Commodity Trade Mantra

Gold seesaws on US Jobless, Housing & Philadelphia Fed Data

Gold seesaws on US Jobless, Housing & Philadelphia Fed Data

Gold seesaws on US Jobless, Housing & Philadelphia Fed Data

Comex Gold Futures fell close to $1667 from $1683 & Comex Silver Prices fell to $31.05 from $31.54 after the US Jobless claims data was released & quickly rebounded on the Philadelphia Fed Data. Higher Crude Oil Prices seem a strong supporting factor lending a bottom to Gold Prices. Copper gained after weakening earlier in the day. US Stock Market index futures advanced further after two economic reports cast an optimistic light on the housing and jobs markets. Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said. It was the largest weekly drop since February 2010. The big drop likely stems from a seasonal-adjustment quirk whose effects could quickly fade and push the numbers back up in the next few weeks. Claims tend to be very volatile around this time of the year. This is because of large swings in the model used by the department to iron out seasonal fluctuations. The four-week moving average for new claims, a better measure of labor market trends, fell 6,750 to 359,250, suggesting some improvement in underlying labor market conditions. Continuing claims increased by 87,000 to a seasonally adjusted 3.21 million in the week ended Jan. 5. Continuing claims reflect the number of people already receiving benefits. About 5.82 million people received some kind of state or federal benefit in the week ended Dec. 29, up 465,547 from the prior week.

Housing starts accelerated in December to its fastest pace in over four years, supporting the view that housing is poised to provide a substantial boost to the US Economy. Starts at building sites for homes surged 12.1% last month to a 954,000-unit annual rate. The government revised downward its estimate for November housing starts to a 851,000-unit rate from the originally reported 861,000. Starts rose 24.7% in the Midwest, 21.4% in the Northeast, 18.7% in the West and 3.8% in the South. Some of the strength in December’s reading for starts came from a 20.3% surge in multi-family unit construction. Permits for future home construction, a sign of future demand, edged higher to a 903,000-unit rate, the quickest since July 2008. Starts for single-family homes, the largest segment of the market, climbed 8.1% last month to a 616,000-unit pace.

Huge Miss – Philadelphia Economic Data Boosts Gold Prices:

Manufacturing in the Philadelphia region unexpectedly contracted in January, an indication companies are becoming more concerned about across-the-board U.S. government spending cuts that could slow growth. The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 5.8 from 4.6 in December. The report follows New York Fed data released earlier this week showing factory activity shrank for a sixth straight month. The Philadelphia Fed’s new orders measure dropped to minus 4.3 from 4.9 the prior month while the shipments gauge declined to 0.4 from 14.7. The inventory index improved to minus 6.5 from minus 7.8. The employment index decreased to minus 5.2 from minus 0.2. The index of prices paid dropped to 14.7 from 23.5 the prior month, while a gauge of prices received decreased to minus 1.1 from 12.4.

Comex Gold Prices shot up swiftly from the lows to $1687 & Comex Silver shot up to $31.71 after falling sharply on the Jobless data. Gold Prices are again up at an almost unchanged status after the wild swings on the 3 important Economic data announcements. Seems like the upside for Gold and Silver seems intact for now.

MCX Gold weakens sharply on the INR rise:

Gold traded in India on the Multi-Commodity Exchange (MCX) fell sharply today on the sharply rising INR – Indian Rupee against the US Dollar. The Rupee appreciated close to 1.05% before closing around 0.85%. Commodities traded in the US Dollar tend to weaken when the INR appreciates against the Dollar. The MCX US$/INR Jan futures fell to 54.27 from the previous close of 54.85 & closed around 54.40. MCX Gold opened slightly weak at Rs. 30,850, but started weakening as the INR started appreciating on the Governments positive announcements on diesel prices, which I will elaborate on later. MCX Gold Prices fell sharply from the day’s high of Rs. 30,870 after picking up momentum below Rs. 30,775 to Rs. 30,530. MCX Silver fell swiftly once Gold picked downside momentum, to Rs. 58,528 from Rs. 59,706. Silver has been displaying sustained strength for the last 5 to 6 trading sessions.

India does a balancing act between politics and economics to curb Deficit:

The Govt. of India gave Oil companies some liberty to set prices, but cautioned that diesel subsidies could not be suddenly ended. The government emphasized that any price rises would be small, raising questions over how much freedom the state-run oil firms will really have. Petrol largely remained under government control after a similar policy was introduced in 2010. Fuel subsidies are a drain on India’s finances and the government is struggling to bring the deficit within a target of 5.3% of GDP – Gross Domestic Product for the financial year ending March. India is the world’s fourth biggest Oil importer. Share prices rose sharply in main oil marketing companies, which suffer losses selling fuel below cost. The Rupee hit a one-month high, while yields on Indian bonds dropped. The government also loosened a cap introduced in September on the number of subsidized cooking gas cylinders permitted to each household after widespread criticism the quota was unfair on the poor. The cap will now be nine cylinders per year, up from six. That is expected to add 93 billion rupees to the annual subsidy bill. Credit Ratings agencies had threatened to strip India of its investment-grade credit rating if the government did not take steps to curb the widening fiscal deficit. India imports 80% of the crude oil it refines into diesel, about 3.7 million barrels per day, and benchmark Brent crude prices were at their highest annual average on record last year at around $111 a barrel, significantly raising its energy bill, reported Reuters. Diesel accounts for about 40% of India’s fuel consumption, and the state-owned fuel retailers lose 9.6 rupees (18 U.S. cents) for every litre of diesel sold. Diesel demand has been very resistant to price hikes. A 5 Rupee per litre price hike in September was followed by month-on-month rises in diesel sales.

Fed Concerned About Overheated Markets Amid Record Bond-Buying – Bloomberg
Euro Area Seen Stalling as Draghi’s Pessimism Shared: Economy– Bloomberg

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