Commodity Trade Mantra

World Bank urges Africa to manage gas wealth

Africa

World Bank urges Africa to manage gas wealth

Reuters : East African countries that have made major gas discoveries need to set up institutional frameworks to manage their new-found wealth effectively and use it to diversify their economies, a senior World Bank official said on Thursday.

The east African coastline is fast becoming a major energy hub with significant discoveries of gas and oil in Mozambique, Tanzania, Uganda and most recently Kenya.

The Washington-based development lender said Tanzania, east Africa’s second-biggest economy, is expected to see an increase in revenue of up to $3 billion a year following major offshore gas discoveries in the country. “The discoveries will have a massive impact. If I take the case of Tanzania, once the gas project is in place, we expect around $2-$3 billion of revenue a year,” newly appointed World Bank vice president for Africa, Makhtar Diop, told Reuters in an interview.

“This is a lot of money and it will require early investment now in this window of four to five years to put institutional settings to be able to really manage very well those resources … before the big investments come in the country.”

British gas producer BG Group and explorer Ophir Energy said this month they had found more gas off the coast of Tanzania, raising hopes that the country will become a major new gas supplier. Norwegian oil and gas firm Statoil also announced in February it has found natural gas offshore Tanzania.

Mozambique, the fastest-growing energy player in the region, estimates that energy firms will spend $50 billion over the next decade to develop its liquefied natural gas (LNG) industry. Diop said there was a need for African countries to manage their expected revenues from gas and oil effectively and diversify their economies.

CHINA SLOWDOWN A CONCERN

“It is a question that we are facing in a lot of African countries now that they have either discovered new resources or have been able to manage well the first phase of the commodity boom,” he said.

“One of the priorities that we have in our work now is to really help build the capacity by learning from other continents the best experience that we have in terms of management of the resources,” Diop said. He said energy-rich African countries must ensure they do not become a one-sector economy.

“Africa has had a very good period of high growth … the growth in Africa has been sustained at around 5 percent for the last five to six years and that was based on good management of macroeconomic fundamentals, but also a good management of the commodity boom,” said Diop. “So now I think the challenge is really to be able to diversify the economy and have a growth which is an inclusive and job-creating growth.”

He also said Africa was now better prepared to deal with expected shocks of the euro zone crisis, but warned China’s slowing economy was a concern for the continent. “I think that what happened in 2008 and 2009 showed that most of the African economies were better prepared than they used to be in the past,” he said.

“Not only in Europe, there is a general slowdown. China also has revised downward its growth prospects for 2012 and as you know China is an important driver of growth in Africa because of the commodity element.”

Source: Reuters

INR at fresh all time low of 56.50 vs US dollar

INR trading

INR at a new all time low of 56.50 vs US$.

The INR (Indian rupee) commenced at fresh record low levels on Thursday, May 31, 2012 on surging risk aversion over unrelenting euro zone worries that battered risk sensitive assets. The domestic currency opened lower by 26 paise at Rs 56.50 to a dollar but managed to trim some of its initial drop to touch a high of 56.37 so far during the day. U.S.$ Jun Futures shot up to 56.78 INR from the previous close of 56.44. As alerted earlier, INR may decline further to 58.60 till remains below 56.35 levels.

India’s Gross Domestic Product (GDP) grew by 5.3% in the January to March quarter of FY12 from the year-ago period, after expanding by 6.1% YoY in the third quarter, the Government said. GDP growth in the second quarter stood at 6.7% while the same in the first quarter was at 8%.

With a grim domestic GDP figure, and with inflation soaring in double digits, markets would now turn to the Reserve Bank action next month where the central bank would have to do the balancing act between rising inflation and slowing growth. Meanwhile, post the GDP data, markets have dropped with the benchmark Sensex close to 16,100 levels and rupee continues to hover at fresh record lows near 56.50 levels.

Sliding global as well as domestic shares and a tumbling euro against a surging Dollar weighed down the domestic currency. In the spot currency, the Indian unit was last seen trading at 56.39, down around 15 paise or 0.27% as compared to previous close at 56.24.

The euro hit a near two-year low over mounting concerns Spain may need assistance to fix its leveraged banking sector in a shrinking economy. Surging borrowing costs in troubled Spain heightened fears that more countries in the euro zone will be hit hard by the region’s debt crisis. The euro fell to as much as 1.2357 against the greenback early in Asia and was currently quoting at 1.2388, marginally off early lows.

Weakness continued on the domestic bourse in morning trade as fresh worries about Spain and Italy sparked fears of a deteriorating situation in Europe and rising global uncertainty saw investors dump risky assets. Foreign institutional investors (FIIs) sold Indian shares worth a net Rs 10.75 crore on Wednesday, 30 May 2012, as per provisional figures from the stock exchange. At the time of writing, the BSE Sensex was down 167.33 points or 1.03% to 16,144.82 whereas S&P CNX Nifty was down 47.25 points or 0.95% to 4,903.50.

Crude Oil trading slips below support levels, into Bear market.

Crude Oil trading

Crude Oil trading slips below support levels, into Bear market.

Crude Oil has breached the strong support at $88.30 yesterday. As alerted earlier, any breach with a sustained momentum below $88.30 may trigger a strong bearish trend for Crude Oil with a longer term target set towards $78.40. For the day, Crude oil below $88.57 will fall further to $86.41, $85 & then to a small support of $82.72. Crude Oil for July delivery traded at $87.42 a barrel, headed for the biggest monthly drop in more than three years on speculation Europe’s worsening debt crisis and a slowing U.S. economy will reduce fuel demand. Futures are trading 20% lower than their highest settlement this year since its peak close this year of $109.77 a barrel on Feb. 24, a technically calculated magnitude, commonly understood as a bear market. Crude Oil peaked in February on concern that tension with Iran will disrupt global supplies. Crude Oil prices are down 16% this month, set for the largest monthly drop since December 2008, and 11% lower this year.

