Market Nuggets: Triland: Gold Traders Trying To Sniff Out Stops In Low Volume
Wednesday February 6, 2013 2:49 PM
Gold remains range-bound, with short-term traders trying to sniff out stops in both directions, says Triland Metals. Stops are pre-placed orders triggered when the market hits certain chart levels. The Comex April futures closed up $5.30 to $1,678.30 an ounce but meandered in a narrow range of $11.70 that was within Tuesday's trading band. "The stop-loss hunting continues, with gold moving from downside stops to upside stops then back to the middle," Triland says. "The short-term range seems to be $1,660 to $1,685 and until that breaks significantly, the market looks set to continue sniffing out stops. Volume has been low."
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: Commerzbank: Chinese Gold Demand Filling Gap Left By India
Wednesday February 6, 2013 8:45 AM
Strong Chinese gold demand appears making up for lost consumption in India, says Commerzbank. Analysts cite data earlier this week from Hong Kong's Census and Statistics Department showing China imported record quantities of gold from Hong Kong in December. "Year on year, imports were up to 114.4 tons, almost trebling," Commerzbank says. "At the same time, 'only' 19.6 tons of gold were exported to Hong Kong, the smallest volume since February…Over the year as a whole, China imported a net quantity of 557.5 tons of gold from Hong Kong, likewise a record and 47% up on 2011. If it is assumed that China itself produced almost 400 tons of gold last year, the total Chinese gold demand will have been over 950 tons, which would mean that China had overtaken India as the world's No. 1 consumer of gold on a yearly basis." Due to factors such as higher duties on gold imports, India's gold demand likely fell last year to just over 700 tons, Commerzbank says. "China is thus filling the gap left by India. With China's population getting increasingly wealthier, demand for gold should remain high, and since the country cannot meet demand from its own gold resources, and the central bank is topping up its gold reserves, gold imports can be expected to remain at a high level, which should support prices."
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: BNP Paribas: Euro To Consolidate Ahead Of ECB, Spanish Auction
Wednesday February 6, 2013 8:38 AM
BNP Paribas looks for the euro to consolidate ahead of a European Central Bank meeting and Spanish debt auction Thursday. "Given the renewed focus on Spain, Thursday's Spanish bond auction will be an important litmus test of market sentiment. A stronger auction (like seen in recent weeks) would be needed to see the EUR sustain short term," BNP Paribas says. As for the ECB meeting, BNP Paribas says it does not expect any strong commentary from officials on the exchange rate itself. "Still, the press conference will not provide a bullish catalyst as was the case in January and will probably sound more cautious on several fronts," BNP Paribas says. A corrective pullback in the euro should not be a surprise since it surged nearly 5 cents during the latter part of January, BNP Paribas adds. The single European currency is trading around $1.3511 as of 8:30 a.m. EST, down from $1.3582 late Tuesday. The currency had surged as high as $1.3711 on Feb. 1 from a low of $1.3265 on Jan. 23. Metals traders tend to monitor major moves in the foreign-exchange market, since they have potential to impact base and precious metals alike.
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: UBS: Spec Positioning Becomes 'Compelling Story' For Gold
Wednesday February 6, 2013 8:13 AM
While gold remains range-bound, "perhaps the most compelling story" for the metal is the lighter-than-usual net length of speculators, says UBS. This stands around 17 million ounces, the lowest level in roughly half a year. Further, the number of shorts rose by 1.6 million ounces as of Jan. 29, according to the last commitments of traders report, and total gold shorts are now at the highest level since July. "As short positioning becomes more and more extended, it increasingly limits the firepower behind sell-offs," UBS says. "At the same time, sharp bounces are more prone to be accelerated by short covering." Still, UBS notes, the 17 million ounces of net length is still about 5 million away from the lowest levels of the last few years, reached in May. "So in a sense, there is probably some room to go if a negative catalyst were to emerge in the coming weeks – but the scope is becoming more limited," UBS says. "Back in May 2012, short selling weighed heavily on gold for most of the month. As a result of the extreme reduction in net spec length, though, it became easier for gold to bounce back in June and, after a period of consolidation, the market found itself in good shape positioning-wise for the rally in August and September. Gold could find itself in a similar scenario – if it manages to extend the resilience displayed thus far."
