“There seems to be…a lot of evidence out there that the benefits of the low interest rate and quantitative easing are accruing primarily to the federal government, foreign governments and large banks,” said Rep. John Campbell, a Republican from California.

A common theme among Republicans was that Bernanke was “enabling” runaway spending by the federal government.

Jan Hatzius, chief economist at Goldman Sachs, noted that Bernanke sent a “modestly dovish signal” by suggesting the Fed is debating holding the securities on its balance sheet longer than currently expected or letting them run off without selling.

“Our estimates suggest that the effects on long-term interest rates of such a move would be modest,” he said.

Bernanke repeated his call for Congress and the White House to agree to take steps so the economy could avoid the impact of the across-the-board federal spending cuts, known as the sequester.

The cuts are set to start to take effect Friday.

“Most economists…would say that [the sequester] would cost a lot of jobs in the short-run and you can achieve the same results with longer-term programs,” the Fed chairman said.

“Would it be fair for me to paraphrase this to average people that the chairman of the Federal Reserve thinks that sequestration is stupid? asked Rep. Michael Capuano. a Democrat from Massachusetts.

“I wish you wouldn’t do that,” Bernanke replied.

Asked if low rates were punishing seniors, Bernanke said that raising rates prematurely would only hurt the economy.

“It’s very striking that if you look at every other industrial country around the world, interest rates are about exactly where they are here,” the chairman said.

“And that says something about the fundamentals, which are very weak in most of these industrial countries. And until we can get greater forward momentum, we’re not going to be able to see sustainable higher returns,” he added.

Courtesy : Market Watch

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India forex reserves up marginally to $295.6 billion

India's foreign exchange reserves climbed marginally to $295.6 billion at the end of December last year, from $294.4 billion in March 2012.

According to latest Economic Survey 2012-13 presented by country's Finance Minister, P. Chidambaram in the Lok Sabha on Wednesday, on month-on-month basis forex reserves remained in the range of $ 286.0 billion (at end-May 2012) to $ 295.6 billion (at end-December 2012).

At this level, reserves provided about seven months of import cover, the Survey observes.

India’s foreign exchange reserves comprise foreign currency assets (FCA), gold , special drawing rights (SDRs) and reserve tranche position (RTP) in the International Monetary Fund (IMF).

The level of foreign exchange reserves is largely the outcome of the Reserve Bank of India (RBI) intervention in the foreign exchange market to smoothen exchange rate volatility and valuation changes due to movement of the US dollar against other major currencies of the world.

Courtesy : Bullion Street

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Oil rebounds in Asia lifted by data points

                             

                  Oil futures rebounded modestly during Wednesday’s Asian as traders digested some solid U.S. economic data points that went mostly ignored in the oil pits Tuesday. 

On the New York Mercantile Exchange, light, sweet crude futures for April delivery rose 0.26% to USD92.88 per barrel in Asian trading Wednesday. Oil settled down 0.58% at USD92.57 a barrel on Tuesday in the U.S. 

A day after a report showed Chinese oil imports rose in January, two data points showed U.S. demand could be improving as well. In U.S. the Conference Board said its consumer confidence index rose to 69.6 in February from a

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Goldman Sachs cut 2013 Gold forecast to $1,600, 2014 to $1450

                       Leading global investment banking and securities firm Goldman Sachs cut its 2013 gold price forecast to $1,600 an ounce from $1,810 an ounce.

In a statement, Goldman Sachs cut its three-month gold-price forecast to $1,615 an ounce from $1,825, its six-month forecast to $1,600 an ounce from $1,805 and its 12-month forecast to $1,550 an ounce from $1,800.

The bank also cut its 2014 forecast to $1,450 an ounce from $1,750 an ounce. It said gold's recent price drop and an increase in U.S. real interest rates have led it to bring forward its projections for a decline in the metal.

Goldman Sachs said while the latest sell-off is "likely excessive," it has "exposed a quickly waning conviction in holding gold positions, especially ETFs.

If that projection proves accurate, it will mark the first year gold has recorded a lower average price year-on-year since 2001, when its record-breaking 12-year bull run began, the bank said.

Goldman predicted a turn in gold's bull cycle in December, saying a rise in real interest rates on the back of improved growth could offset any further balance sheet expansion from the Federal Reserve.

Courtesy : Bullion Street

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Gold down slightly in Asia after U.S. gains

               Gold futures declined slightly in the early going of Wednesay’s Asian session after posting a strong performance during Tuesday’s U.S. session. 

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery fell 0.17% to USD1,612.80 per troy ounce in Asian trading Wednesday. Bullion settled up 1.76% at USD1,614.50 a troy ounce in U.S. trading Monday in what was one of the best one-day performances for the yellow metal in weeks. 

Gold futures were likely to test support USD1,574.80 a troy ounce, Monday's low, and resistance at USD1,653.75, the high from Feb. 13. 

Traders ignored Goldman Sachs taking the ax to its gold price targets in the U.S. Tuesday as Federal Reserve Chairman heartened gold bugs by saying the Fed’s quantitative easing program has not jolted U.S. inflation to uncomfortable levels. 