On rises from $89.20, Crude Oil may face resistance at $93.70 & $96.85. Only a break above $97 will push Crude Oil to 101.20 & then to 104.50. Crude Oil will get highly bullish only on a break with strong momentum above $105 with focus on a target of $118.

Brent oil for July settlement decreased 0.3% to $103.20 a barrel on the London-based ICE Futures Europe exchange. Prices have dropped 14% this month, the most since May 2010. The countries using the euro accounted for about 12% of global oil demand in 2010 & U.S.accounted for about 21%. Oil may extend its decline in New York as the monthly moving average convergence-divergence indicator falls below its signal line, showing a loss of positive momentum.U.S.crude output rose 90,000 barrels a day to 6.24 million in the week ended May 18, the highest level since February 1999, Energy Department data showed last week. Oil production in the Organization of Petroleum Exporting Countries (OPEC) climbed 305,000 barrels to 31.405 million barrels a day in April, the most since October 2008, according to a Bloomberg survey. So-called long positions in crude, or wagers on rising prices, outnumbered short bets by 136,751 contracts in the week ended May 22 on the Nymex. That’s 12% higher than the average in U.S. Commodity Futures Trading Commission data compiled by Bloomberg going back to at least June 2006.

An Energy Department report today will likely show that supplies climbed 1 million barrels to 383.5 million last week, the most since 1990.U.S.oil stockpiles dropped 353,000 barrels to 385.9 million last week, according to the American Petroleum Institute.

Crude Oil Prices fell yesterday as the cost of protecting Spanish bonds against default climbed to a record yesterday and a Greek poll showed support for anti-austerity parties before elections. PendingU.S.home sales slid the most in a year in April, according to a report.

Gold Prices remain directionless & volatile On European Crisis

Gold Prices

Gold Prices remain directionless

Gold prices poised for the worst run of monthly losses in almost 13 years as concern that Europe’s fiscal crisis is escalating drove investors to seek the dollar as a haven over the precious metal. Bullion is 6.1% lower in May for its biggest drop this year as the dollar rallied 5.4% against a six-currency basket including the euro. A fourth monthly decline would be the metal’s longest run of losses since the period to August 1999.

Gold prices: Gold for June Delivery above $1556.2 can rise to a resistance of $1578.7 & again decline. Only on a rise with sustained momentum above $1580.5, Gold prices may rise further to $1593.1 & then to $1616.5 also. Gold price for August delivery will then face strong resistance around $1657. On further strength of theUS$/ Euro, Gold may slip to a support of $1539.5 on a decline below $1552. But a decline with a strong momentum below $1537.3 will push Gold price for June Futures sharply down towards $1515.7 & then to $1499.5 also. A close below $1540 will indicate a strong bearishness for Gold prices & Gold prices may sharply decline to $1270 levels also.

Silver prices: Silver July Futures above $27.91, may rise to a resistance of $28.30. Only on a rise with sustained momentum above $28.36, Silver prices may rise further to $28.63, $29.08 & then to $29.53 also. On a downside move below $27.73 Silver may slip to $27.50. But a decline with a strong momentum below $27.46 will push Silver sharply down towards $27.04, $26.74 & then $26.32. Silver, as repeatedly alerted, has a strong technical support at $26.20 on the downside. Any breach with a sustained momentum on closing basis below this range may signal a strong bearish trend for Silver & may decline further to $22.60.

Italy failed to meet its maximum target at a debt sale yesterday, Spain struggled to bolster its banks and a Greek poll showed gains for parties opposed to austerity that came with an international bailout, driving the euro to a two-year low against the dollar. Data showed Japan’s industrial production rose less than forecast in April, while the number of Americans buying previously owned homes fell in April by the most in a year, helping Asian stocks and commodities including oil and copper extend declines today.

The daily correlation coefficient between gold and the dollar is at -0.301, compared with -0.169 in October. A figure of -1 means the two tend to move in opposite directions, and 1 means they move in lockstep. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, are set for a third monthly decline, according to data on the company’s website.

Gold for August-delivery fell as much as 0.3% to $1,560.70 an ounce on Comex in New York and was last at $1,564. Spot silver fell as much as 0.5% to $27.7625 an ounce, and was last at $27.85. It’s set for a third monthly loss, also the worst run since 2008.

Silver, Gold trading to remain volatile as Gold June Futures close to expiry.

Silver, Gold trading

Silver, Gold trading to remain volatile

Gold trading remained mixed in Asian trade Wednesday as the U.S. dollar rose on the back of a credit rating downgrade on Spain. Spain’s credit level was cut for the third time in less than a month, as the country’s weak banks continue to worry investors. Gold is likely to remain volatile as investors continued to fret about the euro zone debt crisis with Spain’s borrowing costs spiraling towards unsustainable levels, keeping the euro close to its lowest level in nearly two years.

Political uncertainty in Greece will keep investors on edge for now. Though pro-bailout conservatives have topped recent opinion polls, analysts said the vote on the June 17 elections was still too close to call. Policy makers are waiting for clarity on the status before they allow accommodation to support growth. Until the market is convinced of that intention, Gold could remain in a directionless drift. Investors are waiting for central banks to respond with more monetary measures to help shore up the economies.

The ICE dollar index, which gauges the greenback’s performance against a basket of six other major currencies, climbed to 82.564 from 82.468 in North American trade Tuesday afternoon.

