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India gold buying cools off on record prices

Reuters — Mon, 23 Nov 2009 09:22:00 GMT

Mumbai: India gold buying cooled off on Monday after picking up slightly in the previous week as prices struck a fresh record high and the flow of scrap eased, dealers said.

“Buying is negligible compared to the regular daily volumes,” said a dealer with a state-run bullion dealing bank in Mumbai.

The most-traded December contract hit an all-time high of Rs17,534 per 10 grams and was trading 0.64% higher at Rs17,501 at 3:01pm.

Buyers are comfortable only upto Rs17,200 level, said the dealer.

Dealers said the flow of scrap has slowed as sellers sought higher prices.

“The flow has slowed despite record high prices, I may end-up collecting 3 kgs till the end of the day,” said Jitendra Kantilal, partner Jugraj Kantilal & Co., a gold scrap dealer in Mumbai, which offered to buy scrap at Rs17,700.

Oil rises more than 1% as dollar swings lower

Reuters — Mon, 23 Nov 2009 07:28:00 GMT

Perth: Oil prices rose more than 1% to top $78 a barrel on Monday, after the US dollar lost its footing and heightened tensions between key oil exporter Iran and Western nations raised speculation of a potential supply threat.

The dollar, down 0.5% against a basket of currencies, was also a key factor in driving up prices of other commodities, with gold powering to a fresh record high of more than $1,160 an ounce.

Investors typically buy commodities as a hedge against inflation and a weaker US currency.

US crude for January delivery rose 96 cents to $78.43 a barrel by 0736 GMT, after having risen by $1 earlier. London Brent crude rose $1.04 to $78.24.

“The rising Iran tensions, alongside US dollar weakness and gold’s record high levels, have helped buoy oil prices,” said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

Iran’s armed forces launched air defence war games on Sunday to show off the country’s deterrence capabilities in the face of Western pressure over its nuclear programme, and a cleric in the Revolutionary Guards warned the Islamic republic would fire missiles at “the heart of Tel Aviv” if attacked.

The threats came a day after senior officials from six world powers said they were disappointed Iran had not accepted proposals intended to delay its potential to make nuclear weapons, with US president Barack Obama having warned that there could be a package of sanctions against Iran within weeks.

While energy demand in the United States remains sluggish, crude consumption in China, the world’s No. 2 oil consumer, has rebounded strongly in recent months as its economy looks poised to post an impressive growth of around 8% this year.

China’s apparent oil demand in October rose 10.3% from a year earlier, the seventh rise in a row, as refiners produced at record rates among more signs of a solid recovery in the world third-largest economy.

Oil prices have gained about 75% so far this year, thanks to the weak dollar and signs of a global economic recovery, but they are still nearly 47% off their high of more than $147 a barrel in July 2008.

Analysts said oil prices have been trading within the $75-$82 band of the past one month and would need a lot more upside pressure to leap out of the $82 levels.

Barclays Capital said in a research note on Friday the upside would also probably be capped by Opec, which has indicated that any quick run-up in prices is likely to be met by a proactive approach to calm them, and until distillate demand showed some sustained improvements.

With a raft of economic data on tap in the United States in a holiday-thinned week, including existing home sales on Monday, revised GDP figures on Tuesday and the minutes of Fed’s last policy meeting the day after, investors are set to scrutinise the numbers for signs of economic activity perking up in the world’s top oil consumer.

Money managers boosted net long crude oil positions on the New York Mercantile Exchange in the week through 17 November, the Commodity Futures Trading Commission said in a report on Friday.

Gold strikes record price on inflation worries

Reuters — Mon, 23 Nov 2009 04:56:00 GMT

Singapore: Gold powered to a record above $1,160 an ounce on Monday after a rally in the dollar ran out of steam, strong oil prices resurrected inflation worries, and a drop in US stocks stirred doubt about the economic outlook.

Bullion, which has gained around 32% so far in 2009, struck a succession of lifetime highs in November as sentiment turned extremely bullish after India acquired 200 tonnes of the precious metal from the International Monetary Fund.

Gold was quoted at $1,162.85 an ounce by 9:24am, up $14.65 an ounce from New York’s notional close on Friday. It hit another record at $1,164.35 in thin trade also driven by technical buying after bullion surpassed previous records.

“We’re in unchartered territory. It’s going to move fairly freely. Momentum becomes quite a big driver of prices. You could see the hint of safe haven buying returning,” said Mark Pervan, ANZ’s senior commodities analyst.

“There is increasing expectation that the market could deleverage risk towards the end of the year. There’s a view that we could see some selling in equity markets, that lowering a risk would also benefit gold prices.”

US gold futures for December delivery added $16.7 an ounce to $1,163.50 on the COMEX division of the New York Mercantile Exchange, having struck a record at $1,164.80.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,117.493 tonnes as of Nov 20, unchanged from the previous business day. Trading was thin, with Japanese speculators away on holiday, but dealers noted buybacks and limited scrap sales by jewellers in Asia on expectations that gold prices could rise further.

The dollar headed lower in thin trade on Monday, giving up some of last week’s gains, while oil rose above $78 a barrel on heightened tensions between Iran and Western nations.

In theory, a weaker dollar makes dollar-priced gold cheaper for holders of other currencies, while strong oil prices raise the metal’s safe-haven appeal against inflation.

“You’ve got more high-profile hedge funds visibly investing in gold. That’s yet another factor encouraging moves into gold by the wider investor community,” said David Barclay, commodity strategist at Standard Chartered in Hong Kong.

Options traders are betting that gold will hit $1,200 an ounce or higher by early next year, and strong options interest could in turn lift underlying prices further into the uncharted territory.

US stocks fell for a third straight day on Friday as investors took weaker-than-expected results from computer maker Dell and homebuilder D.R. Horton as a further sign the recovery would be anemic.

