Precious Metals Traders Near Recent Highs

Gold is trading at 1318.90 holding flat this morning after US markets were closed on Monday for the US Presidents holiday. There was little news or data and light trading over the holiday. Gold prices increased around 0.8 percent yesterday on the back of rising trend in gold ETF’s holdings managed under SPDR Gold Holdings Trust. Further, weakness in the DX supported an upside in the prices. Additionally, upbeat market sentiments acted as a positive factor. The shiny metal touched an intra-day high of $1329.72 and closed at $1328.50 in yesterday’s trading session. Taking cues from rise in gold prices, upside in the base metals complex along with weakness in the DX. Silver prices rose around 0.8 percent yesterday continuing it’s recent upwards trend to trade at 21.612 adding 161 points in the Asian session. Gold and silver prices are expected to trade higher today on the back of rising trend in gold and silver ETF’s holdings. Further, weakness in the DX will act as a positive factor.

The two most renowned gold analysts are holding to their bearish forecasts for 2014 even after the metal posted its best start to a year since 1983. Futures rose 9.7 percent in 2014 through Feb. 14, rebounding from the biggest annual drop in three decades, and reached a three-month high. Holdings in exchange-traded products backed by bullion increased by 3.2 metric tons last week, the most since December 2012, after slumping 869.1 tons last year when prices slid 28 percent.

Bullion got a boost this year from reports showing the U.S. wasn’t growing as fast as forecast and as lower prices spurred Asian demand, with coin sales rising from America to

China. Gold’s best forecasters say the rebound won’t last because higher prices will stifle purchases and the Federal Reserve will continue slowing stimulus as the economy strengthens. Consumption in China surged 41 percent last year to a record 1,176.4 tons, the China Gold Association said Feb. 10.

Hedge funds and other large speculators more than doubled their bets on higher prices this year, with a net-long position of 69,291 futures and options contracts as of Feb. 11, from a six-year low of 26,774 on Dec. 3, U.S. Commodity Futures Trading Commission data show. The record was 253,653 in August 2011 as prices approached the all-time high in September 2011. Hedge-fund manager John Paulson, who cut his holding in the SPDR Gold Trust by half in the second quarter, kept his 10.23 million-share stake in the largest gold-backed ETP unchanged for a second straight quarter in the three months ended Dec. 31, filings showed Feb. 14. The stake is valued at about $1.13 billion.

Industrial and base metals are trading on a positive note as the US dollar weakens. Copper is trading at 3.269 giving up a bit of its gains this morning as traders booked profits after copper touched 3.285 on Monday. Analysts said besides increased demand from domestic consuming industries, a firming trend overseas after a report showed China’s new credit increased to a record last month, and boosting demand prospects for industrial metals from the world’s top user, influenced copper prices at futures trade here.