Precious Metals Flat While Industrial Metals Ease

By FX Empire Analyst - Barry Norman
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Precious Metals Flat While Industrial Metals Ease

Precious Metals Flat While Industrial Metals Ease

Gold is kicking off the week flat….. The shiny metal is trading at 1287.10 in the Asian session Monday moving between small gains and losses with no direction. Disappointing US data on Friday had a silver lining, US manufacturing production came in lower than expected but still showed growth and expansion. Against Septembers larger than expected climb, October’s slight miss could be expected. Otherwise there was little guidance and this week’s midmonth calendar will leave investors looking for a reason to trade. At the end of last week traders moved to higher risk assets, pushing equities to trade at record highs and leaving the currency and commodity markets bored and lacking. Rising stock markets could curb investors’ interest in the yellow metal even as they weigh how long the US can avoid paring its $85-billion-a-month stimulus program. A majority of analysts now feel that the paring could begin from March. Some clue should be available during mid-week when the US Fed will be releasing the minutes of its October 29-30 meeting while traders try to evaluate the outcome of the December 18th meeting.

Cutting of bullish bets by money managers and hedge funds, for the third consecutive week, could have a bearish effect on the bullion. Data on eurozone trade, US net capital flows and NHB housing index could provide further cues for gold later in the day.

The impact on global supply and demand in 2013 for gold has been dramatic. Because exchange-traded gold products – legal trusts whose debts are denominated in gold bullion, and which then own physical bullion to back their shares' value – have flowed from one side of the ledger to the other.

 Adding an average 45 tons to their collective hoard every 3 months as investment flowed in between 2005 and late 2012, the giant SPDR Gold Trust (GLD) and its smaller competitor from iShares (IAU) have turned net sellers this year. Together, they've sold back some 160 tons per quarter, accounting for two-thirds of 2013's total gold ETF liquidation of 700 tons. Gold ETF’s have been steadily declining over the past weeks as traders try to decide on future FOMC plans.

Gold is heading for the first annual loss since 2000 as some investors lost faith in the metal as a store of value and global equities climbed 18 percent. Janet Yellen, nominee to replace Ben S. Bernanke as Federal Reserve Chairman, signaled on Nov. 14 that she’d continue the record stimulus program until the U.S. economy is stronger. The Standard & Poor’s 500 Index rose 0.4 percent to close at an all-time high on Nov. 15.

Silver has also eased this morning declining to 20.712 down by 15 points but with no conviction. Over the weekend data showed a continued climb in housing prices in China but otherwise there has been little data. Copper remains in the red also down by 5 points at 3.167 way below its average trading above the 3.20 price level. China’s Communist Party signaled a bigger focus on fiscal concerns during President Xi Jinping’s tenure, setting the scene for a clampdown to control the finances of indebted regional authorities weighing on industrial members. The US dollar remains flat having very little effect on commodity prices as the week begins. 

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