Brides forced to be austere with high gold prices

AFP — Sun, 22 Nov 2009 06:09:00 GMT

New Delhi: For Indian brides buying jewellery, the bigger the better is the general rule, but record gold prices during this year’s wedding season are forcing many to compromise.

India is the world’s biggest consumer of gold, so the rise of local prices to records above $1,000 an ounce is keenly felt here - and nowhere more so than in the jewellery shops, an obligatory stop before any ceremony.

While few women are prepared to trade down on the size of their purchases, some are turning to new designs that retain the bulk and glitz but have reduced content of the precious metal.

Leading gold retailers in New Delhi and Mumbai say they are flooded with requests by clients for cheaper necklaces, rings, earrings, bangles or armbands.

“Clients come, select the design and tell us to make it with less gold,” a store manager at Mehrasons, a leading gold shop in New Delhi, told AFP, asking not to be named because he was not authorised to speak to the media.

Gold has cultural and religious significance for Indians - considered auspicious and a sign of wealth and prosperity.

Traditionally, daughters from the majority Hindu population are given gold ornaments at the time of their marriage.

The gold is known as “streedhan”, or women’s wealth, and most families will spend as much as they can afford.

“Big pieces of jewellery mean high gold content, but that is no longer affordable,” said Prabhu Thakkar, a gold trader based in Mumbai’s Jhaveri Bazaar, a wholesale market for gold and silver.

“Indians are never happy with small delicate designs. They need glossy, thick jewellery,” he said. “For Indians, big is beautiful.”

One solution is to buy big pieces but designed differently with lower gold content.

Some jewellery manufacturers are importing technology and alloys from Europe to make ornaments using hollowing techniques that help them reduce gold content by up to 50%.

Using the modern techniques, goldsmiths are trained to flatten 22-carat gold and then stuff it with an alloy that is a mix of copper and silver to make the ornament heavy.

“I have purchased Italian machinery and hired foreign designers to work on Indian designs using electroforming and hollow techniques,” Ritesh Jain, of Aurogold, a manufacturing and retailer in Mumbai, told AFP.

“People in India are always keen to buy gold but they cannot afford huge quantities these days. We have found new methods to move our stock quickly,” Jain said.

His company is investing over $100,000 to buy and install the new machinery.

Calvin John, a brand manager of Tanisq, a gold retail chain owned by the Tata conglomerate, said the trend of using gold in smaller quantities picked up after 2004, when the price of the precious metal began rising.

Local prices of gold, which have accelerated to highs in line with international prices, rose by 9% in the third quarter of this year, the World Gold Council said in a report released Thursday.

The report said that retail investment in India - investment in gold bars or coins - fell 67% over 12 months to 26 tonnes in the third quarter to September as high prices and a poor monsoon dented consumer sentiment.

Jewellery demand fell 42% to 111.6 tonnes, while total demand, which comprises jewellery and retail investment demand, fell 49% to 137.6 tonnes, the report said.

India usually imports between 700 and 800 tonnes of the metal every year and accounts for about 20% of global demand.

In recent weeks, international gold prices have blazed a record-breaking trail on concerns about the declining strength of the dollar as the world’s reserve currency.

For brides-to-be shopping during India’s ongoing wedding season, which runs from November to the end of January, the high prices are a headache.

Gold futures steady near record highs

Reuters — Fri, 20 Nov 2009 05:37:00 GMT

Mumbai: India gold futures steadied near record highs on Friday as pressure from profit-taking was offset by the yellow metal’s safe-haven appeal on cautious global economic outlook, analysts said.

The most-traded December contract was Rs17,212 per 10 grams, down 0.11% at 10:46am, after hitting a low of Rs17,204 in early deals.

The contract had struck an all-time high of Rs17,243 in the previous session.

“The pressure of profit-taking remains after the recent rise,” said Harish Galipelli, head of researcj with JRG Wealth Management.

The contract has gained about 7% since the start of the month.

Falling U.S. equities on growing caution about the US economic outlook helped highlight gold’s safe-haven appeal.

“In all, gold may consolidate between Rs17,100-17,280, but the sentiment still remains positive,” added Galipelli.

Gold may trade in the range of Rs17,192-17,300, said Aurobinda Prasad, deputy manager-research, Karvy Comtrade.

Oil steady at below $78, traders seek fresh cues

Reuters — Fri, 20 Nov 2009 04:50:00 GMT

Perth: Oil prices steadied below $78 a barrel on Friday, looking for fresh direction after a strong US dollar and weak stock markets triggered a 2% overnight fall.

Asian shares followed US stock markets lower, after a brokerage downgraded US technology stocks, while weak US jobs numbers raised concerns about the strength of the ecnomic recovery in the world’s top energy consumer.

“The market is directionless at the moment. Prices have been moving sideways between the $75-$82 range for the past month and we’ll need a lot more positive news for prices to break out of the $82 level -- which I think is unlikely to happen,” said Tony Nunan, an analyst Mitsubishi Corp in Tokyo.

“The economic outlook in the US is still very uncertain. We’ve probably seen the bottom but there are still a lot of storm clouds on the horizon.”

US crude for December delivery edged up 22 cents to $77.68 a barrel by 9:17AM, putting it on track for a 1.7% gain this week. London Brent crude gained 33 cents to $77.97.

Crude prices have swung with the dollar this week, jumping over $3 on Monday and then shedding over $2 on Thursday.

The dollar and yen kept their broad strength on Friday as investors continued to sell higher-yielding currencies and took profits from gains made in the past few months in risky assets.

The dollar has been shifting on changing perceptions of the US economy. The latest data came from the Conference Board’s index of US leading economic indicators, which rose to its highest since September 2007, but fell short of Wall Street’s expectations.

Fresh data showing a record one in seven US mortgages were in foreclosure or at least one payment was past due in the third quarter also added to investors worry that the housing market’s recovery will be tepid at best.

Asia is leading the global economy out of the deepest downturn in decades but the recovery will be marred by high unemployment and huge government debt across the industrialised countries, the OECD said on Thursday.

