Gold Declines on U.S. Economic Recovery, Budget-Deal Optimism

Gold dropped for the first time in four days as optimism that the U.S. economy is recovering and lawmakers will reach a budget deal damped demand for the metal as a protection of wealth. Platinum and palladium advanced.
Spot gold fell as much as 0.4 percent to $1,651.62 an ounce and was at $1,655.73 at 3:25 p.m. in Singapore. It lost 2.3 percent last week, the most since the period to June 22, after data showed that consumer spending, durable-goods orders and industrial output increased in November. A separate report showed the largest economy grew at a 3.1 percent annual rate last quarter, exceeding all projections in a Bloomberg survey.

 

An Argor Heraeus SA-branded one kilogram gold bar is seen in this arranged photograph at Gold Investments Ltd. bullion dealers in London, U.K.. Photographer: Chris Ratcliffe/Bloomberg

The U.S. may be a “bright spot” for the global economy in 2013, according to Huang Guobo, who oversees management of the $3.3 trillion foreign-exchange reserves in China, the largest foreign lender to the U.S. government. President Barack Obama and House Speaker John Boehner have not yet been able to reach a deal to avert more than $600 billion in automatic spending cuts and tax increases from Jan. 1, known as the fiscal cliff.
“The U.S. economy has been recovering and the market is optimistic on resolution of the fiscal cliff,” Janet Kong, an analyst at China International Capital Corp., the nation’s largest investment bank, wrote in a note.
Gold for February delivery slipped 0.1 percent to $1,658.30 an ounce on the Comex in New York. Holdings in gold-backed ETPs reached a record 2,632.516 metric tons on Dec. 20, and have expanded 12 percent this year, data compiled by Bloomberg show.
Spot gold is 5.9 percent higher this year, set for a 12th annual gain, as investors sought the metal to hedge against weakening currencies and the threat of inflation after central banks around the world boosted stimulus to prop up economies.
Spot platinum rose as much as 0.9 percent to $1,549 an ounce, before trading at $1,548.50. The best performing precious metal in 2012 has risen 11 percent. Palladium rose 0.2 percent to $687.25 an ounce, 4.9 percent higher this year. Cash silver fell 0.1 percent to $29.925 an ounce, up 7.5 percent this year.

Source: Bloomberg


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Morgan Stanley Triple-Top Buy Setup?

Shares of Morgan Stanley are approaching what may be a relatively rare but important chart point -- a triple-top buy pattern. Security:   MS
Position:   N/A

After enduring a sharp 10-week long decline in the spring of 2012 -- one that saw Morgan Stanley (MS) shares shed more than 42% of their value -- this key financial sector stock managed to put in a strong, well-spaced double-bottom pattern (between June 4 and July 23, 2012), attracting the interest of value-conscious smart money interests as it did so. Now, five months later, MS is up by more than 50% and is rapidly closing in on what could be an explosive triple-top buy signal, one that could lead to even more gains in the stock as 2012 fades out and 2013 arrives. Here's a closer look now (see Figure 1).

FIGURE 1: MS, DAILY. Triple-top buy patterns are infrequent, but they can sometimes lead to powerful continuation moves. Note how bullish that Morgan Stanley's long-term money flow trend is on this daily chart.

Chart pattern trading can be a valuable technical analysis timing tool, particularly when an attractive pattern -- such as the beautiful triple-top buy signal you see above -- is put into a big picture context that includes at least several of the following confirming market dynamics: 1. The four- and 13-week relative strength of the stock versus the .SPX, .NDX, and/or .RUT. See Figure 2. 2. The long-term money flow trend of the stock -- using an 89- to 110-day Chaikin money flow histogram. 3. The six- to 12-month earnings growth projections for the stock. Check for recent upward/downward revisions in earnings growth rates. 4. The price cycles for the stock; the more that agree with the projected breakout of the chart pattern, the more reliable the breakout is likely to be. There are other tools that can be used, of course, but using these four is a great place to start, especially when dealing with a very large pattern that may offer a substantial profit opportunity. In the case of MS, the stock scores very favorably in each of those four categories, and the next big event to watch for is a break above 18.57, which is the October 18, 2012 high of the second of the three tops shown on the chart. We've all heard the phrase "third time's a charm," and in this instance, it's going to be positive fundamentals and technicals (rather than sheer luck) that will power MS higher in the days ahead, playing MS here on the long side, possibly weeks ahead.

