Demand For Precious & Industrial Metals Support Price Increases

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Demand For Precious & Industrial Metals Support Price Increases

Demand For Precious & Industrial Metals Support Price Increases

European stocks closed higher on Wednesday as investors around the globe cheered a combination of U.S. Federal Reserve Chair Janet Yellen’s reassurance of supportive monetary policy, strong Chinese export data and a U.S. debt deal in Congress. U.S. stocks were mixed on Wednesday, with Procter & Gamble’s reduced earnings outlook weighing on the Dow industrials and the S&P little changed after its largest four-day rise in more than a year. Traders seemed to refocus on commodities after the strong Chinese import and export data. Gold continues to climb as Chinese buyers grab up as much gold as they can. It seems the physical buying of gold has entered a frenzy state where buyers will just continue to buy until there are exhausted. China’s gold consumption has surged to a new record in 2013, despite a demand slowdown in the international market, as consumers took advantage of lower prices and bought more jewelry and gold bars. The China Gold Association (CGA) said that gold consumption in the country surpassed the 1,000-tonne mark in 2013, rising 41.4% on year to 1,176.4 tons. China produces only one-third of its gold requirement. The CGA noted that the rising amount indicates that China would overtake India as the world’s largest consumer of gold. Indian gold demand increased only 4.8% in 2013, as the government took measures to discourage gold imports to rein on a huge trade deficit. Demand for gold jewelry and bars in China increased by 42.52% and 56.57% to 716.5 tons and 375.73 tons, respectively, according to the association. The physical demand pushed gold to open this morning $1295 its highest level in 2014. Some analysts are project gold to touch the resistance level at $1300 before the close of the week; speculators took advantage of the strong prices to book profits this morning as the price eased by $5.70 in the Asian session. However, a sharp downside in the prices was prevented due to rising trend in gold ETF’s managed under SPDR Gold Holdings Trust.

Gold, considered a safe-haven, usually trades in the opposite direction to equities, the metal has snapped out of that in recent days and have been trading along the line of equities. U.S. Congress approved an increase in the country’s debt limit through March 2015, bowing to President Barack Obama’s demands for a debt limit increase without any conditions. African Barrick Gold will overcome last year’s 28 percent fall in the gold price with a big increase in output and stringent cost cutting. Gold prices are expected to move in a range to lower for the day as correction in the market and lower physical demand could keep the prices in range. Silver gave up 126 points as its continues its seesaw action making huge gain one day and then giving them back the next. Silver is exchanging at 20.215 remaining at the top of its trading range for 2014.

Copper also is seeing positive numbers trading above 3.25 yesterday and remaining flat this morning. Data from China showed a huge increase in copper demand, well above market expectations. Copper prices moved higher for the day as positive Chinese data and optimistic speech by Janet Yellen helped copper prices to move higher. Lower industrial production data from Eurozone and India kept the copper prices intact. Weaker dollar internationally also helped Copper prices to move higher. Traders can expect Copper prices to move higher for the day after positive Chinese Trade balance data and positive data coming from US. Other Base metals can move differently and can keep the prices in range to lower for the day. Palladium and platinum are trading in the red this morning with platinum falling below $1400 after topping it for the first time in weeks. Platinum is trading at 1399.85 while palladium is at 726.50

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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