Gold Rallies and US Dollar Declines Following Repeal and Replace Vote Failure. - 28 Mar 2017

Commodity Intraday Tips

Gold Rallies and US Dollar Declines Following Repeal and Replace Vote Failure.  
Trading to an intraday high of $1261, gold prices have managed to hold onto the vast majority of gains. As of 330 Eastern standard time gold is trading at $11.20 higher at 1254.10. This net gain is a combination of a weaker dollar along with safe haven buying. As indicated through the KGX, today’s $11 contains a $7.10 (57 %) gain due to a weak US dollar, and a $4.10 (33 %) gain attributable to buying. In an 11th hour move last Friday, President Trump asked House leaders to cancel the vote to repeal and replace Obamacare. Market participants had little to no time to respond to this news on Friday.   The failure of the current administration to pass the Republican AHCA health bill caused market participants to question whether President Trump will be effective in converting other campaign promises into active legislation. Whether it is tax reform, the initiation of large infrastructure projects, regulatory reform or trade agreement reform, the ability for President Trump to harness his negotiation skills and “art of the deal” is brought into question following Friday’s defeat.  

Barclays Hikes Price Forecast for Copper in 2017. 
Barclays Capital revised its forecast for copper prices for 2017, wenhua.com reported. It hiked forecast for copper price from $5,458 per ton to $5,616 per ton for 2017. Overseas Copper Smelting Projects Decrease. In recent years, copper refining projects overseas were mostly in 2016. Refining capacity expected to come online was 450,000 tons, but actually the capacity put into production was even lower. Growth of new smelting capacity slowed significantly to less than 60,000 tons in 2017. And there will be only 4 new projects in 2018, with small capacity, said Zhang. New projects are mainly smelting & refining projects. In a long-term point of view, Chile’s copper refining capacity will be large, and 200,000 tons of capacities will be added in 2024. But, this project is of great uncertainty since the country’s copper industry aims to axe capital spending, he added. 

Weaker dollar lifts oil futures, but soaring US output weighs. 
Oil prices edged up on Tuesday on a weaker dollar, but crude continued to be weighed down by surging U.S. production and uncertainty over whether an OPEC-led supply cut is big enough to rebalance the market. The greenback has lost 2.9 percent in value against a basket of other leading currencies since its March peak on doubts over U.S. President Donald Trump's policy making abilities. The dollar weakens, many futures traders pull out money from foreign exchange markets and put it into commodities futures like gold or crude futures instead. While there was some support for crude from financial markets, physical fundamentals remained weak, especially due to soaring U.S. output that is undermining efforts lead by Organization of the Petroleum Exporting Countries (OPEC) to cut production in order to rein in a global fuel supply overhang and prop up prices. Soaring output and brimming inventories have made U.S. WTI crude much cheaper than its international peer, Brent, which is receiving support above $50 per barrel by the OPEC-led production cut. As a result, record amounts of U.S. crude oil have found their way to Asia and other destinations this year, and more is expected to be shipped out as traders take advantage of arbitrage opportunities by sending out excess U.S. crude into regions where it can find buyers. 

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Gold gains in early Asia as political risk events eyed.- 27 Mar 2017

Commodity Intraday Tips

Gold gains in early Asia as political risk events eyed.
Gold prices gained in early Asia on Monday as investors see a week of political risk events, including Britain's move to formally start its break from the European Union. Prime Minister Theresa May will Last week, gold prices retraced gains late Friday but still notched up a second weekly rise as concerns over the Trump administration’s ability to push through its pro-growth economic agenda underpinned safe haven demand. Prices of the precious metal turned lower as the dollar steadied after Republican leaders dropped legislation to replace the Affordable Care Act before a planned vote in the House of Representatives, after it failed to gather enough support to pass.

Investors viewed the Trump administration's failure to push through a healthcare overhaul as a sign he may also face further setbacks delivering on other policy pledges including corporate tax cuts, regulatory reform and infrastructure spending. Set out how her government plans to restore sovereignty over Britain's laws on Thursday, publishing a detailed paper on ending "the supremacy of EU lawmakers," according to Reuters.

Philippines Allows 8 'Suspended' Miners to Ship Out Nickel Ore. The Philippines' environment ministry has allowed 8 suspended nickel ore mining firms to ship out stockpiles of mined ore, Reuters reported. The permission is aimed at limiting the potential buildup of silt in nearby waters, an official with knowledge of the order said, rather than the government toning down its campaign, according to the report.  The volume of nickel ore stocks from the mines may well exceed 1 million tonnes, or about a month's worth of consumption by top buyer China, said the official, who declined to be named because he is not authorized to discuss the matter publicly. The total would likely be less than 5 million tonnes, he added.