Many analysts have cautioned that the high jobless rate in the United States and Europe will keep global petroleum demand at anaemic levels for some time to come.

“While the past few months have seen a gradual turnaround in global oil demand data and oil demand expectations, there are still significant areas of weakness and dislocations,” Barclays Capital said in a report.

On the supply side, Opec seaborne oil exports, excluding Angola and Ecuador, will rise by 50,000 barrels per day in the four weeks to 5 December , UK consultancy Oil Movements, which tracks future shipments, said on Thursday.

Bengal’s tea gardens begin to shed sick tag

Shutapa Paul — Thu, 19 Nov 2009 16:30:00 GMT

Kolkata: Samsing tea estate in Dooars, in the Himalayan foothills in West Bengal, is the last of the 11 sick gardens that Sanjay Bansal’s Ambootia Tea Group—one of the top tea producers in India—has snapped up in the past five years.

The 3,200-acre garden was closed for five years until it was reopened in August. Bansal, who has so far turned around more than a dozen sick tea gardens, is confident of reviving Samsing, which, according to him, was “almost written off as unviable”.

The garden, which has some 2,000 workers, could at one point produce up to 2 million kg of tea a year. But such is the state of the tea bushes in Samsing that Bansal might have to be content with annual production of 700,000-800,000 kg initially. Yet he is confident of recovering his investments within two-three years if tea prices remain firm.

Bullish view: Ambootia Tea’s Sanjay Bansal is confident of recovering his investments within two-three years if tea prices remain firm. Indranil Bhoumik / Mint

Bansal says his company has so far spent Rs3-4 crore on refurbishing the tea leaf processing facility at Samsing, but refuses to reveal the garden’s outstanding liabilities.

Most of these gardens have huge liabilities such as provident fund dues and back wages. Under a rehabilitation scheme for 33 sick tea gardens introduced by the Union government two-and-a-half years ago, several incentives were offered for reopening the gardens.

Under the scheme, outstanding bank loans amounting to Rs184 crore were rescheduled and new owners of these gardens were offered a five-year moratorium on payment of both principal and interest. But it wasn’t until last year when tea prices started heading north that people reopened sick gardens.

At least four closed plantations in West Bengal — Chamurchi, Raipur, Samsing and Chinchula—have been reopened since July, according to industry regulator Tea Board of India.

“There are about a dozen closed gardens in India now, and the number hasn’t increased lately,” says Roshni Sen, the Tea Board’s deputy chairman. “The reason surely is firm tea prices.”

Till September, the average price of tea, all grades and auction centres combined, had gone up by Rs17.75 a kg from last year to Rs101.41 a kg, according to the board.

Production at some 20 sick tea gardens across India have restarted in the past couple of years. There’s excitement everywhere, says G. Boriah, a director at the Tea Board. “In Kerala, a group took over and reopened six gardens two years ago, and it is now eyeing at least three more,” he adds.

Over the past couple of years, a number of new companies have entered the business hoping to profit from rocketing tea prices.

Merico Hotels and Resorts Pvt. Ltd, a firm that runs a hotel in Puri in Orissa and is planning to build another in Kolkata, bought the 2,100-acre Chinchula tea estate in West Bengal’s Jalpaiguri district and reopened it in July.

“We got into the business because tea prices were rising and hope to start profiting within three years,” says Merico’s managing director Surajit Bakshi. “Once tea production stabilizes, we will surely consider expanding into tea tourism as well using the unused space in the garden.”

Merico, which is planning to spend up to Rs10 crore over the next few years to shore up tea production, could set up a hotel at Chinchula, according to Bakshi.

Despite firm tea prices, top tea companies such as McLeod Russel India Ltd and Goodricke Group Ltd are sceptical about acquiring sick plantations.

“The gardens being reopened now are only viable at current tea prices,” says Aditya Khaitan, managing director of McLeod Russel. “These are short-sighted steps... You can’t expect tea prices to remain firm forever, and if they fall again, many of these tea gardens might be shut.”

Goodricke buys only quality tea estates, says Arun N. Singh, the company’s managing director and chief executive officer. “We don’t believe in expansion through mindless acquisitions. Instead we have been spending heavily on our factories to make them state-of-the-art production facilities,” he adds.

India gold retreats; triggers demand pick-up

Reuters — Thu, 19 Nov 2009 10:22:00 GMT

Mumbai: India gold prices retreated from record highs on Thursday triggering a slight pick-up in physical offtake, but a weaker rupee weighed on sentiment, restricting a further downside in the yellow metal, dealers said.

“There were a few trades with decent quantity, but it is not as per our expectations as the weak rupee is hindering the extent of the fall (in prices),” said Pinakin Vyas, chief manager treasury, IndudInd Bank in Mumbai.

“Markets would get activated at Rs15,500-15,800,” said Vyas.

The most-traded December gold contract was 0.05% higher at Rs17,114 per 10 grams at 3:42 pm, after hitting a high of Rs17,197 earlier.

The contract had struck a record high of Rs17,236 on Wednesday.

A weaker rupee, which makes the dollar-quoted asset expensive, kept the downside limited in gold.

The Indian rupee fell as a weaker sharemarket, gains in the dollar and concerns authorities may start looking at steps to temper surging capital inflows weighed on sentiment.

“There are a few orders below $1,100 (an ounce),” said another dealer with a state-run bank.

Following were the prices being quoted by HDFC Bank in rupees in the spot market at 1:15 pm.

Gold demand falls 34% in Q3: World Gold Council

Reuters — Thu, 19 Nov 2009 07:37:00 GMT

London: Gold demand fell 34% in the third quarter as high prices weighed on investment flows and led to a slump in jewellery buying in key markets like India and the Middle East, a World Gold Council report showed on Thursday.

But speculation in gold futures and expectations for more official sector bullion buying are keeping prices elevated despite a dearth of physical demand, according to the WGC’s investment research manager Rozanna Wozniak.