The European Commission will set out its economic strategy for the euro zone today. The Commission will issue specific recommendations for each of the 27 European Union members, as well as for the 17 sharing the euro. Once endorsed by EU leaders in June, the executive’s plans will become binding for the 27-nation bloc. Some economists expect a switch in the Commission’s focus to structural budget deficits, which exclude one-off items and the effects of the economic cycle, from headline deficits, which at a time of recession are larger. Some policymakers have saidMadridcould get more time to reduce its deficit if it presented a credible 3-4 year plan of fiscal adjustment. The need for more time was underlined last week, when previously undisclosed data showed Spain’s 17 autonomous regions will need to refinance 36 billion euros of debt this year, rather than the 8 billion euros initially expected. It also faces a 19 billion euros bill to rescue troubled lender Bankia.

Gold trading has recently been moving in lockstep with the Euro, which fell to its lowest level against the dollar in nearly two years as investors continue to fret about Spain’s vulnerable fiscal conditions. Continuous weakness in other currencies and strength in the dollar have kept gold, precious metals and commodities generally depressed.

Holdings of the iShares Silver Trust, the world’s largest silver-backed exchange-traded fund, dropped nearly half a percent from the previous session to 9,619.03 metric tons (10603.1 tons) by May 29, the lowest in nearly two weeks.

Technical levels: Gold trading may now face resistance at $1605 & then at $1657 levels. Gold will get hyper Bullish only on a break with sustained momentum above $1765 to $1801 range.  A decline with a repeat close below $1540 may send Gold sharply down to $1270 levels also. Silver trading may now face immediate resistance at $29.71, $30.70 & then at $32.50 levels. A longer term strong Bullishness in Silver will be triggered only on a sustained break above the $33.40 to $34.75 range. Silver has under performed gold this month, on track to decline 7.6% after falling to its lowest price this year at $26.73. Silver, as repeatedly alerted, has a strong technical support at $26.20 on the downside. Any breach with a sustained momentum on closing basis below this range may signal a strong bearish trend for Silver & may decline further to $22.60.

Crude Oil rises on Positive sentiments.

Crude Oil trading

Crude Oil rises on Positive sentiments.

Crude Oil has a strong support at $88.30. On rises from here, Crude Oil may face resistance at $93.25 & $96.85. A break above $97 will push Crude Oil to 101.20 & then to 104.50. Crude Oil will get highly bullish only on a break with strong momentum above $105 with focus on a target of $118. As of now, any breach with a sustained momentum below $88.30 may trigger a strong bearish trend for Crude Oil with a target set towards $78.40.

Crude Oil rose for a third day in New York as speculation that economic growth will boost fuel demand in the U.S. and China, the world’s biggest crude consumers, countered concern Europe’s debt crisis will worsen. Crude for July delivery climbed as much as $1.13 to $91.99 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.36. Current month prices are down 7.6% this year.

Natural gas extended its decline in New York amid forecasts that cooler weather will follow a heat wave, limiting demand for fuel at power plants. Gas for June delivery fell as much as 3.4% from the settlement on May 25.

Gold, Silver trades expected to be volatile.

Gold, Silver trading

Gold, Silver trades expected to be volatile.

Gold may now face resistance at $1605 & then at $1657 levels. Gold will get hyper Bullish only on a break with sustained momentum above $1765 to $1801 range.  A decline with a repeat close below $1540 may send Gold sharply down to $1270 levels also. Silver may now face immediate resistance at $29.71, $30.70 & then at $32.50 levels. A longer term strong Bullishness in Silver will be triggered only on a sustained break above the $33.40 to $34.75 range. Silver has underperformed gold this month, on track to decline 7.6% after falling to its lowest price this year at $26.73. Silver, as repeatedly alerted, has a strong technical support at $26.20 on the downside. Any breach with a sustained momentum on closing basis below this range may signal a strong bearish trend for Silver & may decline further to $22.60. Holdings of silver-backed exchange-traded funds were at a one-month high on Friday at 489.3 million ounces, though they remain around 7% below the record high they hit in April 2011.

Gold remains firmly tied to the currency markets, climbing earlier in the day after opinion polls ahead of next month’s Greek elections showed pro-bailout conservatives in the lead, lifting the euro on hopes Greece may stay in the euro zone. The news boosted assets seen as higher-risk across the board, but European shares later pared gains on fears over the outlook for Spanish banks, while oil prices also came off highs. The bond markets pointed to ongoing worries over euro zone debt, with the premium investors require to hold Spanish government bonds over their German counterparts earlier on Monday hitting its highest level since the euro was launched.

Data from the U.S. Commodity Futures Trading Commission showed that in the week ended May 22, speculators cut net bullish bets on U.S. Gold to the lowest level since December 2008 as the rise in short positions outpaced the up tick in longs.

A release from S&P/Case-Shiller today is expected to show U.S. home prices declined 2.6% in the 12 months through March, the smallest decrease since the year ended December 2010 & the Conference Board’s consumer confidence index climbed to 69.5 this month from 69.2 in April, according to economists.

A seasonally weak-demand period is currently seen for Gold in India, its biggest global consumer. Physical demand remains depressed by the weak rupee. The wedding season is coming to an end and the monsoon is approaching. Fresh physical buying in India will now commence during the festive seasons starting August 2012.

The INR declined to a new low of 56.38, as also indicated earlier on the break of the important 54.28 support level. The Indian Rupee has a strong resistance at 55 now, which if breached strongly, will lead to 52.75. But if the INR declines from the rise to 55 as seen today, then the lower level of 56.35 will again be tested, which in turn if breached, may trigger fresh downside bearish momentum towards 58.60 per US Dollar as also alerted earlier.

 European firms plan for Greek unrest and euro exit.

Shares of Bankia, which had been suspended on Friday, ahead of the bailout news and took several minutes to begin trading on Monday, sank to an all-time low of €1.11 at one point, but ended off 13% to €1.36, according to FactSet Research.

On Friday, Bankia said it would need to ask the government for a bailout of €19 billion (around $24 billion), a figure that exceeded some estimates calling for a recapitalization of around €15 billion. The bank, formed of a merger of several savings banks, is a casualty of the collapse of Spain’s housing market that triggered a recession and ignited another leg of the sovereign-debt crisis.