China has topped the list of global aluminum producing countries from 2001, with total output of 230 million tonnes over the past 16 years, SMM reported from the SMM 2017 Copper & Aluminum Summit. Aluminum consumption reached 24 kilograms per capita in 2016, with 130 kilograms reserves per capita which totaled 178 million tonnes. China will enter peak aluminum consumption period in 2020, and per capita consumption will hover above 35 kilograms.

Crude prices dip in Asia as market mulls supply outlook.
Crude prices gave up early gains in Asia on Monday after a weekend meeting that saw some promise for the extension of a coordinated output cut by OPEC and non-OPEC key producers. At the weekend, a joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months. Oil sector analysts said the lack of an immediate extension could drag on crude prices.

Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by 21 last week, the tenth weekly increase in a row. That brought the total count to 652, the most since September 2015. Oil has fallen sharply this month amid concern that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.

OPEC agreed in November last year to curb its output by about 1.2 million barrels per day between January and June. Russia and 10 other non-OPEC producers have agreed to jointly cut by an additional 600,000 barrels per day. 

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Crude witnesses constant selling pressure -24 Mar 2017

Commodity Intraday Tips

Crude Oil is maintaining a tiny range mid weak equities and record high US crude inventories. Overall sentiments remain weak for the commodity.

The latest Energy Information Administration (EIA) inventories data recorded a build of 4.95 million barrels in the week ending March 17th following a 0.24 million draw the previous week.

Crude inventories at 533.1 million barrels are 6.3 percent above year-ago levels and at a fresh record high with builds in 10 of the last 11 reporting weeks.

WTI Crude Oil futures are currently trading just under $ 48 per barrel amid these cues. 

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LME Nickel to be Weighed by Higher US Dollar. - 23 Mar 2017

Commodity Intraday Tips

Gold hits 3-week peak as equities ditched on Trump worries.  
Gold climbed to a three-week high on Wednesday as the dollar fell to seven-week lows and bond yields sank on uncertainty over the economic policies of U.S. President Donald Trump. Trump and Republican congressional leaders appeared to be losing the battle to get enough support to pass their Obamacare rollback bill. Mark Meadows, who heads the conservative House Freedom Caucus, said his group had more than enough members to stop the bill from passing current House Republican rollback plan is scheduled for a floor vote on Thursday.  

Gold has rallied around $50 from last Wednesday's low and clocked its longest winning streak since early January after a less hawkish tone on interest rates in the U.S. Federal Reserve's latest policy statement last week. "The repositioning of investors since the (Fed) meeting continues unabated, with investors becoming less bearish as a result of the subdued outlook for rates in 2018," ANZ analysts said in a note.  

LME Nickel to be Weighed by Higher US Dollar.  
US stocks plunged yesterday. The US dollar rebounded, weighing down nickel. LME nickel is expected to test support from USD 10,000/mt today. SHFE 1705 nickel will move at RMB 82,500-83,800/mt. In China’s domestic market, spot nickel should trade at RMB 82,200-83,800/mt on Thursday. 

SMM 2017 Copper & Aluminum Summit is Opening! 
The 12th Shanghai Copper & Aluminum Summit 2017, organized by SMM and Shanghai Nonferrous Metals Association, is opening.  The Summit, to be held on March 23-24, 2017, Shanghai, will focus on hot topics, price outlook, market insights, and etc. SMM would like to invite you to follow stories at the 2017 Shanghai Copper & Aluminum Summit on March 23-24.  Seasonally adjusted new home sales for the US in February will be released today. Despite a drag from crude oil, LME aluminum will remain strong and move at USD 1,910-1,940/mt today and SHFE 1705 aluminum will move between RMB 13,650-13,900/mt. 

Oil bounces off November lows, but bloated US stockpiles pressure market. 
Oil prices recovered on Thursday from losses chalked up the session before, but the market remained under pressure as bloated U.S. crude inventories and rising output dampen OPEC-led efforts to curb global production. 

Analysts said Brent had found technical support around $50 a barrel and was being pushed up as traders took new long positions after crude hit multi-month lows overnight the bounce, traders said the market remained under pressure, largely due to a big U.S. inventory and doubts that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output was reining in a global fuel supply overhang. McKenna, chief market strategist at futures brokerage AxiTrader, said OPEC was "underwriting the investment plans and returns of their competition in U.S. shale oil." McKenna said there was a risk of oil prices dropping further due to U.S. output and a lack of compliance by some producers who said they would cut production. 