“For most of last year, the buying was very physical,” said Wozniak. “(Now), it seems to be more financial market-driven, by some of those other less visible instruments -- derivatives, futures, over-the-counter transactions.”

“In terms of why it is happening, we have had some good news coming out from the central bank sector, as well as the fall in the US dollar,” she said. “That says something about potential future demand.”

A 200-tonne gold purchase by India’s central bank pushed gold prices sharply higher in early November. Prices hit a record above $1,150 an ounce on Wednesday as momentum buying pushed prices through key technical resistance levels.

But high prices have pressured physical offtake this year as consumers shied away from the metal, even as large investors and central banks bought gold as a portfolio diversifier.

Indian jewellery demand tumbled 42% to 111.6 tonnes in the third quarter from a year earlier, though it inched up from extremely low levels earlier in the year. In the Middle East, jewellery buying was down 34% at 69 tonnes.

Greater China, however - which comprises China, Hong Kong and Taiwan - saw a 10% rise in overall demand to 128.6 tonnes, while jewellery demand rose 7%.

Chinese consumers have seen less of an impact on local gold prices from currency fluctuations, and their economy has been more resilient than many. The market also remains relatively immature in terms of consumer buying, Wozniak said.

“The Chinese market was regulated for some time, so the Chinese consumer is still very much in the process of accumulating (gold),” said Wozniak.

Investment demand for gold also slipped from high levels in the third quarter of 2008. Retail investment in products such as coins and bars was down 31% year-on-year, while ETF inflows tumbled 72% to 41.4 tonnes.

Levels of ETF buying were exceptionally high in the third quarter, the World Gold Council said, with a dip in prices boosting interest in gold in all its forms.

Total gold supply edged down 5% in the third quarter, meanwhile, the WGC said. Mine production rose, but a dearth of sales from central banks -- which turned net buyers of gold in the quarter -- and producer dehedging cut into total supply.

Central banks bought 15 tonnes of gold in the third quarter, their second straight quarter as buyers. In the third quarter of last year, they sold 13 tonnes of gold.

Supply of recycled gold to the market rose 31% to 283 tonnes, but was still significantly down on the 569 tonnes it hit in the first quarter of 2009 as prices powered through $1,000 an ounce.

“Scrap does tend to come in waves, and it appears that for another wave, we would need a higher price to generate it,” Wozniak said.

Crude drifts below $80; watching dollar

Reuters — Thu, 19 Nov 2009 03:58:00 GMT

Singapore: US crude futures edged down just below $80 a barrel on Thursday, trading in the middle of recent ranges and taking cues from the dollar and weather in the United States.

The greenback was steady against a basket of currencies, while unseasonably warm weather in the northeastern United States implied soft demand for heating oil.

“The dollar is flat and there is nothing else that really stands out as a major influence. Temperatures are unseasonably mild in the United States and crude is holding the range between the high $70s and low $80s,” said Peter McGuire, managing director of CWA Global Markets.

“Opec said they wanted $80 and they are getting it. I can’t see a surge in demand unless things turn much colder in the United States.”

The Organization of the Petroleum Exporting Countries should hold its oil output steady when it meets in December as current prices do not suggest the need to change supply, the head of Libya’s National Oil Corporation said on Wednesday.

NYMEX crude for December delivery fell 21 cents to $79.42 a barrel by 8:40am, after settling up 44 cents on Wednesday, when a drop in US oil and fuel inventories was overshadowed by wider economic concerns.

Implied oil volalities are at their lowest since February 2008, back near levels before last year’s surge to a record high.

“In the last five or six months the market has found a range and that range is closing in on itself,” said Jonathan Kornafel, director, Asia at Hudson Capital.

He noted trading bands had narrowed from $10 between $65 and $75 to a $4-range between $76 to $80, capped by technical resistance at $80 and $82 as well as worries about fundamental demand, while ultra-accomodating monetary policy would encourage investors to buy on dips.

Commercial crude oil stocks in the United States fell 900,000 barrels last week, the Energy Information Administration (EIA) said on Wednesday, more than analyst projections for a 300,000 barrel draw.

But the fall was much smaller than the 4.4 million-barrel drop reported earlier this week by the industry group American Petroleum Institute.

Also in the EIA report, gasoline stocks were down 1.7 million barrels against a forecast for no change, while distillate stocks also fell, by 300,000 barrels versus expectations for a 700,000-barrel drop.

Gold sets a new record; shares edge up in Asia

Yoo Choonsik and Kevin Plumberg / Reuters — Wed, 18 Nov 2009 15:57:00 GMT

Singapore / Hongkong: Gold hit a fresh record high near $1,150 an ounce on Wednesday, boosting precious metals across the board, as a slight fall the dollar index added to momentum buying.

Asian stocks edged up as hunger for risk stayed high as the year end approached.

The exception: A masked woman walks in front of an electronic stock board of a securities firm in Tokyo, Japan, on Wednesday. Japan’s benchmark Nikkei lost 53.13 points to wrap up the day at 9676.80. Itsuo Inouye / AP

Gold has risen about 30% so far this year, fuelled by dollar weakness and investors’ search for assets which could be used to hedge against inflation.

Expectations that US interest rates will stay at exceptionally low levels for some time have dragged the dollar and encouraged global investors to look for better returns from riskier trades, such as emerging markets, currencies, commodities and stocks.

“It’s going to be hard for the dollar to gain further, since it looks like that the US will keep its low interest rate policy for a while,” said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking Co. in Tokyo.

The dollar index, which tracks the US currency against six other major currencies, fell some 0.3%, not far from a 15-month low struck on Monday. The MSCI index of Asia Pacific stocks outside Japan rose about 0.4%, after touching the highest since 31 July 2008 on Tuesday.

South Korea’s Kospi rose 1.1% to its highest close in three weeks, led by shares of Hyundai Mobis Co. after the company’s affiliate Hyundai Motor said it had to dispose of a stake in the car parts maker to meet anti-trust laws.