Wednesday February 6, 2013 2:49 PM
Gold remains range-bound, with short-term traders trying to sniff out stops in both directions, says Triland Metals. Stops are pre-placed orders triggered when the market hits certain chart levels. The Comex April futures closed up $5.30 to $1,678.30 an ounce but meandered in a narrow range of $11.70 that was within Tuesday's trading band. "The stop-loss hunting continues, with gold moving from downside stops to upside stops then back to the middle," Triland says. "The short-term range seems to be $1,660 to $1,685 and until that breaks significantly, the market looks set to continue sniffing out stops. Volume has been low."
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: Commerzbank: Chinese Gold Demand Filling Gap Left By India
Wednesday February 6, 2013 8:45 AM
Strong Chinese gold demand appears making up for lost consumption in India, says Commerzbank. Analysts cite data earlier this week from Hong Kong's Census and Statistics Department showing China imported record quantities of gold from Hong Kong in December. "Year on year, imports were up to 114.4 tons, almost trebling," Commerzbank says. "At the same time, 'only' 19.6 tons of gold were exported to Hong Kong, the smallest volume since February…Over the year as a whole, China imported a net quantity of 557.5 tons of gold from Hong Kong, likewise a record and 47% up on 2011. If it is assumed that China itself produced almost 400 tons of gold last year, the total Chinese gold demand will have been over 950 tons, which would mean that China had overtaken India as the world's No. 1 consumer of gold on a yearly basis." Due to factors such as higher duties on gold imports, India's gold demand likely fell last year to just over 700 tons, Commerzbank says. "China is thus filling the gap left by India. With China's population getting increasingly wealthier, demand for gold should remain high, and since the country cannot meet demand from its own gold resources, and the central bank is topping up its gold reserves, gold imports can be expected to remain at a high level, which should support prices."
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: BNP Paribas: Euro To Consolidate Ahead Of ECB, Spanish Auction
Wednesday February 6, 2013 8:38 AM
BNP Paribas looks for the euro to consolidate ahead of a European Central Bank meeting and Spanish debt auction Thursday. "Given the renewed focus on Spain, Thursday's Spanish bond auction will be an important litmus test of market sentiment. A stronger auction (like seen in recent weeks) would be needed to see the EUR sustain short term," BNP Paribas says. As for the ECB meeting, BNP Paribas says it does not expect any strong commentary from officials on the exchange rate itself. "Still, the press conference will not provide a bullish catalyst as was the case in January and will probably sound more cautious on several fronts," BNP Paribas says. A corrective pullback in the euro should not be a surprise since it surged nearly 5 cents during the latter part of January, BNP Paribas adds. The single European currency is trading around $1.3511 as of 8:30 a.m. EST, down from $1.3582 late Tuesday. The currency had surged as high as $1.3711 on Feb. 1 from a low of $1.3265 on Jan. 23. Metals traders tend to monitor major moves in the foreign-exchange market, since they have potential to impact base and precious metals alike.
By Allen Sykora of Kitco News asykora@kitco.com
Market Nuggets: UBS: Spec Positioning Becomes 'Compelling Story' For Gold
Wednesday February 6, 2013 8:13 AM
While gold remains range-bound, "perhaps the most compelling story" for the metal is the lighter-than-usual net length of speculators, says UBS. This stands around 17 million ounces, the lowest level in roughly half a year. Further, the number of shorts rose by 1.6 million ounces as of Jan. 29, according to the last commitments of traders report, and total gold shorts are now at the highest level since July. "As short positioning becomes more and more extended, it increasingly limits the firepower behind sell-offs," UBS says. "At the same time, sharp bounces are more prone to be accelerated by short covering." Still, UBS notes, the 17 million ounces of net length is still about 5 million away from the lowest levels of the last few years, reached in May. "So in a sense, there is probably some room to go if a negative catalyst were to emerge in the coming weeks – but the scope is becoming more limited," UBS says. "Back in May 2012, short selling weighed heavily on gold for most of the month. As a result of the extreme reduction in net spec length, though, it became easier for gold to bounce back in June and, after a period of consolidation, the market found itself in good shape positioning-wise for the rally in August and September. Gold could find itself in a similar scenario – if it manages to extend the resilience displayed thus far."
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