On Tuesday, Goldman Sachs lowered its 2013 price forecast for gold to USD1,600 an ounce from USD1,800. The venerable Wall Street cited gold’s

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26-FEB-2013 INTRADAY LEVELS FOR MCX COMMODITY MARKET

26-FEB-2013	RESISTANCE LEVELS	SUPPORT LEVELS

COMMODITY	RES-1	RES-2	RES-3	SUP-1	SUP-2	SUP-3
ALUMINIUM	108.60	109.45	110.05	107.15	106.55	105.70
COPPER	424.50	426.55	428.40	420.60	418.75	416.70
CRUDEOIL	5095	5138	5173	5017	4982	4939
GOLD	29698	29778	29882	29514	29410	29330
LEAD	124.80	125.80	126.50	123.10	122.40	121.40
NATURALGAS	190.00	192.20	195.90	184.10	180.40	178.20
NICKEL	910.60	922.10	928.70	892.50	885.90	874.40
SILVER	54271	54569	54949	53593	53213	52915
ZINC	112.85	113.30	114.10	111.60	110.80	110.35

For More Details Please Visit MCX FREE TIPS

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Oil climbs slightly on bargain hunting

Following a weekly loss that saw futures trade around their weakest levels since early January, oil futures inched higher in the early part of Monday’s Asian session as traders saw an opportunity to perhaps grab crude on the cheap. On the New York Mercantile Exchange, light, sweet crude futures for April delivery rose 0.03% to USD93.16 per barrel in Asian trading Monday. On the New York Mercantile Exchange, light sweet crude futures for delivery in April rose 0.5% Friday to settle the week at USD93.33 a barrel by close of trade. On the week, New York-traded oil futures lost 2.7%. Oil futures, as was the case with gold and other dollar-denominated commodities, came under pressure on speculation the Federal Reserve is mulling an end to its money-printing endeavors that have previously boosted stocks and other riskier assets such as oil. With traders thinking that oil, gold and other commodities could be in for a near-term pullback, the U.S. dollar’s status as a safe-haven has proven appealing. The U.S. Dollar Index, which tracks the performance of the greenback against a basket of six other major currencies, ended the week at 81.55, the strongest level since August 30. Futures were also pressured by news that Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, may increase output to avoid demand destruction at the hands of higher prices. Speaking of OPEC, Iran is set to meet with the U.S. and five other nations later today in Kazakhstan. Iran has been under sanctions from the West regarding its pursuit of a nuclear agenda and those sanctions have crippled the country’s ability to receive dollars or euros for the sale of crude to foreign buyers. Meanwhile, Oil & Gas UK forecast that country’s oil production will slip 3% to 6% this year due to issues in the North Sea before rising next year. Elsewhere, Brent for April delivery fell 0.22% to USD114 per barrel on the ICE Futures Exchange.

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Courtesy:INVESTING

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Russia, Kazakhstan Expand Gold Reserves for Fourth Month

Russia and Kazakhstan expanded gold reserves for a fourth straight month in January, while Azerbaijan acquired bullion for the first time in more than a decade as central banks sought to diversify their assets. Russian holdings climbed 12.2 metric tons to 970 tons last month after gaining 8.5 percent over 2012, according to International Monetary Fund data. Kazakhstan’s hoard grew 1.5 tons to 116.8 tons, following last year’s 41 percent expansion, data on the IMF website showed. Azerbaijan bought 1 ton after reporting no holdings since 1999 and Mexico sold 0.1 ton. Enlarge image Gold will probably peak in 2013 and keep declining the following year as U.S. growth accelerates, Goldman Sachs said in a report on Dec. 5. Photographer: SeongJoon Cho/Bloomberg Gold fell for a fourth month in January, with analysts from Goldman Sachs Group Inc. to Credit Suisse Group AG calling an end to the metal’s 12-year bull run as data showed the global economy improving. Gold slumped to a seven-month low last week as investors cut holdings in exchange-traded products. Central banks will again be strong buyers this year after they boosted purchases 17 percent to 534.6 tons last year, the most since 1964, according to the London-based World Gold Council “Central-bank buying remains one of the bullish factors for gold,” Jiang Yangjing, an analyst at China International Capital Corp., said by phone from Beijing. “Prices at the moment are driven largely by macroeconomic data.” Federal Reserve Gold for immediate delivery traded at $1,583.30 an ounce at 12:07 p.m. in Singapore, down 5.5 percent this year. The price dropped to $1,555.55 on Feb. 21, the lowest since July 12, as some U.S. Federal Reserve policy makers advocated more flexibility in economic stimulus. A fall in February for a fifth monthly loss would be the worst run since 1997. Turkey’s holdings, which rose 10.3 tons last month, jumped 84 percent in 2012 as it accepted gold in its reserve requirements from commercial banks. Belarus’s reserves expanded 0.5 ton in January, while Tajikistan acquired 0.1 ton the same month, according to the IMF data, which are updated as countries report. Serbia bought 2.5 tons in December, and Venezuela added 1.9 tons in November, the data showed. Billionaire investors George Soros and Louis Moore Bacon cut their stakes in gold ETPs in the last quarter of 2012, while John Paulson maintained his share, filings showed this month. Total investor holdings in ETPs stood at 2,560.097 tons on Feb. 22, down 2.8 percent from a record reached on Dec. 20. An “inevitable unwind of the 12-year gold bull market has begun,” Ric Deverell and Tom Kendall, analysts at Credit Suisse, wrote in a Feb. 21 report. Gold will probably peak in 2013 and keep declining the following year as U.S. growth accelerates, Goldman Sachs said in a report on Dec. 5. Immediate-delivery metal reached a record $1,921.15 an ounce in September 2011.

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Courtesy:Bloomberg

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