However, Japan’s Nikkei average bucked the regional trend, shedding 0.6% to end at a six-week closing low on fears that banks and property firms would dive in to tap equity markets for fresh capital in coming days.

Shares of Japan Airlines Corp., or JAL, tumbled nearly 4% to their lowest level since the firm’s 2002 re-listing after the nation’s transport minister declined to rule out a court-led bankruptcy for the troubled airline.

After the close, Mitsubishi UFJ Financial Group posted a 59% rise in quarterly profit helped by stronger lending and said it will raise up to $11.2 billion by issuing new shares, as Japan’s biggest bank aims to meet tougher global capital requirements.

The 1-trillion-yen share issue is a record for a Japanese financial firm and biggest fund-raising there in nearly a decade.

“Investor sentiment is pretty bad right now, it seems there is no end to negative factors,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“We have the strong yen, fund-raising worries, political uncertainty, concern about banks, and JAL.”

The Shanghai Composite rose 0.6% to a three-month closing high as investors bought energy stocks on optimism over rising demand for power to fuel China’s economic recovery.

“An increasing number of investors are now pouring money into the market, expecting it to sustain a medium-term rally due to China’s improving economy and corporate earnings,” said Zhang Qi, senior analyst at Haitong Securities in Shanghai.

In Hong Kong, stocks weakened 0.3% after hitting the 23,000 level for a second consecutive session earlier in the day, as investors took profits on HSBC shares and other lenders. “There is a bit of taking money off the table as the year-end approaches,” said Howard Gorges, vice-chairman at South China Financial Holdings. “The selling pressure is heavy.”

Shares in Taiwan and Australia rose slightly, while Singapore and India fell less than 1%.

Oil rose towards $80 per barrel after an industry report showed US crude oil stocks fell steeply last week, but gains were limited by doubts over the outlook for economic growth and energy demand.

“Commodities, including oil, have seemed to defy gravity over the last few weeks, partly supported by the dollar, but also on a false assumption that economic recovery will lead to a further rise in prices,” said Eugen Weinberg, head of commodity research at Commerzbank.

“That is probably wrong because the economic recovery is already reflected adequately in the current prices,” he said.

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Kaori Kaneko and Elaine Lies in Tokyo contributed to this story.

Oil rises towards $80 after US crude stocks draw

Reuters — Wed, 18 Nov 2009 10:09:00 GMT

London: Oil rose towards $80 per barrel on Wednesday after an industry report showed US crude oil stocks fell steeply last week, but gains were limited by doubts over the outlook for economic growth and energy demand.

Weekly data from the American Petroleum Institute late on Tuesday showed US crude inventories fell much more sharply than expected last week, dropping 4.4 million after storms in the Gulf of Mexico disrupted supplies.

Investors awaited a report from the Energy Information Administration at 9:00pm, considered the most reliable data on the US oil industry, to confirm the API figures.

“If the EIAs confirm the big drawdown, and I think they probably will, the market could move up sharply -- probably to above $80 per barrel,” said Eugen Weinberg, head of commodity research at Commerzbank.

US light crude oil futures for December delivery rose 60 cents to $79.74 a barrel by 2:50pm, adding to Tuesday’s gains of 24 cents.

London Brent crude gained 58 cents to $79.55.

Financial market will scrutinize US economic data due on Wednesday to gauge the health of the economy, after reports this week painted a picture of a slow recovery from recession with ample slack to cool inflation.

Indicators on Wednesday include US consumer prices, real weekly earnings and housing starts for October.

The United States is the world’s biggest oil consumer and recession there over the past 18 months has helped keep a lid on global demand for fuel. Expectations of economic recovery have helped propel oil prices higher this year but several analysts argue that the market may have moved too far too fast.

“That is probably wrong because the economic recovery is already reflected adequately in the current prices,” he said.

The US currency, which fell to 15-month lows against other major currencies this week, has been helping drive commodities higher for most of this year as investors have sought hard assets to hedge against the depreciating currency.

The dollar slipped on Wednesday, after its biggest rise in three weeks on Tuesday, as traders awaited US inflation data.

The US currency had rallied following rare comments on the dollar by US Federal Reserve Chairman Ben Bernanke, comments later echoed by other Fed officials and European Central Bank President Jean-Claude Trichet..

The dollar has declined steadily since March against a basket of other currencies, a decline that has also helped sput buying of other commodities.

Gold hit a record high of $1,146.95 an ounce in Europe on Wednesday, as a dip in the dollar index fuelled momentum buying of the precious metal.

Oil has rallied from below $33 last December even though global demand fell year-on-year for the first nine months of 2009, according to the International Energy Agency.

Gold hits new record but falls back to $1,140

Reuters — Wed, 18 Nov 2009 06:04:00 GMT

Tokyo: Gold prices inched up to touch another record high on Wednesday but then succumbed to profit-taking and fell back to $1,140 per ounce on the view that recent rises had gone too far too fast.

Although technical charts suggest bullion is overbought, market players said the precious metal’s long-term strength is seen intact, with the dollar expected to remain weak and amid worries about inflation and an uncertain economic outlook.

Federal Reserve Ben Bernanke made a rare comment on Monday about the value of the dollar, drawing a link between its current weakness and inflation risks.

Some said buying momentum for gold was likely to slow ahead of next week’s Thanksgiving holiday in the United States, and also now that prices have neared the $1,150 level, a key technical target seen likely to pave the way for $1,200.

“I think we will see the market taking a break with Thanksgiving almost here,” said Kazuhiko Saito, chief analyst at Tokyo’s Fujitomi Co Ltd, adding that it could be next month before another solid rally takes place.

Spot gold was at $1,137.70 per ounce at 10:42am, down 0.3% from the New York notional close of $1,141.50. It earlier touched a record $1,143.95 per ounce.

The dollar index hovered at around 75.26 after striking a 15-month low of 74.679 on Monday.

Gold has pierced record highs on eight of the past 12 sessions, during which it has risen more than 7 percent.