Copper rises on hopes of China stimulus

Copper China

Copper rises on hopes of China stimulus

Copper edged higher on Monday on hopes of more stimulus from China, and after Greek conservative parties topped opinion polls, helping calm fears over contagion should Athens default on its debt and leave the euro.

A conservative victory on June 17 would raise the odds that Athens will form a government that would agree to harsh bailout terms by the European Union and the International Monetary Fund, enabling it to stay in the currency club.

But risks remain high, as Spain is said to be considering issuing more debt to recapitalize its fourth-largest lender, Bankia.

In China meanwhile, copper got support from news that Beijing may subsidize vehicle purchases in rural areas, the latest of a number of moves signaling the Chinese government’s attempts to stimulate the economy.

Three-month copper on the London Metal Exchange rose 0.5 percent to trade at $7,675 a tonne by 1433 GMT from $7,639 on Friday, with volumes expected to remain light given public holidays in Europe and the U.S.

Copper prices have dropped more than 8 percent this month alone, with demand prospects glum not just in Europe, but in China, which accounts for around 40 percent of the world’s copper consumption.

“The market is taking a breather after two weeks of heavy losses. There is a bit of optimism as polls showed the pro-bailout party is ahead in Greece but I am skeptical,” said VTB Capital analyst Andrey Kryuchenkov. “I can’t see a sustained recovery. My guess is that copper is going to hold at $7,000-7,800 until there is more news about Greece and more economic data.”

Surveys showed on Saturday Greece’s conservatives have regained an opinion poll lead that would allow the formation of a government committed to keeping the country in the euro zone.

But the euro zone remains a wild card to many investors, who worry that debt problems there will worsen and further crimp the region’s demand for copper and other commodities.

German central bank chief Jens Weidmann dismissed French-backed calls for the use of joint euro bonds to boost economic growth inEurope. He said in an interview in French newspaper Le Monde that “this debate irritates me a bit.”

In China, a Qingdao-based copper buyer said until more details were released on various investments and subsidies by Beijing, investors would wonder how these would stimulate domestic consumption in the longer term.

“The earmarked investments and subsidies will create more demand for metals in the short term, but it remains to be seen how these projects will stimulate domestic consumption and help China restructure its economy, and if it will improve liquidity or just increase debt held by local governments,” he said.

On a fundamental level though, copper remained in short supply, with the global market in a 110,000-tonne deficit in February, the International Copper Study Group (ICSG) said last week.

In industry news, the incoming CEO of Codelco has signaled there will be no change in the Chilean state copper giant’s attitude toward its right to acquire 49 percent of Anglo American Plc’s assets in south-central Chile.

Also, the world’s No. 3 copper mine, Chile’s Collahuasi, is gradually resuming mining operations following the accidental death of a worker late Saturday, spokeswoman Bernardita Fernandez told Reuters on Sunday.

In other metals, soldering material tin was at $19,751 a tonne from $19,750, while zinc, used in galvanizing, was at $1,905 from $1,908.50.Battery material lead was at $1,943.75 versus $1,950, aluminum was at $2,019.50 from $2,013.50, while stainless-steel ingredient nickel was at $17,060 from $17,050.

Source: Reuters

Gold business in China: ICBC’s big bullion dreams.

Gold China

Gold business in China

The world’s biggest bank by market value, ICBC is the top player by volume on China’s Gold and futures exchanges, but its participation in foreign markets is limited to over-the-counter trading, which reached a total $90 billion last year. Industrial and Commercial Bank of China Ltd is seeking membership of overseas exchanges and aims to become a major global bullion market maker, a senior executive said on Monday.

Emboldened by Beijing’s ambitions to have a bigger say in global commodity prices, ICBC now has an eye on bourses such as COMEX and on joining the 11 market makers of the London Bullion Market Association (LBMA).

These quote continuous two-way bid and offer prices for gold, silver, platinum and palladium throughout the London day, providing a liquid market in which to trade.

“We hope to play a bigger role in the global precious metals market and become a major market maker, like Barclays,” Shen Shisheng, ICBC vice-general manager of financial markets, told Reuters on the sidelines of a conference in Shanghai.

Barclays Capital is among the gold fixing members on the LBMA. The newest LBMA market maker, Merrill Lynch, was appointed in January last year. ICBC became an ordinary member of the LBMA late last year, the first commercial bank in China to join the association.

Given the bank’s large trading volume, Shen said that ICBC has recently started price quotation for gold transactions on the Shanghai Gold Exchange and has begun acting as an agent for non-member clients. It has also opened offices in London and New York and plans to start price quotation in both cities soon, he said.

ICBC also wants to grow its financial products to service the full supply chain of the bullion market, including loans to miners and smelters, physical gold leasing, hedging and brokering.

“We now have banking operations in 34 countries and we need to expand our gold services and products to other major markets,” Shen said.

China’s gold markets have boomed in recent years as high inflation and poor performance in equities markets have seen investors turn to bullion as a safe-haven asset.

According to the U.S. Futures Industry Association, China was fourth in terms of volume of gold futures contracts traded in 2011.

Total trade for China’s gold futures hit 722.18 million lots in 2011, a 113% jump from a year ago, while turnover jumped nearly 180% to 2.55 trillion yuan ($401.9 billion), according to data from the Shanghai Futures Exchange.

Source: Reuters

Africa 2012 GDP growth seen at 4.5%

Africa

Africa 2012 GDP growth seen at 4.5%

The African Development Bank said on Monday it forecast the continent’s economy would grow 4.5 percent this year and 4.8 percent in 2013, but warned the festering euro zone crisis may hurt demand for African exports.

