Market Nuggets: BMO: Too Soon To Say Chinese Data Hints At Weaker Commodity Demand
10 November 2010, 2:01 p.m.
By Allen Sykora
Of Kitco News
http://www.kitco.com/
(Kitco News) -- At first glance, preliminary data showing Chinese commodity imports fell last month might suggest a weakening of Chinese demand for raw materials. However, analysts with BMO Capital Markets say it may be too soon to jump to this conclusion. BMO says "the details reveal a much more mixed and complex picture, with commodity-specific supply/demand fundamentals and seasonality (as demonstrated by the seasonally adjusted imports statistics) playing a very large part in determining October trade numbers. As such, the October Chinese commodity import data can't just yet be interpreted as representing a fundamental macro-based reduction in China's appetite for foreign commodities, especially since September was somewhat stronger than expected. The combination of quantitative easing, Western world currency concerns and continued global growth all should serve as support for Chinese commodity import levels into 2011. We believe this will likely mean that commodity prices from copper to iron ore will remain very well bid." The data showed Chinese copper imports dropped nearly 26% on the month, iron ore fell 13% and oil plunged 30%. However, taking seasonal factors into account, copper imports were down by a lesser 19%, iron ore was actually up 12% and oil was down by about 29%, BMO says. Seasonally adjusted aluminum imports were up a strong 21%.
By Allen Sykora of Kitco News; asykora@kitco.com
Market Nuggets: Silver Break Underscores Current Commodity Market Volatility, Possible Harbinger?
10 November 2010, 9:47 a.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/
(Kitco News) -- The late day break in silver reverberated across several commodity markets and was just one example of the current market volatility, say the traders at futuresMONSTER. The VIX, the main volatility index, crept up slightly when silver traded from sharply higher to sharply lower, they say, because of the CME's decision to raise silver margins on speculators late Tuesday. And they note silver's action could be a harbinger of events to come. "People can say what they like about the move in the silver but at the end of the day the retail long trade in the silver caused the washout and the CME's move to increase margins from $5k to $6.5k (per) contracts could be a precursor to a lot of other things that have been going up with no pullbacks," they say.
By Debbie Carlson of Kitco News; dcarlson@kitco.com
10 November 2010, 8:48 a.m.
By Allen Sykora
Market Nuggets: Barclays Says Global Silver ETP Holdings Hit Record
(Kitco News) -- Silver holdings in global exchange-traded products around the globe rose by 123 metric tons Tuesday to a record 14,398, says Barclays Capital. Total in-flows so far in November amount to 250 tons, Barclays says. "The inflows have primarily materialized in the U.S.-based product, but we note that holdings reflect trade settled on the third business day rather than yesterday's appetite," the bank says. The bank describes long-term investor interest in gold as stabilizing, with an inflow of 0.1 ton yesterday across the 23 gold exchange-traded products that it tracks.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:47 a.m.
By Allen Sykora
Market Nuggets: Base Metals Ease As China Raises Bank Reserve Requirements - MF Global
(Kitco News) -- Base metals were mostly lower early Wednesday, retreating on news that China's central bank has ordered some banks to boost reserve requirements by 0.5%, says MF Global analyst Edward Meir. "The authorities are likely acting in light of fresh trade figures showing the country posting a larger-than-forecast $27.1 billion October trade surplus, as imports did not grow as much as expected," Meir says. The data included a decline in copper imports. Meanwhile, another report showed some slowing in China's red-hot property market after recent tightening moves, including a rate hike last month. Chinese property prices rose at their slowest pace in 10 months in October, with home prices in 70 cities climbing 8.6% from a year earlier, compared to a 9.1% pace in September. "That still may be too much for the authorities, and we would not be surprised to see more aggressive tightening in the weeks ahead," Meir says. "All this does not bode well for metals going into the first quarter of next year, but commodity investors do not seem to be focusing on Chinese medium-term macro trends for the moment, as they continue to seek hard-asset protection from what they perceive to be a continued erosion in the dollar."