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Gold climbs to near 3-week high as dollar slides.- 22 Mar 2017

Commodity Intraday Tips

Gold climbs to near 3-week high as dollar slides.
Gold rallied to the highest level in nearly three weeks on Tuesday after a strong debate performance from French centrist presidential candidate Emmanuel Macron and as fading expectations for near-term U.S. interest rate hikes pushed the dollar lower. The Fed's policy statement last Wednesday was less hawkish than expected, dampening speculation that the U.S. central bank would raise interest rates quickly this year. Gold is highly sensitive to rising U.S. rates, because they increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.Gold fell in the run-up to the Fed's rate hike last week, with hedge funds and money managers sharply cut their net long position in COMEX gold futures funds totally missed the boat  which means they could run right back in here," said Bill O'Neill, co-founder of LOGIC Advisors. "There are a number of things going on politically that are going to keep the market nervous." "The previous two hikes marked cycle lows for gold, and European election uncertainty, U.S. President Trump's foreign policies, as well as seasonal demand in India materializing in April are likely to make Q2 the strongest quarter for gold prices this year," Standard Chartered (LON:STAN) said in a note.

Japan Copper Wire & Cable Shipments to Decline 5.2% in February 2017.
Japan Electric Wire and Cable Makers' Association announced Japan’s copper wire & cable shipments are expected to decrease 5.2% year-on-year to 55,300 tone’s in February 2017, wenhua.com reported.The Committee of Statistics under Ministry of National Economy of the Republic of Kazakhstan reported Kazakhstan’s copper cathode and refined zinc production fell 3.3% and 1.0%, respectively on a yearly basis in the first two months of the year, while crude steel output leapt 8.6% year-on-year, according to wenhua.com. Tuesday as investors and speculators exited their positions in the industrial metal on hopes of restart of production at the world's biggest copper mine in Chile after unions and miner BHP Billiton said that they would hold further talks. The striking workers’ union at the world's largest copper mine, BHP Billiton's Escondido, in Chile on Monday said that it was open to further conversations which could lead to reopening negotiations.

Oil prices fall on bloated U.S. crude storage.
Oil prices dipped on Wednesday as rising crude stocks in the United States underscored an ongoing global fuel supply overhang despite an OPEC-led effort to cut output. "Crude oil prices fell as concerns over rising U.S. inventories resurfaced... Rising exports in Libya also weighed on prices," ANZ bank said on Wednesday. U.S. crude oil inventories rose by 4.5 million barrels in the week to March 17 to 533.6 million, the American Petroleum Institute (API) said late on Tuesday. Bloated storage comes as U.S. oil production C-OUT-T-EIA has risen over 8 percent since mid-2016 to more than 9.1 million barrels per day (bpd) to levels comparable in late 2014, when the oil market slump started. Rising production in the United States and elsewhere, and bloated inventories, are undermining efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output and prop up prices is likely to see the largest increase in mega projects production in history," Goldman Sachs said in a note to clients on Tuesday.

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Gold is marooned between U.S. rates and India demand: Russell - 21 Mar 2017

Commodity Intraday Tips

Gold is marooned between U.S. rates and India demand: Russell.
It's not unusual for a financial market to be pulled in different directions simultaneously by competing influences, but what is notable for gold currently is the apparent inability of the contradictory factors to gain momentum. History and logic suggest that when the United States starts a monetary tightening cycle, gold will underperform, since as a non-yielding asset it loses out to instruments that will enjoy higher yields from the rising rates. The Federal Reserve lifted interest rates on March 15 for the second time in three months, with expectations that it will raise at least twice more this year and perhaps three times in 2018.Part of the answer may be that investors are taking a view that the rise in real yields may not be as dramatic given U.S. inflation is also on an upward trend. There also may be a U.S. dollar effect, with analysts at JP Morgan noting that it's likely that the greenback has already seen the bulk of its rally in this tightening cycle.