Africa’s economy grew 3.4 percent in 2011, with North Africa’s economic output expanding 0.5 percent and sub-Saharan Africa growing by more than 5 percent.

“The economic outlook for Africa remains optimistic. Natural resource-rich economies are expected to do better than more mature emerging economies,” AfDB said in its annual African Economic Outlook.

Source: Reuters

Euro & Gold rise on Greece News & Optimism

Euro & Gold trading

Euro & Gold rise on Greece Optimism

The Euro regained its footing & climbed up 0.7% to 1.2598, after dropping last week to its lowest level versus the dollar since July 2010. June will be a key month as investors await the Greek election.

The Euro strengthened for the first time in five days and Asian stocks rebounded from a five-month low after opinion polls of Greek voters eased concern that the country will exit the euro zone (As fore-casted earlier) & also as data showed trader bets for a decline in the currency reached a record high. Greece’s conservative New Democracy political party, which supports the European Union’s bailout plan is gaining ground ahead of June 17 parliamentary elections & was placed first in all six opinion polls published on May 26 as campaigning continued for next month’s general election.

The Euro may now find strong resistance at 1.2790 levels & support at 1.2475 or on any further weakness, lastly at very strong support of 1.2385. INR today bounced up to 55 as expected from a decline to 56.38, Forecasted to find resistance at 55 from 56.38 /US$ last week.

More than $4 trillion was erased from the value of global equities in the first three weeks of the month on concern Greece will abandon the euro. Hedge funds and other large speculators increased wagers the euro will drop versus the dollar to 195,361 contracts in the period ended May 22, the most on record going back to 1999, data from the Commodity Futures Trading Commission show.

Gold also edged higher today, tracking a rebound in the euro after opinion polls showed the Greek public favored pro-bailout conservatives, easing some nervousness in financial markets, but uncertainty over the euro zone undermined market conviction. Fears that Greece may leave the euro-zone have sent gold prices plunging in recent weeks. Greek fears have sent investors ditching the euro in exchange for the dollar, a traditional hedge to gold, and a rising dollar often translates into falling gold prices. A strong showing by New Democracy could lead to a coalition government in favor of sticking with austerity in exchange for bailout funds, which could stabilize the euro which in turn would strengthen Gold prices.

Speculators cut their net long position in U.S.gold futures and options to its lowest since December 2008 in the week ended May 22. Net long position in silver dipped to the lowest level since November, 2008, the U.S. Commodity Futures Trading Commission said.

US markets remain closed for the day on account of Memorial Day & trading may remain range bound for the day.

Spain’s wealthy Catalonia region sought central government help as it was running out of options for refinancing debt this year, adding to worries about Spain’s finance. Spain’s borrowing costs shot up at a bond auction on Thursday, last week and its troubled banks suffered a double blow, with shares in part-nationalized Bankia diving and 16 lenders – including the euro zone’s biggest – having their credit ratings cut.

This week investors will look atU.S.non-farm payrolls and China’s official purchasing managers index data to gauge the health of the world’s top two economies.

Silver to continue 2011 Boom that was cut short, outperform Gold

Silver to outperform Gold

Silver to continue 2011 Boom, outperform Gold

Silver demand, especially for investment purposes continued northern journey and climbed up 20% in the first ten weeks of this year. According to the recently issued World Silver Survey by GFMS, global mining production (supply) for silver only saw a 1.4% increase throughout 2011, although industrial demand and investor support continued to be strong. This news among other investment reasons, justifies the potential for higher silver prices in the near future; as total demand and industrial usage rises, amid constrained supply and production.

According to the Silver Institute, investors are increasingly acquiring Silver in many forms. Globally, Silver-based exchange-traded-funds (ETFs) account for 586 million ounces of Silver, up from 576 million ounces at the end of 2011. Silver outperformed platinum, palladium and gold during the period as global Silver industrial demand also continues to improve after a record in 2011. According to The Future of Silver Industrial Demand, a report commissioned by the Silver Institute and released last March, Silver industrial demand is forecast to grow by 36% from 2010 through 2015.

China continues to play a significant role in Silver’s demand outlook. China said its net imports of silver nearly quadrupled to more than 3,500 metric tons in 2010, boosted by sharp increases in demand by the industrial sector and the jewelry industry. Silver stocks have been relatively flat over the last month after the Global X Silver Miners ETF (SIL) surged more than 13% between January and Mid-February. Silver stocks have stagnated since China’s factory output, retail sales and investment data all slowed in February while its inflation rate dropped to a twenty month low.

India News: Outward Flow of Money are Bad News.

Indian Economy

India News: Outward Flow of Money are Bad News.

India sees Money flow outward as Foreign Co’s pull more money out of India. Foreign direct investment, the sort of sticky long-term money India craves to fund its current account deficit and build up its infrastructure, may not be so stable after all.

According to a Nomura report, multinational companies have been pulling money out of India at an accelerating rate, moving $10.7 billion out of the country in 2011, up from $7.2 billion in 2010 and just $3.1 billion in 2009. Outward flows are bad news for a country that this week saw its rupee currency hit a new record low as investors worry about its hefty fiscal and current account shortfalls, slowing economic growth and policy gridlock.

Still, corporate funds continue to enter India even as existing investors exit. Inbound foreign direct investment surged 88 percent to a record $36.5 billion in the fiscal year that ended in March, according to official data. “Global deleveraging may have forced companies to sell their Indian assets and repatriate funds to their home country,” Nomura analysts wrote in the Friday note.

“At the same time, domestic push factors such as slowing potential growth, the high cost of doing business and regulatory uncertainty have weakened the investment climate, likely causing this erosion. This is not a good sign.”

Telecoms companies Etisalat ETEL.AD of Abu Dhabi and Bahrain Telecommunications Co BTEL.BH are leaving India after their mobile phone licences were among those ordered cancelled by an Indian court amid a corruption probe.