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:27 a.m.
By Allen Sykora
Market Nuggets: Silver Volatility Reflects High Level Of Speculative Activity - Commerzbank
(Kitco News) -- The volatility in silver lately is reflective of the high level of speculative activity, says Commerzbank. The metal climbed to $29.36 an ounce Tuesday, then fell to $26.50 in a short time. "This morning, the price of silver is already a dollar higher again," Commerzbank says. "This high volatility suggests strong involvement by speculative oriented financial investors, but is by no manner of means a phenomenon that only applies to the silver market." Long positions were closed out Tuesday after silver soared in November alone by as much as 18% at the peak. "The trading volume for silver futures contracts on the Comex hit a record level yesterday and was over four times the 250-day moving average," Commerzbank says. "The fact that silver is in high demand and is outstripping gold in terms of investor interest is also shown by renewed high inflows into silver ETFs."
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:16 a.m.
By Allen Sykora
Market Nuggets: Gartman: Bull Market Not Over Despite Pullback After Silver Margin Hike
(Kitco News) -- The bull markets in gold and silver have not ended, although the markets also may not "turn around on the proverbial dime" after their late-Tuesday pullback when CME raised silver margins, says newsletter writer Dennis Gartman. For the 5,000-ounce silver futures contract, the "maintenance" margin for ongoing speculative positions was hiked to $6,500 from $5,000, while the "initial" margin for spec positions went to $8,775 from $6,750. Hedge/member margins also rose to $6,500 from $5,000. The new margins will be effective as of the close of business Wednesday. The margin notice prompted a fallback in spot silver from around $29.25 to $26.50 late Tuesday, Gartman says in his daily The Gartman Letter. "After the action yesterday, it may take a day or two or three to truly shake the late longs out of their positions," he says. "Markets do not usually turn around on the proverbial dime after 'reversals' such as yesterday and the margin increases only serve to make that more likely, not less." But has the bull market ended? "Not it has not," he says, but adding that it may have reached a point of "frenzy" where some liquidation was necessary.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 7:55 a.m.
By Allen Sykora
Market Nuggets: Barclays Technicians Have "Buy Dips" View On Gold, But Pause Not "Unwelcome"
(Kitco News) -- The uptrend remains for gold, although a "pause" may be in order, say technicians with Barclays Capital. "In the absence of clear evidence for a top, we retain a bullish long-term buy dips view," they say in a research note. "With the DSI reading 95% bullish, sentiment is once again becoming extremely stretched and a pause would not be unwelcome. Range trading above $1,325 is bullish, more aggressively so if support at $1,375 limits the downside. Sentiment for silver is also 95% bullish, so as price approaches the psychologically important $30 level, we are nervously watching out for signs of profit-taking." The late-Tuesday pullback may have been a start. "However, while supported above $26.50, we continue to respect the uptrend. Targeting $31 and higher next year," Barclays concludes.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 7:41 a.m.
By Allen Sykora
Market Nuggets: Barclays Technicians: Main Resistance For Platinum Is $1,830-$1,845 Area
(Kitco News) -- Technical analysts with Barclays Capital describe platinum as the "poor relation in the precious-metals rally," underperforming against the other metals so far this year. "However, when faced with surging commodity prices, even platinum is gaining ground against the dollar," Barclays says. "We were impressed by the rally to a new 2010 high last week and even more so in light of further gains this week, which have extended beyond a retracement level at $1,782 quite aside from the pullback Tuesday into the close." This signals a risk that the rally extends to Fibonacci resistance at $1,969 next year and possibly eventually to the 2008 highs, Barclays technicians say. "Near term, the main obstacle to further gains is the $1,830/45 zone, which marked the cliff edge back in 2008," Barclays says. "A close above that zone would be an important marker that suggests platinum is making up lost time."