Bullion has gained about 30% in the year to date.

US December gold jumped as high as $1,144.70, a record, on Wednesday after settling up 20 cents at $1,139.40 in New York. It drifted lower to $1,138.30 in late Asian trade.

The precious metal inched up in New York on Tuesday as worries about long-term inflation more than offset a stronger dollar.

In news closely monitored by the market, the International Monetary Fund said it sold two tonnes of gold to the central bank of Mauritius at prevailing market prices on 11 November.

The report follows news early in November that the IMF had sold 200 tonnes of gold to India, a factor that helped drive gold prices to record highs above $1,100.

The focus has now shifted to the remainder of 403.3 tonnes that the IMF has said it plans to sell.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings stood at 1,113.833 tonnes as of 17 November, unchanged since 13 November.

In news on other precious metals, Johnson Matthey said platinum prices could top recent 14-month highs to hit $1,550 an ounce in the next six months if investment demand adds to a recovery in car sales.

Spot platinum stood at $1,446.50 per ounce, down 0.5% from New York’s notional close of $1,453.

India gold futures steady near record Rs17,000 level

Reuters — Wed, 18 Nov 2009 05:57:00 GMT

Mumbai: India gold futures steadied near their previous day’s record highs on Wednesday morning as pressure from a slightly higher rupee was offset by inflationary concerns stoked by rising crude oil, analysts said.

The most-traded December contract was 0.04% lower at Rs17,015 per 10 grams at 11:02am, after hitting a record high of Rs17,040 in late session on Tuesday.

Gold may face some resistance at Rs17,120, Abhishek Chauhan, technical analyst with Angel Commodities said.

The Indian rupee nudged higher as traders unwound long dollar positions, with the US unit easing against majors. A strong rupee makes the dollar-quoted asset cheaper.

Oil rose towards $80 a barrel, supported by an industry report that showed crude stocks in the U.S. fell steeply last week, but limited by US economic data that painted a picture of a slow recovery.

Rising crude oil enhances gold’s appeal as an inflation hedge.

Analysts said the outlook is still positive for the yellow metal.

“People are ready to buy at any dip. Gold may distinctly move on the upside till 17,185 later today,” said Gnanasekar Thiagarajan, director, Commtrendz Research.

Gold at Rs,17,000 level attract scrap sales

Tue, 17 Nov 2009 09:07:00 GMT

Mumbai: India gold hitting a fresh record high on Tuesday attracted scrap sales, but domestic demand abated after a slight pick-up late in the previous session, dealers said.

Gold futures on the Multi Commodity Exchange (MCX) was trading at Rs16,950 per 10 grams, up 0.15% at 2:43pm, after hitting a fresh record of Rs17,021 in early trade.

“There are sellers, but it is not a heavy rush. Some people are waiting for further rise to 17,500 (rupees),” said Kapil Kumar Chokshi, Chokshi Arvind Jewellers, which buys scrap.

Chokshi Jewellers offered to buy scrap at Rs17,200.

However, dealers said, the physical offtake abated in the middle of the wedding season, which will last till December.

“Yesterday I did some deals at $1,127-1,130 (an ounce)... but there is nothing since morning,” said a dealer with a state-run bullion dealing bank in Mumbai. “I don’t even have a single advanced orders.”

Oil sheds some gains; eyes dollar, data

Reuters — Tue, 17 Nov 2009 05:11:00 GMT

Perth: Oil fell on Tuesday, but clung to most of its previous session gains of 3% hovering above $78 a barrel, as traders took profit ahead of the release of key US indicators and a weekly fuel inventories report.

Oil prices rallied on Monday as a weaker dollar encouraged hedging activities, while better-than-expected US consumer spending data also buoyed hopes of energy demand recovery in the world’s largest oil consumer.

But with a lengthy calendar of economic data due on Tuesday, analysts said traders were expected to take a cautious stance and would hesitate to drive oil prices higher despite Asian equities hitting a 15-month high.

US crude for December delivery fell 30 cents to $78.60 a barrel by 9:35am. The contract settled $2.55 higher at $78.90 on Monday. London Brent crude fell 30 cents to $78.46.

“The guidance is really going to come from the dollar and the bunch of US economic data due later tonight,” said David Moore, a commodities analyst at the Commonwealth Bank of Australia.

Markets will watch for any comments on currencies when US President Barack Obama and Chinese President Hu Jintao make statements, while a string of economic data from the United States, including industrial output, producer prices and redbook retail sales, will be at the top of traders’ watchlists.

Asian stocks rose to more than 15-month highs after US Federal Reserve Chairman Ben Bernanke repeated the central bank was likely to hold interest rates at very low levels for some time, keeping the dollar pinned near 15-month lows and gold close to record highs..

Still, some analysts remain downbeat on oil prices in the near term and cautioned that crude oil’s recent rally had run ahead of demand fundamentals.

The International Energy Agency (IEA) has not seen much recovery in actual oil demand in OECD countries and the pace of global recovery may not justify OPEC raising production at its next meeting, the agency’s executive director said on Tuesday.

“We are concerned that economic recovery expectations are very high. While that is true in China and India, in OECD countries like Europe and Japan, we have not seen much of an actual recovery in oil demand,” Nobuo Tanaka told Reuters on the sidelines of an energy conference in Singapore.

Traders will also keep their eyes peeled for US fuel inventory data, with industry group American Petroleum Institute (API) releasing its report later on Tuesday and the government agency US Energy Information Administration (EIA) to follow with its own figures on Wednesday.

US crude oil inventories rose last week as imports probably edged up, despite minimal disruptions in offloading operations in the wake of Tropical Storm Ida, a preliminary Reuters poll ahead of weekly inventory data showed on Monday.

Distillate supplies, which include heating oil and diesel, were forecast down 800,00 barrels on average.

While the recovery in oil demand in the world’s No. 1 energy consumer appears choppy, oil use in China, the world’s second-largest oil-consuming nation, is on a gradual upswing.