New York Life NYLIN.UL recently exited its 26 percent stake in an Indian insurance venture with Max India (MAXI.NS) for $530 million, while U.S. mutual fund giant Fidelity Worldwide Investment recently struck a deal to unload its India unit to local company L&T Finance Holdings (LTFH.NS).

Foreign companies have been increasingly frustrated by regulatory uncertainty and a lack of reforms. Rules that would allow foreign companies into the supermarket and airline industries are stalled.

Vodafone (VOD.L), the world’s biggest mobile carrier, has repeatedly clashed with authorities in India, which is trying to collect more than $2 billion in taxes from it through a retroactive law change, even after India’s highest court ruled in the company’s favor. Vodafone, the biggest overseas corporate investor in India, has said it will not walk away.

The Nomura report said the services, manufacturing and real estate sectors probably saw “the maximum outflow”.

Source: Reuters

Gold Futures Margins Lowered: CME Group

Gold trading: CME Group

Gold Futures Margins Lowered: CME Group

CME Group is cutting margins for gold futures, the exchange announced late Thursday.

The new rates will be effective after the close of business on Tuesday, CME Group said. The exchange operator also announced margin changes for a number of other markets, mostly lower, including reduced margins for crude oil, gasoline, lean hogs and lumber.

CME Group said the new margins were part of the “normal review of market volatility to ensure adequate collateral coverage.”

For the main 100-ounce gold contract on the Comex division of the New York Mercantile Exchange, the initial margin for new speculative positions will fall to $9,113 from $10,125. The maintenance margin for existing speculative positions, plus all hedge positions, will fall to $6,750 from $7,500.

Margins were also trimmed for the smaller-sized gold contracts.

The full CME Group notice can be seen at  http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv12-221.pdf.

Gold, Silver Indian imports : $61.5 bn value in 2011-12

Indian Gold, Silver imports : $61.5 bn value in 2011-12

The value of Indian Gold and Silver imports rose sharply in last fiscal year, as per the latest data provided by Ministry of Finance. As per the World Gold Council, India is the largest consumer of gold in the world followed by China.

In a written reply in India’s upper house of Parliament, Minister of State for Finance Namo Narain Meena said, “Imports of gold and silver have soared to $61.5 billion in 2011-12, from $22.8 billion in 2008-09. According to official figures, value of imports of gold and silver was $22.8 billion in 2008-09, $ 29.6 billion in 2009-10, $42.5 billion in 2010-11 and $61.5 billion in 2011-12.

He continued that, “The current account deficit (CAD), which arises when import of goods and services exceeds export, had touched 4% at the end of December 2011. It was 3.3% during the same period of previous year.”

“As far as gold and silver are concerned, India is a net importer and the prices of these precious metals depend on international prices. The volatility in the prices of gold and silver in India is mainly due to the volatility in the prices of these commodities in the international markets,” he said. In a separate reply, Meena said to lower the impact of gold import on CAD, the government in Budget for 2012-13 has proposed to increase basic customs duty on standard gold bars, gold coins of purity exceeding 99.5% and platinum from 2% to 4%.

India’s April imports of gold and silver fell to $3.1 billion, compared to $4.7 billion in the same month last year- a decline of about 34%. India’s gold imports slowed to 200 tonnes in the first quarter of calendar year 2012. Similar to global trends, the contraction was led by investment demand while jewelry demand contracted 19% during the same period. In addition to portfolio shifts, this could be a result of the government’s recent focus on curbing gold demand (steps include raising import duties on gold from 2% of the value to 4% and restraining loans against gold collateral). All these measures, coupled with sharp depreciation in the rupee, have resulted in lower imports.

INR rebounds from record low 56.38 : Declined to 56.35 as Forecasted

INR rebounds from record low 56.38

INR today bounced up as expected from a decline to 56.38, Forecasted to touch 56.35 from 54.28 /US$ last week. The Reserve Bank of India (RBI) governor did not rule out selling dollars directly to oil importers. The INR also gained as traders saw sporadic intervention from the RBI, while other traders cited dollar selling by custodian banks as well as exporters converting their foreign currency holdings on the last day of the two-week deadline mandated recently by the central bank. The INR closed at 55.65/66 per dollar after hitting a record low of 56.40 hit earlier in the session. The pair had closed at 56.0050 on Wednesday. The INR has shed 12.7% against the US Dollar since its 2012 peak in early February and is the worst performer inAsiaso far this year.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange (NSE), the MCXSX and the United Stock Exchange all ended around 55.72 on a total volume of $6.7 billion.

The big ticket dollar bids by public sector units (PSUs) to meet their business requirement, is adding volatility in the dollar-rupee forex market. This creates artificial demand for the greenback. The Indian rupee shows no sign of respite from its free falling, despite repeated measures taken by the Reserve Bank of India (RBI).

As alerted earlier: The breach of 56.35 for the INR is pretty crucial now, & should ideally bounce back a little to 55 levels again, a strong resistance now. But if this support of 56.35 is breached with strong momentum, then the INR will lose further strength & it only appears to come in after a further sharp dip to around 58.60. So, technically this move could extend further.

The euro in the meantime, continued to be battered at a 22 month low level against the dollar and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors at bay. The single common currency fell to about $1.2544 on Wednesday, its lowest level since July 2010. The euro drew little comfort from an informal summit of European Union leaders that shed no new light on how the euro zone nations intend to tackle its debt crisis, including the threat of Greece’s exit from euro. Against a basket of major currencies, the dollar stood at 82.085. That was close to a peak of 82.221 hit on Wednesday, the dollar’s highest level since September 2010. The global currency pair is currently quoting at 1.2574. The Euro regained its footing Thursday, but only after dropping to its lowest level versus the dollar since July 2010 after economic surveys pointed to a deepening downturn across the euro zone.

