Monday, 12 November 2012

Gold Ends Unchanged, Plagued by Uncertainties:


http://www.marketwatch.com/story/gold-futures-trade-gently-higher-extending-gains-2012-11-12?siteid=bigcharts&dist=bigcharts


Nov. 12, 2012, 3:05 p.m. EST

Gold ends unchanged, plagued by uncertainties

Silver contract pulls back after Friday’s climb; Copper gains

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By Myra P. Saefong and Robert Daniel, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures settled unchanged Monday, supported by strong demand out of India and inflationary concerns in Japan, but plagued by uncertainties linked to the U.S. fiscal cliff and the European debt crisis.
Gold for December delivery GCZ2 -0.19%  settled at $1,730.90 an ounce on the Comex division of the New York Mercantile Exchange, unchanged from Friday’s settlement.
Prices traded between $1,725.20 and $1,738 Monday. They tallied a gain of nearly $17 over the past two trading sessions.

GCZ2 1,727.60, -3.30, -0.19%
Silver for December delivery SIZ2 -0.69% fell by 8 cents, or 0.2%, to settle at $32.52 an ounce, stalling after having gained 1.1% on Friday.
The market “could see some fireworks,” which makes sense with the European debacle and U.S. fiscal cliff and quantitative easing, said Gijsbert Groenewegen, a managing partner at Silver Arrow Capital Management.
The fiscal cliff refers to tax and spending hikes that will happen in January if politicians can’t agree on a budget deal.
But on technical levels, gold needs to first break above $1,740 and then $1,790, and silver needs to break above $33.25 and then $34-$35, said Groenewegen.

Japan and India

Data showing contraction in Japan’s economy for the third quarter raised prospects for further economic stimulus, boosting gold’s appeal as a hedge against inflation, but volatility was a factor with gold trading relatively thin amid the U.S. Veterans Day holiday.
In Japan, the government reported that the nation’s economy shrank sharply in the third quarter, with GDP falling by 0.9% and by 3.5% on an annualized basis. See: Japan’s economy shrinks 0.9% in July-September.
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Avoiding the fiscal cliff

The White House plans an aggressive public campaign to build support for its approach to reduce the deficit through tax increases and spending cuts, a sharp contrast to its private talks with Republicans that faltered last year. Photo: Reuters.
The Japanese data, however, were bearish for silver prices.
“Any signs of economic weakness (such as the Japanese GDP numbers) could show lessening demand for industrial use of silver,” said Jeffrey Wright, a managing director at Global Hunter Securities.
Gold demand in India was supportive, ahead of the Diwali holiday, which begins Tuesday and lasts for five days.
International trading company MMTC Ltd. reported record buying volumes of gold and silver for the Diwali jewelry events, said Richard Hastings, a macro strategist at Global Hunter Securities.
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However, “we should be a bit cautious about the effect of prices on consumer buying in India due to the rupee’s weakness,” he said.
Meanwhile, China reported that its trade surplus widened to $32 billion from $27.7 billion in September, above the $27 billion surplus expected by economists surveyed by Dow Jones Newswires.
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A slightly better reading for Chinese trade “could suggest stability in jewelry demand in China,” said Hastings.
On Friday, gold futures rose, in part, due to reports of strong demand coming from India and China. Read Nov. 9 MarketWatch article with details of the demand expectations from China and India.
And other market observers noted that President Barack Obama’s re-election suggested that the Federal Reserve’s quantitative-easing program, which is bullish for gold, would continue. Read Commodities Corner: What Obama’s reelection means for gold.

Copper leads gains

Among other Comex metals futures to start the week, copper scored the biggest percentage gain.
December copper HGZ2 +0.75% settled at $3.47 a pound, up 2 cents, or 0.7%.
January platinum PLF3 +0.47%  added $7.10, or 0.5%, to $1,566.50 an ounce while December palladium PAZ2 -0.43%  closed down $3, or 0.5%, to $608.05 an ounce.
“The most positive development geopolitically [for all commodities and stocks] would be news that the U.S. Congress and the President have reached some kind of preliminary agreement regarding the fiscal cliff,” said Steven Kaplan, a senior editor at TrueContrarian.com.
“The first commodity to move higher in anticipation of such news would probably be copper,” Kaplan said, pointing out that copper was the strongest metal on Monday.
“This could be pointing the way toward higher prices for gold and silver later in the week,” he said.
For now, an agreement regarding the fiscal cliff remains uncertain, said Kaplan. But “negative anticipation of the outcome is probably already mostly built into current [commodity] prices, leaving only limited downside.”
Kaplan added: “if there is a resolution to the fiscal cliff which would involve continued high deficits, then that could lead to a strong rally for gold. In the unlikely event that Republicans agree to significantly higher taxes, that would continue to put downward pressure on the yellow metal.”
Myra Saefong is a MarketWatch reporter based in San Francisco. Robert Daniel is MarketWatch's Middle East bureau chief, based in Tel Aviv.
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