Commodity Trade Mantra

Gold Futures Whipsawed on Twisted Jobs Data

Gold Futures Whipsawed

Gold Futures Whipsawed on Twisted Jobs Data

Gold Futures hit the highest in almost 11 months close to $1,800 & fell swiftly after the U.S. unemployment rate unexpectedly dropped. The jobless rate in September declined to 7.8% from 8.1%. The unemployment rate, derived from a survey of households, was forecast by analysts to rise to 8.2 %. Gold Futures for December delivery on Comex fell 0.9 % to settle at $1,780.80 at 1:44 p.m. in New York, a higher close than seen previously. Gold Futures Prices earlier touched $1,798.10, the highest for a most-active contract since Nov. 9, and gained 0.4% this week. Silver Futures for December delivery declined 1.5 % to $34.572 an ounce. Yesterday, Silver closed at the highest since March 1. Silver has jumped 24% this year, while Gold Futures advanced 14%. Open interest in U.S. Gold Futures rose to a one-year high while bullion held by the No. 1 gold exchange-traded fund SPDR Gold Trust climbed to a record, underscoring renewed investor focus in trading the Gold Futures.

Gold Futures may at the most decline to a support to around $1747 & again resume rising. As alerted in my previous article, China would re-enter markets after a week long holiday & all dips in Gold Futures would be bought up on opportunistic buying. Copper & Lead may be poised for further gains on same grounds too. Gold Futures may now try to target $1,855 an ounce next week after missing its chance to break through $1800 this week. A lot of traders are sitting on the sidelines awaiting a small correction to re-enter after having booked soft gains at levels close to $1800. Any level of manipulation is not going to wash off the ongoing global crisis. My short term target of $1855 looks certain for Gold Futures. Any rise further would need massive participation from players like China who is sitting on the world’s largest Forex reserves rumored to be well over $3 trillion. When players like these exercise a move to hedge valuation of their reserves with Gold Futures or Gold Bullion – a Standard Currency, against the expected fall of the US Dollar, there is bound to be massive momentum. A close in Silver Futures above $35.20 now will send Silver soaring towards $44.20 & then $50.50. The rising tensions in the Middle East, the decision by the Turkish government to launch military actions against Syria are also price rise supportive for Gold Futures & Crude Oil prices.

Are U.S. Unemployment Numbers Doctored?

Everyone’s aware that there is a lot of Window Dressing done before Key Elections, but some cross the line & make the process very obvious. These so called window dressings are aimed to profit from the short term memory of the general public. For the first time in 44 months, the unemployment rate has fallen to 7.8%. A 43-month streak of 8% plus unemployment, the longest stretch since the federal government started keeping records in 1948, has ended one month before the presidential election — with just one additional monthly Labor Department report scheduled on the Friday before the Nov. 6 vote. The Obama administration took the new number as both progress and a reminder of the challenge ahead, reported Bloomberg.

Jack Welch, writing on his Twitter account, said the Obama administration manipulated U.S. employment data for political gain by showing a drop in the jobless rate. “Unbelievable jobs numbers, these Chicago guys will do anything, can’t debate so change numbers,” the former General Electric Co. chief executive officer said in a message posted immediately after the report.

The Obama administration denied the allegation as baseless and defended the U.S. Bureau of Labor Statistics, which computes the figures. Alan Krueger, chairman of the White House Council of Economic Advisers, told Bloomberg Television that Welch’s remark was “irresponsible.” A good conspiracy theory is irrefutable. A bad one usually collapses when confronted by reality. The claim, by some supporters of Republican challenger Mitt Romney that President Barack Obama’s Chicago-based campaign doctored September’s unemployment figures for political gain fall into the second category, according to members of both parties who have served in the government’s economic data system. Welch’s message was re-sent via Twitter 3,832 times, meaning each of those people re-broadcasted it to their groups of followers, in the first 10 hours. Rebuttals posted by journalists on Twitter, including Keith Olbermann and Politico’s Roger Simon, were re-tweeted at least 300 times combined. Representative West’s message of support was re-tweeted 592 times. Anyways, it’s too early for the Fed to even consider ending its unconventional policy- The QE3 or QEternity, based on this jobs data. Though a knee-jerk reaction has been seen, markets may soon realize this & resume following the undercurrent.