The euro traded as low as $1.2507 versus the dollar before trimming losses to rebound to the $1.2575 level, little changed from its level in North American trade late Wednesday. The euro managed to trim losses, however, as overall risk sentiment appeared to rebound. Strategists said a bounce back after weeks of heavy selling pressure may be overdue. The euro remains down nearly 5% versus the dollar since the beginning of May. The dollar index, which measures theU.S.unit against a basket of six major currencies, traded at 82.060, down slightly from 82.073 late Wednesday.

NCDEX Pepper & Turmeric, Mentha Oil MCX Futures decline.

Agro Trading

NCDEX Pepper & Turmeric, Mentha Oil MCX Futures decline.

NCDEX, MCX Agro Commodities Update: Higher Mentha Oil production estimates is pushing the commodity to lower levels. Production of Mentha Oil is likely to exceed 50,000 tonnes this year vs 38,000 tonnes last year. Market sentiments are likely to remain weak till arrivals continue & no strong demand is expected. Expectations of higher sowing activities this year, has added pressure on the markets even as low stocks and lower arrivals were reported. Rising export demand amidst lower stocks however are expected to support the prices in the medium term. The next crop is expected to arrive in June.

Pepper NCDEX Futures on profit booking & also due to poor demand from the overseas buyers. Pepper imports by U.S. the largest consumer of the spice declined 14.8% in the first 2 months of 2012 to 8810 tonnes as compared to 10344 tonnes in the same period previous year. Brazilian & Indonesian pepper production details not yet clear as per reports available.

The total domestic production of Jeera in the present year is estimated to be in the range of 32-33 lakh bags (1 bag = 55 kg), against 28 lakh bags produced last year. According to the agriculture ministry, in Gujarat, Jeera was sown on 2.65 lakh hectares, compared with 1.30 lakh hectares last year. The total production inGujarat is expected at 12-13 lakh bags, while in Rajasthan it is estimated to be 10 lakh bags. The NCDEX Jeera July contract ended the last session down by Rs 475 or 3.53% at Rs 12,995 after hitting the high of Rs 13,530 per quintal. The counter is likely to dip further with support at Rs 12,700-12,750 and Rs 12,500 while resistance is at Rs 13,200, Rs 13,450 per quintal.

Total production of Turmeric in the current year is likely at 90 lakh bags against 70 lakh bags that were reported last year in the same period. Moreover, sturdy carryover stocks in major mandis of around 20-22 lakh bags are also witnessing some selling pressure at higher levels. Higher arrivals are keeping the prices bearish and price are likely to find some support at lower levels if arrivals into the market falls drastically. As per the latest release from the Tamil Nadu Agricultural University, it is expected that last year stock and this year production accounts to nearly 1 crore bags (75 kg/bag). India’s domestic consumption and export demand requires 65-75 lakh bags. As the supply is above domestic and export demand, the price started declining. Technically, the Turmeric NCDEX counter is likely to find next support at Rs 3,820-3,800, Rs 3,770 and resistance is at Rs 3990, Rs 4050 per quintal.

According to the latest report from Conab, the safrinha corn production inBrazil should be 40% larger than last year due to both an increase in acreage and yields. In Mato Grosso the safrinha acreage increased 39% from 1.84 million hectares to 2.55 million. In Parana the acreage increased 12.5% from 1.72 million hectares to 1.93 million. While the corn is still developing in both states, the yields are expected to be much better than last year’s problematic crop.

Bearish trend prevailed in Coriander futures on the heels of strong arrivals in major mandies along with restricted off-take by traders at current levels. As per market sources, the total arrivals of around 0.80-1.10 lakh bags (1 bag = 40 kgs ) were reported in all the major mandies from the last one week. The spot prices of new coriander were trading in the range of Rs 3200-3400 per quintal.

Chana futures NCDEX might garner some bargain buying at lower levels due to higher prices of imported pulses along with weak arrivals at major mandies. The NCDEX June Chana futures are likely to gather some buying around Rs 4100-4120 per quintal in the near term. As per market sources, higher prices of imported pulses due to weakness in rupee against dollar might keep domestic pulses market supportive in the coming days. Traders stated that rupee have pared almost 9% against dollar in the last month to trades around 56 levels which might allow the costlier imports of international pulses. The spot prices of Australian chana were trading at Rs 4400 per quintal against the Indian quality of Rs 4100 per quintal.

INR declines to Lifetime Low of 56, a key psychological level.

INR Forex trading

INR declines to Lifetime Low of 56, a key psychological level.

US$/INR May Futures have shot up as expected to 56.06, Forecasted to touch 56.35 from 54.28 /US$. The Rupee continues its sharp downfall. INR now, at a new record low of 56 per US dollar. The Indian rupee is seen moving now moving above 56 a dollar, a key psychological level. The fall in Indian Rupee comes despite RBI intervention. Expect some dollar selling from exporters to emerge around 56.35 levels. The breach of 56.35 for the INR is pretty crucial now, & should ideally bounce back a little to 55 levels again, a strong resistance now. But if this support of 56.35 is breached with strong momentum, then the INR will lose further strength & it only appears to come in after a further sharp dip to around 58.60. So, technically this move could extend further.

The BSE Sensex and NSE Nifty extended losses following further fall in rupee. Asian markets too slip further; Nikkei 225 Average tanked over 2% as yesterday Fitch down graded Japan to A+ from AA due to growing risk of high public debt. Hang Seng, Straits Times, Kospi andTaiwanwere down 1.2-1.75% while Shanghai declined 0.76%.

India’s economic growth is likely to rise to more than 7.5% in calendar year 2013 but continued government policy uncertainty could erode the country’s longer-term growth prospects, the Organization for Economic Cooperation and Development (OECD) said on Tuesday. The upbeat OECD forecast stood in stark contrast to the pessimistic view offered on Monday by Morgan Stanley, which cut its growth forecasts for India, citing a high budget deficit and slowing private investment. It said it now expected the economy to grow by 6.8%, instead of 7.5%, in 2013.