10 November 2010, 2:01 p.m.
By Allen Sykora
Of Kitco News
http://www.kitco.com/
(Kitco News) -- At first glance, preliminary data showing Chinese commodity imports fell last month might suggest a weakening of Chinese demand for raw materials. However, analysts with BMO Capital Markets say it may be too soon to jump to this conclusion. BMO says "the details reveal a much more mixed and complex picture, with commodity-specific supply/demand fundamentals and seasonality (as demonstrated by the seasonally adjusted imports statistics) playing a very large part in determining October trade numbers. As such, the October Chinese commodity import data can't just yet be interpreted as representing a fundamental macro-based reduction in China's appetite for foreign commodities, especially since September was somewhat stronger than expected. The combination of quantitative easing, Western world currency concerns and continued global growth all should serve as support for Chinese commodity import levels into 2011. We believe this will likely mean that commodity prices from copper to iron ore will remain very well bid." The data showed Chinese copper imports dropped nearly 26% on the month, iron ore fell 13% and oil plunged 30%. However, taking seasonal factors into account, copper imports were down by a lesser 19%, iron ore was actually up 12% and oil was down by about 29%, BMO says. Seasonally adjusted aluminum imports were up a strong 21%.
By Allen Sykora of Kitco News; asykora@kitco.com
Market Nuggets: Silver Break Underscores Current Commodity Market Volatility, Possible Harbinger?
10 November 2010, 9:47 a.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/
(Kitco News) -- The late day break in silver reverberated across several commodity markets and was just one example of the current market volatility, say the traders at futuresMONSTER. The VIX, the main volatility index, crept up slightly when silver traded from sharply higher to sharply lower, they say, because of the CME's decision to raise silver margins on speculators late Tuesday. And they note silver's action could be a harbinger of events to come. "People can say what they like about the move in the silver but at the end of the day the retail long trade in the silver caused the washout and the CME's move to increase margins from $5k to $6.5k (per) contracts could be a precursor to a lot of other things that have been going up with no pullbacks," they say.
By Debbie Carlson of Kitco News; dcarlson@kitco.com
10 November 2010, 8:48 a.m.
By Allen Sykora
Market Nuggets: Barclays Says Global Silver ETP Holdings Hit Record
(Kitco News) -- Silver holdings in global exchange-traded products around the globe rose by 123 metric tons Tuesday to a record 14,398, says Barclays Capital. Total in-flows so far in November amount to 250 tons, Barclays says. "The inflows have primarily materialized in the U.S.-based product, but we note that holdings reflect trade settled on the third business day rather than yesterday's appetite," the bank says. The bank describes long-term investor interest in gold as stabilizing, with an inflow of 0.1 ton yesterday across the 23 gold exchange-traded products that it tracks.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:47 a.m.
By Allen Sykora
Market Nuggets: Base Metals Ease As China Raises Bank Reserve Requirements - MF Global
(Kitco News) -- Base metals were mostly lower early Wednesday, retreating on news that China's central bank has ordered some banks to boost reserve requirements by 0.5%, says MF Global analyst Edward Meir. "The authorities are likely acting in light of fresh trade figures showing the country posting a larger-than-forecast $27.1 billion October trade surplus, as imports did not grow as much as expected," Meir says. The data included a decline in copper imports. Meanwhile, another report showed some slowing in China's red-hot property market after recent tightening moves, including a rate hike last month. Chinese property prices rose at their slowest pace in 10 months in October, with home prices in 70 cities climbing 8.6% from a year earlier, compared to a 9.1% pace in September. "That still may be too much for the authorities, and we would not be surprised to see more aggressive tightening in the weeks ahead," Meir says. "All this does not bode well for metals going into the first quarter of next year, but commodity investors do not seem to be focusing on Chinese medium-term macro trends for the moment, as they continue to seek hard-asset protection from what they perceive to be a continued erosion in the dollar."
