WEEKLY BULLION REPORT-18 Aug 2014 To 23 Aug 2014
Gold tumbled the last day of the week after climbing on geopolitical tensions after the Polish Ambassador said that Russia was mounting troops on the Ukraine border and President Putin responded to US sanctions with his own sanctions. Gold climbed to a three-week high after US President Barack Obama authorized air strikes in Iraq, and the metal looked set to post its best week in seven as global geopolitical tensions spurred safe-haven demand. Bullion also got a boost from a drop in Asian share prices on growing fears that conflicts in Ukraine and the Middle East could sap global growth. The 10-year US Treasury yield hit a 14-month low and the dollar slipped against the safe-haven yen, showing increasingrisk-aversion in financial markets. Gold fell, pressured by a lack of physical buyers and gains on Wall Street, but a US air strike in Iraq and tensions in Middle East supported prices, which stayed above $1,300 an ounce. Gold was up around 1% for the week, its first weekly increase in four weeks. In early trade, gold rallied to a three-week high on news US aircraft bombed Islamic fighters marching on Iraq’sKurdish capital of Arbil.According to the World Gold Council’s latest estimate, global gold demand fell 514.7 metric tons in 2013, or 11.2%. That was enough to blast gold down 27.9%to its worst annual performance in nearly a third of a century. The problem wasn’t traditional bar-and-coin investment, which soared 31.1% higher last year to 1780.6t. Gold plunged solely because global ETF demand plummeted to negative 879.8t in 2013.
Silver took a major turn after climbing on safe haven trades to end theweek at 19.903 down by 87 points. Bullion also got a boost from a drop in Asian share prices on growing fears that conflicts in Ukraine and the Middle East could sap global growth. The 10-year US Treasury yield hit a 14-month low and the dollar slipped against the safe-haven yen, showing increasing risk-aversion in financial markets.
Crude Oil recovered 12 cents after several days of declines to trade at 95.70 reaching the EIA projected average price for 2014. Brent Oil recovered 33 cents after touching a 2014 low and remains weak at 102.40 as the world supplies shows a glut of oil available as the US produces more and global hot spots continuing production. In June, the price of Brent crude oil hit $115 a barrel, an eight-month high. But the spike didn’t last long. This week, oil was down at an eight-month low, below $104. The Islamic State insurgency in Iraq had fuelled fears of major supply disruptions, but the jihadists’ stronghold is largely confined to the north of Iraq, and Iraqi exports come mostly from the south. Meanwhile, the start of air strikes last week should weaken the Islamic State’s position,further reducing the odds of supply disruptions. The IEA , which oversees energy use in the west, believes that prices will continue to fluctuate in line with patterns that heating oil users have seen in previous years. “Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected,with an oil glut even reported in the Atlantic basin,” the IEA said in its monthly report. US and European Union sanctions on the Russian oil sector are not providing oil markets with much support either. The consensus in the industry seems to be that neither set of sanctions will have any tangible near-term impact on supplies. The IEA said that even for the medium term, the impact of political uncertainly on oil prices appears “questionable”. “The market appears confident that the Organisation of the Petroleum Exporting Countries can deliver the production increase needed from it to meet rising demand expected in the second half of the year.
Natural Gas is trading at 3.836 down 70 points continuing the weekly down trend.Weather forecasts earlier in the week called for hot temperatures increasin residential demand, but when natural gas was unable to break the resistance at the $4 mark traders reversed course and sold to book profits. Generally in the summer demand for natural gas spikes as utilities react to increased loads from air conditioners. This summer has been like this past winter — cooler than normal. In fact, this summer is flirting with record cool temperatures across many cities across the US, and that has reduced the demand for natural gas. This has meant that inventories are recovering faster than expected, and that has reduced the fear premium that existed in early spring. Gas inventories are still below normal for this time of year, but the potential for more cool weather has investors betting that inventories will be in good shape once high demand season begins. A fresh public opinion poll reveals that natural gas production from shale enjoys widespread backing across the country, with more than three times as many supporting production than opposing. The issue of shale gas production, by hydraulic fracturing of rocks (‘fracking’), has provoked strong responses, with opinions divided on key issues such safety and potential damage to the environment. Support for shale gas development alongside renewable energy: 59% would be willing to see natural gas from shale production go ahead as long as it forms part of a mix that includes renewable energy sources, with only 12% disagreeing.
Copper recovered 7 points but remains near a recent low after topping 3.27 last month the commodity is trading at 3.098 unable to recover after the finance scandal in China and continued worries over Chinese demand and lackluster data as of late. Metals moved lower on Thursday on the heels of weaker than expected figures on gross domestic product out of France and Germany, which set off a bit of a landslide in market commentary highlighting the need for the European Central Bank to step up its easing measures. As well, reports that France and the UK might act to arm Iraq’s Kurds may also have added to the downward pressures on prices.
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