FIGURE 2: SPX. Many financial sector stocks in the Standard & Poor's 100 are outperforming the .SPX over the past 13 weeks, including Morgan Stanley.

Playing MS here on the long side isn't too complicated, but you definitely need to decide what your trading objectives are, since there is a high probability of a pullback to retest the 18.50 to 19.00 area (depending on how powerful the break higher might be), traders using 30- to 60-minute charts might find any number of good entry points after a pullback and may be able to ride them higher for one to three days. Intraday scalpers might simply go for a 25- to 50-cent gain on a break above 18.57, being careful to use a very close stop if they do. Finally, traders could simply buy a January '13 MS $17.50 covered call -- selling for about 17.27 as this is written -- intending to hold the position through option expiration on January 19, 2013. Using the 21-day exponential moving average (EMA) (blue line on Figure 1) can help give you an objective trailing stop for the entire position; if you see MS make a daily close below it, you simply liquidate both sides (remember, you're long 100 shares of stock and short one call option when you put on a covered call) of the position. Risking 2% or less of your account equity can also help limit the damage to your portfolio on trades that simply don't work out, as risk control is a critical component in the long-term success of any kind of trading endeavor. Trade wisely until we meet here again.

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U.S. Stock Futures Drop as Yen Slips Amid Budget Deadlock

U.S. stock futures declined and oil headed toward the lowest close in a week amid speculation American lawmakers will miss a year-end budget deadline. The yen slid as Japan’s incoming pro-stimulus prime minister said he may change rules governing the central bank.
Futures for Standard & Poor’s 500 Index dropped 0.5 percent as of 8:17 a.m. in London. The Stoxx Europe 600 Index slipped less than 0.1 percent even as BP Plc climbed after winning judicial approval on claims settlement for the 2010 Gulf of Mexico oil spill. Markets in most European nations are closed today for Christmas eve. The yen fell 0.2 percent against the dollar, extending the longest streak of weekly declines in nine months. Brent oil in London dropped 0.3 percent to $108.62 a barrel. Spot gold climbed 0.4 percent.

 

The yen weakened against the dollar. Photographer: Kiyoshi Ota/Bloomberg

 

The Japanese national flag flies atop the Bank of Japan headquarters in Tokyo, Japan. Photographer: Akio Kon/Bloomberg

Time is running out for U.S. lawmakers and President Barack Obama to agree on a budget deal by year end to avoid triggering more than $600 billion in tax increases and spending cuts, Senator Joseph Lieberman said. Shinzo Abe said he will consider changing laws governing the Bank of Japan if it fails to revise its inflation target up to 2 percent next month.
“Most people had made the assumption that the fiscal-cliff discussions would have been successful,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. U.S. House Speaker John “Boehner’s failure to get enough votes for the ‘Plan B’ in the House certainly was a shock to the financial markets. If that story continues, it will continue to hit risk markets and support demand for the U.S. dollar.”
Volume on Australia’s stock market, which shut at 2:10 p.m. local time, was more than 60 percent below the 30-day average for the time of day. Hong Kong traded for half a day, while Japan was closed.

Gold Producers

The MSCI Asia Pacific excluding Japan Index gained 0.1 percent with about eight shares rising for every seven that fell. Hong Kong’s Hang Seng Index gained 0.2 percent and Australia’s S&P/ASX 200 Index closed 0.3 percent higher. South Korea’s Kospi Index was up 0.1 percent, while the Shanghai Composite Index advanced 0.3 percent.
Supplies of cash in China are the most plentiful in three years in the run-up to public holidays, after policy makers told the central bank to ensure companies have enough funds to support economic growth, according to the seven-day repurchase rate from the National Interbank Funding Center.
Gold producers advanced in Asia as the U.S. budget impasse boosted demand for the metal as an investment haven. Alacer Gold Corp. (AQG) surged 6.7 percent in Sydney and Newcrest Mining Ltd. climbed 1 percent. Zijin Mining Group Co. (2899), China’s No. 1 gold producer by market value, rose 2.4 percent in Hong Kong.