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:27 a.m.
By Allen Sykora
Market Nuggets: Silver Volatility Reflects High Level Of Speculative Activity - Commerzbank
(Kitco News) -- The volatility in silver lately is reflective of the high level of speculative activity, says Commerzbank. The metal climbed to $29.36 an ounce Tuesday, then fell to $26.50 in a short time. "This morning, the price of silver is already a dollar higher again," Commerzbank says. "This high volatility suggests strong involvement by speculative oriented financial investors, but is by no manner of means a phenomenon that only applies to the silver market." Long positions were closed out Tuesday after silver soared in November alone by as much as 18% at the peak. "The trading volume for silver futures contracts on the Comex hit a record level yesterday and was over four times the 250-day moving average," Commerzbank says. "The fact that silver is in high demand and is outstripping gold in terms of investor interest is also shown by renewed high inflows into silver ETFs."
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 8:16 a.m.
By Allen Sykora
Market Nuggets: Gartman: Bull Market Not Over Despite Pullback After Silver Margin Hike
(Kitco News) -- The bull markets in gold and silver have not ended, although the markets also may not "turn around on the proverbial dime" after their late-Tuesday pullback when CME raised silver margins, says newsletter writer Dennis Gartman. For the 5,000-ounce silver futures contract, the "maintenance" margin for ongoing speculative positions was hiked to $6,500 from $5,000, while the "initial" margin for spec positions went to $8,775 from $6,750. Hedge/member margins also rose to $6,500 from $5,000. The new margins will be effective as of the close of business Wednesday. The margin notice prompted a fallback in spot silver from around $29.25 to $26.50 late Tuesday, Gartman says in his daily The Gartman Letter. "After the action yesterday, it may take a day or two or three to truly shake the late longs out of their positions," he says. "Markets do not usually turn around on the proverbial dime after 'reversals' such as yesterday and the margin increases only serve to make that more likely, not less." But has the bull market ended? "Not it has not," he says, but adding that it may have reached a point of "frenzy" where some liquidation was necessary.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 7:55 a.m.
By Allen Sykora
Market Nuggets: Barclays Technicians Have "Buy Dips" View On Gold, But Pause Not "Unwelcome"
(Kitco News) -- The uptrend remains for gold, although a "pause" may be in order, say technicians with Barclays Capital. "In the absence of clear evidence for a top, we retain a bullish long-term buy dips view," they say in a research note. "With the DSI reading 95% bullish, sentiment is once again becoming extremely stretched and a pause would not be unwelcome. Range trading above $1,325 is bullish, more aggressively so if support at $1,375 limits the downside. Sentiment for silver is also 95% bullish, so as price approaches the psychologically important $30 level, we are nervously watching out for signs of profit-taking." The late-Tuesday pullback may have been a start. "However, while supported above $26.50, we continue to respect the uptrend. Targeting $31 and higher next year," Barclays concludes.
By Allen Sykora of Kitco News; asykora@kitco.com
10 November 2010, 7:41 a.m.
By Allen Sykora
Market Nuggets: Barclays Technicians: Main Resistance For Platinum Is $1,830-$1,845 Area
(Kitco News) -- Technical analysts with Barclays Capital describe platinum as the "poor relation in the precious-metals rally," underperforming against the other metals so far this year. "However, when faced with surging commodity prices, even platinum is gaining ground against the dollar," Barclays says. "We were impressed by the rally to a new 2010 high last week and even more so in light of further gains this week, which have extended beyond a retracement level at $1,782 quite aside from the pullback Tuesday into the close." This signals a risk that the rally extends to Fibonacci resistance at $1,969 next year and possibly eventually to the 2008 highs, Barclays technicians say. "Near term, the main obstacle to further gains is the $1,830/45 zone, which marked the cliff edge back in 2008," Barclays says. "A close above that zone would be an important marker that suggests platinum is making up lost time."
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