Peru Copper Output up 24.8% in January,  Zinc to Bounce Up as China Output Cuts Show Result, SMM Says.
Peru Energy & Mines Ministry data show the country’s copper output increased 24.8% year-on-year to 196,317 metric tonnes in January 2017, wenhua.com reported. The country’s copper production added 38.4% year-onyear to 2.35 million metric tonnes in 2016. Zinc prices fell below 22,000 yuan per tonne March 9 due to concerns over failure in output cut by zinc smelters. Fortunately, a large number of Chinese zinc smelters began maintenance. In addition to maintenance cycle, recent output cut is also the spirit of the meeting of some large zinc smelters in Central West China held recently.China’s refined zinc output is expected to be about 1.29 million tonnes in the first quarter of the year, up 1.4% year-on-year, SMM predicts. SMM undertook a survey of maintenance at zinc smelters during March and April, and found some smelters delayed maintenance to April. Zinc output in March is estimated to be 430,000 tonnes, while output in April should fall 1.9% on the month and down 3.9% year-on-year.

Oil prices rise on talk that OPEC could extend supply cut.
Oil prices rose early on Tuesday on expectations that an OPEC-led production cut to prop up the market could be extended, and as strong demand was seen to slowly erode a global fuel supply overhang. The Organization of the Petroleum Exporting Countries (OPEC), together with other producers including Russia, has pledged to cut its output by almost 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for almost three years.Yet so far the cutback has not had the desired effect as compliance by involved exporters is patchy and as other producers, including the United States, have stepped up to fill the gap, resulting in crude prices falling more than 10 percent since the beginning of the year halt the decline, OPEC members increasingly favor extending the pact beyond June to balance the market, sources within the group said, although they added that this would require non-OPEC members like Russia to also step up their efforts also said that healthy oil demand would help rebalance markets and support prices.Global demand for 2017 is expected to remain healthy and surpass long-term average growth in demand of 1.2 million barrels per day by between 0.2 and 0.4 million barrels per day.

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Gold-Mining Giants Benefit From Rebound in Bullion Prices - 20 Mar 2017

Commodity Intraday Tips

Gold-Mining Giants Benefit From Rebound in Bullion Prices.
Gold mining majors swung back into positive territory last week, as shares recovered on a dovish Federal Reserve announcement. Following a four-week slump, gold miners including Barrick Gold Corp, Newmont Mining, and Gold Fields Ltd all saw positive momentum. The Bloomberg Intelligence (BI) Global Senior Gold Valuation Peer Group — a basket of 15 producers — was up 6.5% this past week, marking the biggest uptick since the end of December, Bloomberg reported.  Leading the weekly gains, was Johannesburg-based Gold Fields Ltd., up 15% this past week, the biggest jump since February 2016.

“The old rule of thumb was that three rate hikes by the Fed would lead to a stumble in financial markets. But the fact that rates are starting at such a low level, as well as Yellen’s hand-holding and relatively mild remarks, kept markets on an even keel following this cycle’s third rate move. We look for two more rate hikes this year, and a similar muted market response,”

SHFE Nickel to Meet Pressure.
Market players will see a light economic data calendar on Monday and US dollar index will move at lows. The Philippines’ two nickel mines of DMCI are expected to be closed down, which is one of the 10 mine closures last year. The mines are waiting for litigation outcome. It is learned that the government allows mines to keep operation during litigation, weighed down SHFE 1705 nickel. LME nickel will meet strong pressure at the 10-day moving average on Monday and SHFE 1705 nickel will move at RMB 84,000-85,600/mt.

Nickel ore inventories at seven major Chinese ports were down 190,000 tones’ last week, according to SMM data. This week, medium and high-grade nickel ore prices for spot and future delivery are expected to rise due to strong buying interest, SMM foresees. But, price gains will be small given lack of rising strength in the high-grade NPI market.

Oil prices drop on rise in U.S. drilling.
Oil prices fell on Monday as rising U.S. drilling activity and steady supplies from OPEC countries despite touted production cuts pressured already-bloated markets. Traders said that prices were under pressure due to rising U.S. drilling activity and ongoing high supplies by the Organization of the Petroleum Exporting Countries (OPEC) despite its pledge to cut output by almost 1.8 million barrels per day (bpd) together with some other producers like Russia. oil has attempted to break out of the trading range that formed last year ... However, this uptrend has stalled," futures brokerage CMC Markets said in a note on Monday. "Now there is good, strong momentum to the downside."

U.S. drillers added 14 oil rigs in the week to March 17, bringing the total count up to 631, the most since September 2015, energy services firm Baker Hughes Inc BHI.N said on Friday, extending a recovery that is expected to boost shale production by the most in six-months in April.  "The cuts in OPEC production from the start of 2017 should start to show up between mid-March (now) and mid-April.  Over the coming weeks we expect a sharp reduction in imports and increase in refining runs which should lead to impressive crude inventory draws," analysts at AB Bernstein said on Monday in a note to clients.

Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
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