Budget Stalemate

The S&P 500 Index had its worst decline in more than a month on Dec. 21 after Boehner failed to garner support from his caucus for “Plan B,” which would have extended tax cuts on incomes below $1 million.
“For the first time I feel it’s more likely that we will go off the cliff,” Lieberman, a retiring Connecticut independent, said on CNN’s “State of the Union” program of the so-called fiscal cliff. Lawmakers plan to return to Washington Dec. 27 to continue negotiating.
The yen dropped against 15 of 16 major peers and was down to 84.37 per dollar. The currency fell for a sixth week against the greenback last week after the nation’s central bank said it would review its inflation target after a pro-stimulus government was elected.
Abe, who is poised to become prime minister after his Liberal Democratic Party’s coalition secured a majority in elections on Dec. 16, has called on the BOJ to pursue “unlimited easing” to help end deflation and revive growth.
Japan’s currency has tumbled 12 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

Gold’s Reversal

Gold advanced after its worst week in six months, erasing an earlier decline. Bullion for immediate delivery rose to $1,663.42 an ounce after dropping as much as 0.3 percent today.
“The market’s wondering which way it’s going to go,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “As 2012 draws to a close and 2013 comes into play, the price may drift back up as it looks like it’s not going to happen,” he said, referring to an agreement by U.S. lawmakers on the budget.
Copper climbed for a second day after U.S. data showed demand from the second-largest user may improve, gaining 0.2 percent in London. Reports from the U.S. Commerce Department last week showed household purchases climbed last month as orders for long-lasting items increased more than forecast.


Source: Bloomberg


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Egypt Shares Drop as Economy Concern Outweighs Vote

Egyptian stocks fell for the first time in four days as concern that the government will fail to revive economic growth overshadowed initial results showing a draft constitution won approval.
Palm Hills Developments SAE, a developer of luxury real estate, tumbled 3.6 percent. Commercial International Bank Egypt SAE (COMI) dropped 2 percent.
The EGX 30 Index (EGX30) declined 1.2 percent to 5,378.21 at 1:39 p.m. in Cairo, the biggest retreat since Dec. 10. The benchmark gauge has still advanced 48 percent this year, the sharpest rally since 2007. Elsewhere in the Middle East, the Bloomberg GCC 200 Index of the biggest companies in the six-nation Gulf Cooperation Council, slipped 0.2 percent today.
“In theory, the constitution’s approval means we’re on the road to stability,” said Ashraf Akhnoukh, Cairo-based manager for Middle East and North Africa markets at Commercial International Brokerage Co. “But in reality, the economy remains a huge challenge and it’s a big question whether this government will be able to stimulate recovery.”
Islamists who support President Mohamed Mursi said 64 percent of voters backed the charter. Still, unrest in the month leading up to the vote had forced the government to delay a $4.8 billion International Monetary Fund loan seen crucial to revive the economy, which U.K.-based consulting firm Maplecroft says won’t grow enough over the next three years to prevent unemployment from rising.
The volume of shares changing hands in Egyptian stocks was 50 percent more than the average of the last 10 days, according to data compiled by Bloomberg.

Plunging Reserves

Growth may average 3 percent over the next three years, according to Maplecroft. The pound, subject to managed float, is trading at the lowest level since 2004 as the country struggles to stem the decline in foreign-currency reserves, which have plunged 58 percent since last year’s uprising.
Palm Hills declined 6 percent, the biggest intraday drop since Dec. 6, to 2.37 pounds. Commercial International Bank fell 2.5 percent to 34.50 pounds.
Dubai’s DFM General Index (DFMGI) gained 0.4 percent to 1,606.92 at the close in the emirate, the highest since Dec. 10.
Air Arabia (AIRARABI) rose 2.7 percent to 80.2 fils, the highest since March 2011. The company was the second-most traded stock in the index. Air Arabia’s 2012 profit may jump 44 percent to 387 million dirhams ($105 million), according to the average estimate of eight analysts on Bloomberg.