India’s economic growth slowed to 6.1% in the three months to December, the weakest annual pace in almost three years. The current account deficit is the highest since 1980. Inflation is the highest among the so-called BRICS group of major developing nations. Costly subsidies have pushed the fiscal deficit to 5.9% from a target of 4.6% of GDP in the fiscal year that ended in March 2012. S&P’s rating agency cut its outlook forIndia’s credit rating to negative from stable in April, reflecting worries about high deficits and political paralysis that has stalled progress on major economic reforms.India has had rapid economic growth after opening up its economy in 1991. But investors fret that the government is now squandering a chance to tap the country’s potential.

Gold rises further: Bullion, IPO & Realty among biggest Black Money generators.

Gold rises: Bullion trading tips

Gold rises: Bullion, IPO & Realty Black Money generators.

MCX Gold June Futures prices today rose by Rs. 119 to Rs 29,092 & Gold August Futures prices today rose by Rs. 108 to Rs 29,437 per 10 grams. Comex Gold June Futures prices today rose by $7 to $1599 an ounce, the highest since May 10. U.S.$ May Futures were up at 54.82 INR from the previous close of 54.53.

MCX Silver July Futures shot up to Rs. 54805 & Comex Silver traded at $28.855 slightly down from $28.90 seen on Friday last week.

The Finance Minister Pranab Mukherjee has tabled white paper on black money in Parliament today. The 100-page report is detailed and exhaustive but does not contain any names.

According to the report, black money generating sectors are jewellery, IPO, land, real estates, Gold, Silver bullion, public procurements and NGOs. It also states that black money in Swiss accounts has reduced by Rs 14,078 crore between 2006 to2010. “Self regulation by private sector on black money has failed and states should mull tax on farm income to curb black money,” the report said.

Several recent policy decisions by India have caused “significant concern” and “dampened sentiment” about its investment climate, US Ambassador to India Nancy J Powell said today.

“The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retroactive tax provisions in the Finance Bill are two examples,” Powell said, addressing members of the Indo American Chamber of Commerce (IACC) and American Chamber of Commerce (AMCHAM).

Voicing concern over challenges to trade and investment, she also called for a level playing field forUS companies doing business with India. Powell said she was committed to ensuring that US companies can compete on a level playing field inIndia and operate in the same open and fair environment that Indian firms enjoy in the US.

Gold Silver rise for the 2nd day, Euro rises vs US$.

Gold Silver Trading

Gold Silver rise for the 2nd day

Gold Silver Bullion heading for the first weekly gain this month & a massive one at that. Gold posted its largest one-day gain, over 2% in more than three months in the previous session. Gold, Silver Bullions prices zoomed upside today as a recovery in the euro prompted fresh buying of the precious metal after prices slid to five-month lows earlier this week. Euro recovers from four-month low versus US Dollar to move into positive territory, taking some pressure off gold, though concerns over a Greek euro exit and instability in the Spanish banking system meant confidence was weak. Bullions demand rose on a renewed speculation that the Federal Reserve will announce additional stimulus to boost the U.S.economy, increasing demand for the precious metal as a safe haven.

 Comex Gold June futures prices shot up today in Intraday Trade to $1597.5 on short covering from the lows of $1,526.7 seen on Wednesday & from a close of $1574.9 yesterday. Gold has bounced up as alerted repeatedly of the commodity having declined to over – sold conditions along with the Euro. Gold may now face resistance at $1605 & then at $1657 levels. A decline with a repeat close below $1540 may send Gold sharply down to $1270 levels also. MCX Gold June futures prices shot up yesterday in Intraday Trade to Rs. 28,598 from the lows of Rs. 27,855 seen on Wednesday. MCX Gold June futures prices further shot up today to Rs. 28,978 on the Euro’s rise against the US$. Gold may now face resistance at Rs. 28,990 & then at Rs. 29,368 levels till trades remain above Rs. 28,145. (As alerted today morning).

The US$ May futures shot up to 55.01 from the previous close of 54.6175 but closed down at 54.50 around end of session today. The INR can reach a new low of 56.35, as also indicated earlier on the break of the important 54.28 support level.

Silver, as repeatedly alerted, has a strong technical support at $26.20 on the downside. Any breach with a sustained momentum on closing basis below this range may signal a strong bearish trend for Silver & may decline further to $22.60. Comex Silver July futures prices shot up today in Intraday Trade to $28.895 on short covering from the lows of $26.73 seen on Wednesday & from a close of $28.02 yesterday. Silver may now face resistance at $29.62 & then at $32 levels. MCX Silver July prices shot up in Intraday Trade to Rs. 53,608 from the lows of Rs. 51,201 seen on Wednesday. MCX Silver July futures prices further shot up today to Rs. 54,747. Silver may now face resistance at Rs. 54,595, 55630 & then at Rs. 58,240 levels till trades remain above Rs.52,150. (As alerted today morning).

Gold may rise for a couple of trading sessions & may again decline towards the month end as June Futures contracts come close to expiry. Silver may also see some downside movements then. But rises in both can be expected from June onward till trades keep above the crucial support levels as mentioned above.

Greece Update: Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-IMF program of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections. Greeks are scheduled to go the polls again on June 17. A victory by the far-left, anti-bailout coalition SYRIZA – which some opinion polls suggest is likely – would increase the possibility of the country leaving the euro. Earlier this week, the country’s president said Greeks had withdrawn up to 800 million euros ($1 billion) from banks as the political uncertainty deepened. In a further blow, the European Central Bank said it had halted liquidity operations with some Greek banks because their capital was too depleted.

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