Fuel stocks held by China’s top two oil firms CNPC and Sinopec Group fell for the third month in a row in October, showing more evidence of a gradual revival in oil demand.

Asian coal traders risk overexposure on freight

Jonathan Saul and Jackie Cowhig / Reuters — Mon, 16 Nov 2009 17:53:00 GMT

London: Indian and Chinese coal traders face big losses if they fail to ramp up their use of derivative instruments to hedge a growing shipping freight exposure.

Indian traders who have not hedged either coal or freight costs are likely to fail to honour contracts, creating a domino effect of losses for their suppliers, said traders and producers who declined to be named. This will result in a rash of disputes and lawsuits, they said, as has happened several times during the past few years.

Freight rates have remained erratic in recent months partly due to bursts of coal and iron ore buying activity by China and depressed demand for raw materials due to the economic downturn.

“If you have volatility in the freight market, that has repercussions further down on the supply chain,” Nikos Nomikos, reader in shipping risk management with London’s Cass Business School, said.

Coal prices have also risen to a 12-month high this month due to strong demand from China and India.

Indian coal traders, who supply almost all the 20 million tonnes (mt) of South African coal imported annually into the country, are currently losing up to $10 a tonne by not hedging coal linked to the benchmark API4 physical price index. Traders say importers have also not hedged their coal freight, with many companies facing massive losses and closure. “We have lost in a month what we made in a year,” an Indian trader said, declining to be named.

Some Indian traders say they may push counterparties to re-negotiate coal contracts at lower fixed prices to mitigate losses.

The 400 mt Asian physical coal trade is double that of the Atlantic market where traders hedge every tonne. Only a small part of coal price risk in Asia is hedged using swaps with even less done via freight forward agreements (FFAs).

FFAs allow a buyer to take a position over where freight rates will stand at a point in the future and are the commonly used instrument to hedge freight risks.

Most FFA contracts are settled against the Baltic Exchange’s physical indices.

“Any serious coal market player who isn’t hedging his freight either through contracts or through taking in tonnage or through the freight derivatives market would seem to be running a significant and unnecessary risk,” Baltic Exchange chief executive Jeremy Penn said.

Indian traders said they find FFAs costly and not entirely appropriate to their needs.

“The FFA market is not popular with the Indian market,” another Indian coal trader said. “FFAs are difficult to use and expensive.”

FFA shipping routes do not include the routes most used by Indian players to a variety of Indian ports from South Africa’s Richards Bay. This means several FFA routes are needed to hedge.

Clive Murray, chief executive of London Commodity Brokers (LCB), said FFA market players were reluctant to accept Indian counterparties, making clearing more necessary than ever to reduce risk.

“The FFA market has a long way to go yet before it will be able to accept Indian exposure,” he said.

Murray said exchange controls in China and India have made it difficult to use derivatives.

“The authorities in these countries need to have it proved to them that the use of derivatives is purely for hedging and not for speculating, which makes it complicated,” he said.

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Gold advances to record high as investors seek dollar alternative

Nicholas Larkin and Kim Kyoungwha / Bloomberg — Mon, 16 Nov 2009 17:38:00 GMT

London / Singapore: Gold prices rose to a record on Monday in London and New York as investors purchased the precious metal as an alternative to a slumping dollar.

Shining strong: The metal rose 7.9% this month as the greenback fell 1.6%. Gold has climbed 28% in 2009; heading for a ninth annual gain. Toru Hanai / Reuters

The Dollar Index, a six-currency gauge of the greenback’s strength, fell for a second day as better-than-forecast economic growth in Japan added to signs of a world rebound from recession. Asian leaders pledged to maintain stimulus measures until growth is durable, reducing the dollar’s allure as a refuge. Bullion and the currency usually move inversely.

“The dollar has shifted so fast from looking fairly strong to looking so weak, boosting gold prices,” Walter de Wet, a London-based Standard Bank Ltd analyst, said by phone. “Nobody wants to short gold.”

Immediate-delivery bullion rose as much as $14.51 (Rs669), or 1.3%, to $1,133.20 an ounce (28.35g) and traded at $1,127.20 by 11.24am in London. The metal added 2.2% last week. December gold futures gained 1% to $1,127.50 an ounce on the New York Mercantile Exchange’s Comex division after earlier reaching $1,133.50.

The metal advanced to a record $1,128.75 an ounce in the morning fixing in London from $1,104 at the afternoon fixing on 13 November. Some mining firms use fixings to sell output.

“The gold trend is incredibly powerful,” Evy Hambro, who helps to manage BlackRock Investment Management Ltd’s $11.6 billion World Mining Fund, said in a Bloomberg Television interview. “Production is declining and reserves are not being replaced.”

The dollar index slid as much as 0.6% on Monday and is down 7.7% this year. Gold has climbed 28% in 2009 and is heading for a ninth annual gain. The metal has added 7.9% this month as the US currency dropped 1.6%. Bullion will advance to $1,300 an ounce, said Wallace Ng, chief dealer with Fortis Bank in Hong Kong. “ It’s not an unreasonable call at all if you look at how the dollar behaves.”

The Federal Reserve has cut borrowing costs to an all-time low and the US government boosted spending to a record to combat recession in the world’s biggest economy, fuelling speculation that the dollar will be debased. The Reserve Bank of India bought 200 tonnes of gold from the International Monetary Fund last month, and Sri Lanka’s central bank said this month the country will continue buying the metal.

“Investors of all levels, from retail investors to central banks, are really diversifying their portfolios,” said Toby Hassall, an analyst with CWA Global Markets Pty Ltd in Sydney.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 0.61 tonnes to 1,113.83 tonnes on 13 November, its website showed. The holdings had reached a record 1,134 tonnes on 1 June.

Gold’s rally has pushed its 14-day relative-strength index, a gauge of whether a commodity or security may be set for a decline or gain, to over 70, a level viewed by some investors as a signal for a retreat. Monday’s index was 72.71.