Payout Expectation

“Investors are positioning themselves in anticipation of the dividends for 2012,” said Samer Darwiche, Dubai-based analyst at Gulfmena Investments Ltd.
The Sharjah-based airline last paid a cash dividend of 0.06 dirham a share for 2011, when profit dropped 12 percent, data compiled by Bloomberg show.
Abu Dhabi’s ADX General Index rose 0.5 percent, Oman’s MSM30 Index gained 0.3 percent and Bahrain’s measure added 0.7 percent. Kuwait’s index fell 0.3 percent, Qatar’s QE Index retreated 0.2 percent and Saudi Arabia’s Tadawul All Share Index dropped 0.2 percent at 2:39 p.m. in Riyadh.
Israel’s TA-25 Index declined 0.5 percent. The country’s benchmark bonds rose, pushing the yield to the lowest level in almost a week, on speculation the central bank may lower borrowing costs as early as tomorrow.


Source: Bloomberg

European Stocks Fluctuate Near 19-Month High

 European stocks fluctuated near a 19-month high as investors awaited developments in U.S. negotiations to avoid so-called fiscal cliff. U.S. index futures and Asian shares were little changed.
Ericsson AB lost 2.6 percent after taking an 8 billion kronor ($1.2 billion) charge related to its wireless-chip venture with STMicroelectronics NV. (STM) UBS AG, Switzerland’s biggest bank, dropped 1 percent as it faces scrutiny in Hong Kong for possible misconduct linked to the city’s rates. SBM Offshore NV (SBMO) soared 13 percent after seeking to settle a dispute with Talisman Energy Inc.
The Stoxx Europe 600 Index (SXXP) retreated less than 0.1 percent to 281.62 at 10:10 a.m. in London, having swung between gains and losses at least six times. The benchmark measure is heading for a seventh straight month of gains and has rallied 15 percent this year as the European Central Bank announced an unlimited bond-buying program and the Federal Reserve began a third round of asset purchases.
“Investors won’t be taking any big positions from now until year end,” said Matthieu Giuliani, a fund manager at Banque Palatine SA in Paris, which oversees $5.3 billion. “As for the fiscal cliff, it’s in the best interest of both parties to find a solution. It’s normal that the opposition asserts its power to prolong things, but in the end they will reach an agreement.”
Standard & Poor’s 500 Index futures fell 0.1 percent today, while the MSCI Asia Pacific Index (MXAP) rose less than 0.1 percent as the Bank of Japan expanded its asset-purchase program.

Budget Talks

Officials from President Barack Obama’s administration told leaders of U.S. business and financial-services groups that negotiations with House Speaker John Boehner, a Republican, have deteriorated in the last 24 hours, according to a person familiar with the meeting.
The officials told the group of eight industry representatives at the White House that Republican plans to move forward with Boehner’s alternative proposal on taxes and spending risks pushing the government past the deadline, said the person, who asked for anonymity to discuss the private talks. If lawmakers don’t reach an agreement by the end of the year, a package of more than $600 billion of automatic tax increases and spending cuts, will come into force in January.
Data on U.S. gross domestic product, home sales and leading indicators are among economic reports expected today.
Ericsson fell 2.6 percent to 64.60 kronor as the world’s largest maker of mobile-phone networks took the charge for writing down the value of ST-Ericsson. The company said it won’t buy a full majority of the unit after Geneva-based STMicroelectronics said it will exit the venture.
STMicroelectronics lost 1.2 percent to 5.31 euros in Milan.

UBS Probe

UBS (UBSN) slipped 1 percent to 15.05 Swiss francs. The Hong Kong Monetary Authority has started an investigation to see if there was wrongdoing by the bank in its submission of data for setting the Hong Kong Interbank Offered Rate, according to a statement from the de-facto central bank.
SBM Offshore climbed 13 percent to 10.43 euros as the world’s largest maker of floating oil and gas output platforms sought to settle a dispute with Talisman and wrote off the value of a related operation. The company will sell a 9.95 percent stake to HAL Investments BV for $193 million to restore its balance sheet and meet banking covenants.
Cap Gemini SA (CAP), a French computer-services company, slid 3.6 percent to 33.24 euros. Accenture Plc, the world’s second- largest technology-consulting company, reported a decline in first-quarter sales of its advice.