Gold Futures a safe-haven against a turbulent Q4:

Investors are looking at Gold Futures as their top Commodity Trading choice and a safe-haven against what may be a turbulent fourth quarter, given a possibility that the so-called U.S. “Fiscal Cliff” of automatic spending cuts and tax increases will shrink the economy and lead to more money printing. Major Gold ETFs monitored by Reuters added over 0.4 million ounces of bullion on Thursday, as SPDR Gold Trust reported record holdings of 1,333.44 metric tons of Gold Bullion. Net inflows into Silver ETFs tracked by BNP Paribas totaled 410.2 tons in September. U.S. stocks reversed early gains as optimism about a drop in the jobless rate faded and the Standard & Poor’s 500 Index failed to hold at almost five-year highs. Strategists at Deutsche Bank expect “fears toward the fiscal outlook will intensify in the fourth quarter, along with the possibility of a U.S. credit downgrade event.” “This will prove to be most beneficial to the precious-metals complex and specifically gold,” the strategists wrote in a research report.

Gold Futures head for 12th annual gain on Inflation Hedge:

Gold Futures traders are the most bullish in three weeks as investors’ bullion holdings expanded to a record after central banks pledged to do more to spur economic growth. Investors are holding the highest ever through Gold ETF, gold-backed exchange-traded products after buying 85.4 metric tons last month, the most since July 2011. Hedge funds’ bets on a rally are the biggest in seven months as they have more than doubled their net-long position since Aug. 14 to the most since Feb. 28, U.S. Commodity Futures Trading Commission – CFTC data show. Investors added 208.7 tons to ETPs since the start of January, data compiled by Bloomberg show. ETP holdings reached a record 2,565.5 tons yesterday, valued at $146.9 billion, data show. Inflation is bound to shoot up in the future because of mega quantitative easing and the amount of debt that’s got in the system. Some investors buy bullion as a hedge against inflation and a weaker dollar, and Gold Futures generally earn returns only through price gains, increasing its allure as interest rates decline. The Fed said Sept. 13 it will probably hold the federal funds rate near zero until at least the middle of 2015. Inflation expectations measured by the break-even rate for five- year Treasury Inflation Protected Securities jumped 46 % this year and reached a 16-month high on Sept. 17. Gold is 7.3% below the record $1,921.15 reached in September 2011 and its average so far this year is set to be the highest ever. Gold Prices reached all-time highs in euros, Swiss francs and South African rand this week.

Sales of American Eagle gold coins by the U.S. Mint jumped 76% to 68,500 ounces last month, the most since January, data on its website show. UBS AG said yesterday its physical gold sales on Oct. 3 to India, last year’s biggest buyer, were the most since April. Indian consumers usually accelerate purchases before the wedding season and religious festivals later this year.

While demand from India will be “strong” in the third and fourth quarters, overall consumption will slump 25 % to about 750 tons this year, Marcus Grubb, managing director of investment research at the World Gold Council, told reporters in London on Oct. 3. Buying retreated this year amid surging local prices and as jewelers held a strike in March and April to protest government taxes on imports. Gold Futures rallied about 8.4 % since moving above its 200-day moving average in August. Other technical indicators are signaling prices may be poised to decline. Bullion’s 14-day relative-strength index was at 67.6 today, near the level of 70 that indicates to some analysts who study such charts that a drop in prices may be imminent.

Gold Futures Trading Hits Record in Japan:

The Tokyo Commodity Exchange (TOCOM) announced a sharp increase in Gold Trading of Gold Futures during September. In a statement, Tocom, Japan’s largest commodity Futures exchange with a trading volume of 34.5 million contracts said trading volume averaged 120,650 contracts per day in September, up 55.4% from August 2012. Gold Futures, the most active product at Tocom was up 67.8% to 58,241 contracts. The Gold Mini was up 67.4% to 10,175 contracts and Platinum was up 56.4% to 19,026 contracts.

Agro Commodities may rise triggering Inflation soon:

Soybeans & Corn may again start their upward movement from next week. Both crops reached all- time highs in the past two months as the worst U.S. drought in a half century damaged crops, but have declined sharply in last few weeks. The S&P GSCI gauge of raw materials entered a bull market as it climbed 24 % from this year’s lowest close on June 21 through Sept. 14. The index dropped about 5.4 % since then. The LME Index of six industrial metals advanced 10 % last month, the most since January.

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