“Though technically charts are hovering in the overbought zone, the tipping point seems to be far off and a short-term correction or retracement should not be considered a sell-off,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a report.

Among other precious metals for immediate delivery in London, platinum gained nearly 2.7% to $1,430 an ounce, the highest price since 4 September 2008, and was last at $1,417.50. Palladium climbed nearly 2.5% to a 15-month high of $365 an ounce and last traded at $363.25. Silver advanced 1.7% to $17.73 an ounce.

Car makers are beginning to replenish platinum stocks and Chinese jewellery demand remains strong, Ian Farmer, CEO of Lonmin Plc, said on a conference call on Monday. Lonmin, the world’s third largest platinum producer, cited signs of improvement in the industry and a possibility of supply shortages in the following two years.

Platinum and palladium are mainly used in auto pollution-control gear.

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Karolina Miziolek in Hong Kong, Haslinda Amin in Singapore and Rebecca Keenan and Jesse Riseborough in Melbourne also contributed to this story.

Gold will never fall below $1,000 an ounce: Faber

Udayan Mukherjee / CNBC-TV18 — Mon, 16 Nov 2009 17:33:00 GMT

Mumbai: Investment adviser and fund manager Marc Faber, who also publishes a widely read monthly investment newsletter titled The Gloom Boom and Doom Report, which highlights unusual investment opportunities, spoke in an interview about the global economy, India and the markets. Edited excerpts:

What’s your take on the recent flip-flops in the emerging and US markets?

Economic concerns: Investment adviser Marc Faber says crude oil is not facing huge downside risk. Scott Eells / Bloomberg

Basically, we have the private sector contracting around the world and then we have these huge stimulus packages that boost economic activity and we have quantitative easing; in other words, money printing around the world in concert by all central banks. So I think we have stabilized but basically considering the size of the stimulus packages and the monetary printing, the economy hasn’t responded well. What have responded well are asset markets. The US Federal Reserve is basically keen to lift asset markets again. Unfortunately, it backfired on them, to the extent that oil and other commodity prices have risen sharply. So the benefit of quantitative easing has essentially flowed into Wall Street, into investment banks, into the banking sector, but it hasn’t flowed into the typical household in the US.

So we have a very strange economy. We have booming financial markets. The stock market in India is up more than 100% from the lows in March, and in the US, we are up 60%. But at the same time the average household—the man on the street—is suffering.

Do you think the big dollar carry trade would present any threats to emerging markets?

I am not so sure there’s a huge dollar carry trade. What happens is that worldwide because interest rates are at zero percent—institutions as well as individuals borrow money and they go and speculate. There are too many dollars floating around from the American current account deficit that reached $800 billion (Rs36.9 trillion) annually and total international reserves in the hands of central banks now are $7.7 trillion. That is the dollar overhang and, to some extent, some people want to hedge their dollar exposure and then they sell dollars and buy foreign currencies, and also precious metals including gold, silver, platinum, palladium.

What then is the central risk for equity markets?

There is a risk that at some stage in 2010, the government bond markets (would) weaken considerably because I don’t understand why anyone who would now buy a 10-year US treasury at a yield of less than 3.5%. It’s a losing proposition. I also don’t understand why anyone could buy a 30-year US treasury at a yield of 4.4%. So I think that eventually yields will go up and this could disturb the stock market. In addition, we have very high valuations because corporate profits have held up better than expected, in the sense that corporations have cut expenditures substantially, notably in the workforce. So, maybe in 2010, we will see again more weakness in corporate profits and that the expectations are disappointed and that we go down again.

Where does all this leave commodities, which you track closely?

I don’t think that crude oil has a huge downside risk.

What about gold?

I don’t think that you’ll see gold below $1,000 per ounce probably ever again. So I’m quite positive.

Maybe, gold at this level is a better buy than it was at $300 per ounce in 2001.

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Oil advances 1.4% to above $77 on dollar weakness

Reuters — Mon, 16 Nov 2009 09:21:00 GMT

London: Oil prices rose a dollar to above $77 a barrel on Monday, regaining most of last week’s 1.4% losses as the dollar drifted lower

US crude futures for December delivery rose $1.18 to $77.53 a barrel by 2:39pm, London Brent crude gained $1.09 to $77.40.

The US dollar fell slightly by 0.45% on Monday against a basket of currencies, as it heads into a week likely to see increased debate over currencies during US President Barack Obama’s visit to China.

“As a result, we do not see traders taking aggressive positions in either direction on the dollar this week, possibly waiting to see what happens at the culmination of the president’s visit,” MF Global commodity analyst Edward Meir said.

A weaker dollar typically supports commodities because the dollar-priced contracts become cheaper for buyers using other currencies.

Underlining views that global economic imbalances are reflected by the weakening dollar, the head of the International Monetary Fund said a stronger Chinese yuan was part of the reforms Beijing needed to implement to increase domestic consumption.

The weaker dollar helped push gold prices to a fresh record high on Monday, while US wheat, corn and soybean futures also advanced more than 1%.

There was little impact from comments by Opec’s president, Jose Botelho de Vasconcelos, who said the market was still oversupplied, adding that he was satisfied with current oil prices and compliance, which he put at about 65%.

Hopes of a revival in energy demand from Japan supported prices.

Japan’s economy grew at the fastest pace in more than two years in the third quarter, as stimulus measures lifted consumer spending and capital spending bottomed out.

But with growth in the world’s No. 2 economy largely fuelled by the continued effects of stimulus spending by governments around the world, some analysts warned the recovery may lose momentum in coming quarters due to weak domestic demand.

With most corporate results already reported, market watchers will seek the next catalyst to set direction for the dollar, stocks and commodities.

That puts this week’s round of economic data in the spotlight, including US retail sales, inflation and housing starts data.

Analysts said upside gains to oil prices could be limited, however, with US data pointing to a choppy recovery, while bulging fuel inventories also reflected sluggish energy demand.