Areva Declines

Areva SA (AREVA) lost 3.9 percent to 12.90 euros. The maker of nuclear reactors, offshore wind turbines and biomass plants cut its earnings forecast for 2013, citing financing delays at unspecified renewable energy projects carried out by clients.
Rheinmetall AG (RHM), the maker of KS Kolbenschmidt engine pistons, dropped 2.8 percent to 36.43 euros as Citigroup Inc. downgraded the stock to sell from neutral.
Immofinanz AG (IIA) tumbled 4 percent to 3.28 euros, for the biggest drop in the Stoxx 600. The Austrian real estate company said first-half net income declined to 103.3 million euros from 265.1 million euros a year ago.


Source: Bloomberg

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Gold Gains as Consumers Buy After Drop to 3-Month Low, ETPs Rise

Gold gained in London as a drop to the lowest level in more than three months and a weaker dollar spurred buying while holdings in exchange-traded funds rose to a record.
Physical demand from top buyer India has been “above average” this week, volumes in China are also strong, and buying out of Europe is “notable,” UBS AG said in a report today. The U.S. Dollar Index (DXY), a gauge against six counterparts, fell as much as 0.3 percent to the lowest level since Oct. 18., amid speculation U.S. lawmakers will reach an agreement on the budget, reducing demand for safer assets. Gold typically trades counter to the U.S. currency.
“Indian and Chinese buying was active on the lows overnight,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “After such heavy losses, activity remains subdued with some small-scale opportunistic buying on the lows. Weaker dollar is also somewhat helping bullion.”
Gold for immediate delivery gained 0.3 percent to $1,675.81 an ounce by 10:09 a.m. in London. The price fell to $1,661.10 yesterday, the lowest since Aug. 31. Bullion for February delivery increased 0.4 percent to $1,676.70 on the Comex in New York.
“Near-term gold sentiment is under pressure, but further out the view remains positive and in that sense current weakness ought to be considered a good buying opportunity,” Edel Tully, a London-based analyst at UBS, said in a report today. Commodity index re-balancing next month may boost gold demand by about 300,000 ounces, she wrote.

Bank Actions

Spot gold is up 7.2 percent this year, heading for a 12th annual gain, after central banks from the U.S. to China and Europe took action to prop up economies. Holdings in gold-backed exchange-traded products increased to a record 2,631.43 metric tons yesterday, data tracked by Bloomberg show. They’ve expanded 12 percent this year.
In the U.S., House Speaker John Boehner offered a backup plan that would raise tax rates for Americans making more than $1 million a year, as he seeks compromise between fellow Republicans and the Obama administration. Standard & Poor’s raised Greece’s rating after a debt buyback.
Silver for immediate delivery rose 0.2 percent to $31.70 an ounce, up 14 percent for the year. Spot platinum advanced 0.3 percent to $1,598.50 an ounce, advancing 14 percent in 2012. Palladium gained 0.2 percent to $689.50 an ounce.


Source: Bloomberg


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Yen Falls to August 2011 Low Versus Euro on Stimulus Bets

The yen fell to its lowest level against the euro since August last year on prospects the Bank of Japan (8301) will expand stimulus at a two-day policy meeting that ends tomorrow, its first since the nation’s general election.
Japan’s currency traded near the weakest level since April 2011 versus the dollar after data today showed the country’s trade deficit widened in November. The 17-nation euro extended gains against the dollar to an eighth day and touched a seven- month high amid optimism U.S. lawmakers will reach agreement on the budget and before data forecast to show improvement in German business confidence.
“Yen-selling is likely to remain intact,” said Koji Iwata, vice president of foreign-exchange trading in New York at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest financial group by market value. “The BOJ will probably disappoint the market if it doesn’t boost asset purchases.”
The yen touched 111.78 per euro, the weakest since Aug. 30, 2011, before trading at 111.69 as of 6:30 a.m. in London, 0.3 percent below yesterday’s close. Japan’s currency lost 0.2 percent to 84.35 per dollar, after touching 84.48 on Dec. 17, the lowest since April 12 last year. The euro advanced 0.1 percent to $1.3243 after earlier reaching $1.3256, the most since May 1.
Seventeen of 21 analysts surveyed by Bloomberg News expect the BOJ to ease monetary policy at its policy meeting. Incoming Prime Minister Shinzo Abe, whose Liberal Democratic Party swept to victory in elections for the lower house of Japan’s Parliament on Dec. 16, said yesterday that he requested BOJ Governor Masaaki Shirakawa agree to an accord containing a 2 percent inflation target.
Abe has called for unlimited easing by the BOJ to defeat deflation and revive growth.

