Commodity Research Report Ways2Capital 22 August 2016


Posted August 22, 2016 by ways2capital

Gold prices edged lower in European trade on Wednesday, reversing overnight gains as market players looked ahead to minutes of the Federal Reserve’s July policy meeting

 
MCX - WEEKLY NEWS LETTERS
✍ GLOBAL UPDATE
Gold prices edged lower in European trade on Wednesday, reversing overnight gains as market players looked ahead to minutes of the Federal Reserve’s July policy meeting, which many feared could be more hawkish than the statement. Gold for December delivery on the Comex division of the New York Mercantile Exchange shed $ 9.95, or 0.73%, to trade at $1,346.95 a troy ounce by 3:05 AM ET, after rising $ 9.40, or 0.7%, on Tuesday. Investors will be focusing on minutes of the Federal Reserve’s most recent policy meeting due at 2:00 PM. for further clarity on the timing of the next U.S. rate hike.
Gold edged back above $1,350 an ounce on Thursday as the dollar gave up earlier gains against a currency basket, with uncertainty over the outlook for U.S. monetary policy continuing to underpin the metal. Palladium slid, however, after surging more than 4 percent in the previous session in a rally triggered by a wave of short-covering after recent hefty gains. The metal is testing support at the $700 an ounce level.
Glencore has shelved plans to sell a copper mine in Chile that was expected to fetch about $500 million, after failing to achieve a high enough price, according to people familiar with the situation. Along with other big mining companies, Glencore has been seeking to offload a range of assets to reduce debt following a commodities price crash, but a rally on raw materials markets and in the value of share prices of mining companies this year has taken away the need for urgent sales at any price.
Extending gains for the second day, nickel prices advanced by 0.61% to Rs 689.30 per kg in futures trading today as participants engaged in enlarging their positions, tracking a firm trend at spot market on rising demand from consuming industries.At the Multi Commodity Exchange, nickel for delivery in August month gained Rs 4.20, or 0.61% to Rs 689.30 per kg in business turnover of 1,893 lots.
Taking weak cues from overseas markets, silver prices moved down by 0.22% to Rs 46,232 per kg in futures trade today as participants cut down their bets.At the Multi Commodity Exchange, silver for delivery in September declined by Rs 104 or 0.22% to Rs 46,232 per kg in business turnover of 646 lots.Likewise, the white metal for delivery in December contracts was trading lower by Rs 94 or 0.20% to Rs 47,353 per kg in 18 lots.
Crude oil held gains in Asia on Friday with Brent comfortably above $50 a barrel as an output freeze by key producers was said to be gaining traction, though vast global oversupply continues to hang over the market. On the New York Mercantile Exchange, WTI crude for September delivery gained 0.27% to 48.35 a barrel. On the Intercontinental Exchange, Brent crude for October delivery inched up 0.06% to $50.92 a barrel. Overnight, Brent crude futures surged above $50 for the first time since Fourth of July, while hitting its highest level in nearly two months, as global oil prices continued to rally on the prospects that major producers could reach a deal to stabilize worldwide energy markets at a closely-watched meeting next month.

✍ GOLD
Gold prices advanced for a second day by gaining Rs 55 to Rs 31,130 per 10 grams at the bullion market on Tuesday, tracking a firming trend overseas amid increased buying by Jeweller s to meet rising demand from retailers at domestic spot market. Silver also recovered by Rs 500 to Rs 47,000 per kg due to increased off-take from coin makers and other consuming industries.

Gold cut its gains on Tuesday after mixed US economic data failed to give clarity on the prospects for a US interest rate rise this year and the US dollar pared losses from a seven-week low. US consumer prices were unchanged in July as the cost of gasoline fell for the first time in five months and underlying inflation moderated, while US housing starts unexpectedly climbed and industrial production rose more than forecast in the same month.

Gold imports more than halved to $ 4.97 billion in the first four months of the current fiscal, which is expected to keep a lid on the current account deficit. The sliding prices of the precious metal in both global and domestic markets are seen as a contributory factor for the 52.5 per cent decline. Gold imports stood at $ 10.47 billion in April-July of 2015. The in-bound shipments contracted for the sixth consecutive month in July by 63.65 per cent to $1.07 billion, according to Commerce Ministry data.

The global economic crisis will continue to drive the demand for gold and silver worldwide. Bullion experts at the India International Gold Convention organised by Foretell Business Solutions Limited unanimously expressed that global demand will continue to remain strong, and price higher. It is also expected that gold demand in India, which was declined in first half of calendar year 2016, will increased in second half of the year. "Demand is expected to come back and price discounts expected to narrow form October. The overall demand is expected to remain around 380 to 400 tonnes for second half of calendar 2016 on account of increase in farmers' incomes, salary arrears to central government employees under 7th Pay Commission and festive demand," said Debajit Saha, head of bullion research at Foretell Business Solutions Pvt Ltd.Gold demand remained extremely poor in the first half of current calendar year. Market had entered into dip discount, impacting official supply of gold. Discount increased the moment government announced levy of the excise duty, which prompted jewellers to go on a long strike. Three factors pulled demand down. High import duty incentivized parallel imports. Announcement of excise duty and the subsequent strike, lead to destocking at jewellers end. Last, unanticipated increase in price of gold in early 2016, pushed domestic prices and drove demand out further, besides increasing scrap flows.

Physical gold demand in Asia improved modestly this week as consumers returned to the market ahead of upcoming festivals in India and China when demand is usually high. In India, the world's second biggest gold consumer, discounts narrowed as jewellers started buying for the festive season. Dealers were offering a discount of up to $52 an ounce over the global spot benchmark XAU= , down from up to $60 last week.
"Large jewellers have started building inventory for the upcoming festival season. In coming weeks, demand is expected to pick up further if prices remain stable at the current level," said a Mumbai-based bullion dealer with a global bank. India's gold demand may rise in the second half of 2016 after falling to the lowest in seven years in the first half as monsoon rains spur rural demand during the peak festive season, the World Gold Council said on Aug. 11. of gold demand in India comes from villages, where jewellery is a traditional investment.




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Last Updated August 22, 2016