Europe:
- European Central Bank left its benchmark rate at 0.75 per cent; however it did suggest that if the recent appreciation of the currency pushed the inflation below the central bank’s 2 per cent limit then further interest rate cut could be a possibility.
- The Bank of England kept its target for bond purchases at 375 billion pounds and left the key rate at 0.5 per cent.
- France sold 7.98 billion euros of government debt and Spain sold 4.61 billion euros of government debt.
US:
- The Institute for Supply Management’s non-manufacturing index was at 55.2 for January 2013.
- The US trade deficit for December shrank to US$ 38.5 billion from US$ 48.6 billion in November, which could suggest a notable upward revision to the GDP in the fourth quarter of last year.
- Jobless claims for the week ending February 2, 2013, were at 366,000, down by 5,000 from last week.
- The Bloomberg Consumer Comfort Index was at minus 36.3 in comparison to last week’s minus 37.5.
China:
- China’s overseas shipments increased 25 per cent from a year earlier versus an estimate of 17.5 per cent.
- Trade surplus was at $ 29.15 billion versus $ 24.7 billion projection.
- Inflation was at 2 per cent.
Japan:
- Deficit of 264.1 billion yen was reported in the trade number for December versus an expected deficit of 144.2 billion yen.
India:
The Indian Rupee finished the week at 53.58 to the US dollar.
Gold US$ 1667.20 – down US$ 0.40 cents from last week
The yellow metal for the third consecutive week continues to remain in discount to Platinum; however the discount has widened to US$ 44.80. Gold continues to trade sideways in the range of US$ 1660 and US$ 1695 and could not match up the pace at which the white precious metals moved. However, positive data was reported during the week about the imports gold in China in December which was at 114 tons and is the highest monthly volume in recent years.
Further, based on ECB comments the market was looking for direction upwards, however the move remained more or less flat which seemed to be more due to euro giving up its gains against the dollar.
Gold came under pressure and gave up its gains based on the release of the trade number of the US, which indicated that the revised GDP number could be in the positive territory.
In the coming week, market participants from China would not be participating due to the holiday week for the lunar new year and this could be a test for gold on the lower side, as we have evidenced that China has been a significant contributor on the buy side.
The latest Commitment of Traders Report (‘COTR’) (end of business day February 5, 2013), shows that the long positions have increased and short positions have increased but not very significantly.
Option volatilities midrates:
Gold atm (at the money) – Change from last week
1 month 11.00% Unchanged
3 month 12.50% Unchanged
6 month 13.75% Up 1.00%
1 year 16.00% Unchanged
Premium 1kg Gold bars loco Dubai (DGD 995 fine) against loco London: US$ 0.50
EFP Spot Gold to April Comex: US$ 0.47
ETF Holdings are at 2810 tons
Support: US$ 1626 and US$ 1607 Resistance: US$ 1695 and US$ 1707
Silver US$ 31.43 – down by US$ 0.41 from last week
Silver continues to get very much impacted by the moves in gold and seems to also have got itself in to a sideways trading range of US$ 30.50 and US$ 32.50. However, the COTR suggest that the market participants could be in a phase where it is reconsidering whether silver should be viewed more as an industrial metal or as a precious metal.
The latest COTR (end of business day February 5, 2013), shows that the long positions have decreased and short positions have also decreased.
Option volatilities mid rates:
Silver atm (at the money)
Change from last week
1 month 20.50% Up 1.00%
3 month 22.00% Up 1.00%
6 month 23.75% Up 0.25 %
1 year 25.50% Unchanged
EFP Spot Silver to March Comex: US$ (0.5000) cents
ETF: Holdings are at 17,510 tons
Support: US$ 30.00 and US$ 28.1 Resistance: US$ 32.50 and US$ 33.1
Platinum US$ 1712 – up US$ 29 from last week
The premium to gold continues for the third week in a row and the premium to gold is US$ 44.80. This week it completely belonged to the white precious metals group, especially platinum. Platinum finally broke out of its range and broke the critical level of US$ 1700 and sustained above it.
The move took platinum prices above US$ 1740 levels, however profit taking coming in to play, which made platinum give up its gains.
The strong auto sector report from China which posted a year on year increase of 46 per cent, which was the highest growth rate since March 2010 and also a solid month on month growth of 12 per cent, clearly demonstrated the demand side of the story especially from China.
The supply side story in terms of the concerns for the mining sector seems to continue, which provides the required impetus to the platinum prices.
The latest COTR (end of business day February 5, 2013), shows that the long positions have increased and short positions have increased but not very substantially.
Option volatilities midrates:
Platinum atm (at the money) Change from last week
1 month 17.00% Up 1.00%
3 month 17.25% Up 0.75%
6 month 18.00% Up 0.50%
1 year 19.00% Up 0.50%
EFP Spot Platinum loco London to April NYMEX: US$ 1.10
ETF Holdings are at 57.40 tons.
Support: US$ 1650 and US$ 1540 Resistance: US$ 1742 and US$ 1793
Palladium US$ 752 – down US$ 3 from last week.
Palladium traded above US$ 770 during the week, however gave up all its gains due to profit taking by market participants.
The strong data for the auto sector supported the price move for palladium and will continue to do the same. The supply side reports from Russia have not been encouraging
which puts additional pressure on palladium prices on the upside.
However, there seems to be a theory playing amongst some of the market participants, which is that one should be vary of price movements on the upside, since they believe that the price has been overdone on the upside as palladium has already provided returns of 25 per cent over a period of 3 months and there would be pressure for profit taking and any negative news could trigger the move on the down side. The latest COTR (end of business day February 5, 2013), shows that the long positions have increased and short positions have also increased but not very significantly.
Option volatilities midrates:
Palladium atm (at the money) Change from last week
1 month 24.50% Up 1.50%
3 month 24.50% Up 0.50%
6 month 24.50% Unchanged
1 year 25.50% Unchanged
EFP Spot Palladium loco London to March NYMEX: US$ (0.30)
ETF Holdings are at 74.6 tons
Support: US $ 735 and US$ 700 Resistance: US$ 772 and US$ 793