Trade Deficit

Japan’s exports fell 4.1 percent last month from a year earlier, leaving a trade deficit of 953.4 billion yen ($11.3 billion), the Finance Ministry said today in Tokyo.
Commonwealth Bank of Australia (CBA) lowered its forecasts for the yen today, citing a falling surplus in Japan’s current account, the broadest measure of trade.
The Japanese currency will drop to 98 yen per dollar in December next year, Commonwealth Bank strategists Joseph Capurso and Richard Grace wrote in an e-mailed report. That compares with an earlier projection for it to trade at 83. The yen will decline to 129.36 per euro by the end of 2013 compared with an earlier projection of 110.39, according to the bank, which is Australia’s largest by market value.

Yen Forecasts

A sharp contraction in the current account surplus is a major reason the yen will “weaken substantially further in 2013,” the strategists wrote. The surplus “will remain small, or possibly return to deficit, because Japan’s household savings is likely to keep falling and government budget deficits are likely to remain large.”
The yen has lost 13 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has weakened 3.3 percent and the euro has dropped 1 percent.
Japan’s benchmark Nikkei 225 Stock Average climbed as much as 2.4 percent today, rising above 10,000 for the first time since April, as a weaker yen brightened overseas earnings prospects. The MSCI Asia Pacific Index of shares advanced 1.2 percent.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, touched a two-month low amid speculation a compromise will be reached in U.S. budget negotiations, sapping demand for safer assets. Political leaders in Washington are debating how to avoid the so-called fiscal cliff, more than $600 billion in automatic tax increases and spending cuts that will take effect in January unless Congress acts.

‘Plan B’

House Speaker John Boehner is trying to sell a tax increase for top earners to fellow Republicans. The speaker said yesterday the House will vote this week on a budget “plan B” that would raise tax rates on income of more than $1 million a year, while he continues to negotiate with President Barack Obama. Obama’s administration and other Democrats immediately rejected the proposal as inadequate.
The Dollar Index declined as much as 0.2 percent to 79.221, the least since Oct. 18.
Europe’s shared currency advanced for an eighth day against the dollar, the longest series of gains since the eight trading sessions ended April 28, 2011.

Ifo Survey

In Germany, the Munich-based Ifo institute is predicted to say its business climate index rose to 102 this month from 101.4 in November, according to economists surveyed by Bloomberg. An Ifo measure of executives’ expectations may increase to 96.4 from 95.2, while a gauge of the current situation probably slid to 108 from 108.1, surveys showed ahead of the data today.
Standard & Poor’s yesterday lifted Greece’s credit rating to B- from selective default, citing the completion of the nation’s distressed debt buyback and the determination of euro- zone member states to preserve its membership in the bloc.
The next key test for euro sentiment will come from the Ifo survey, Ray Attrill, the Sydney-based global co-head of currency strategy at National Australia Bank Ltd., wrote in a note to clients today. “Any improvement on the November readings should keep the rally intact.”
The New Zealand dollar fell against all of its 16 major counterparts after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole-milk prices fell for a fourth-straight auction.
New Zealand’s currency, known as the kiwi, dropped 0.2 percent to 83.95 U.S. cents. It fell 0.1 percent to 70.79 yen.

Source: Bloomberg


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Gold Drops for Third Day as Dollar Strength Counters ETP Record

Gold declined for a third day as the dollar’s strength damped demand for alternative investments, countering record holdings in exchange-traded products. Silver slumped to a one-month low.
Spot gold fell as much as 0.6 percent to $1,686.70 an ounce, before trading at $1,689.20 at 3:47 p.m. in Singapore. Bullion slid to a one-month low of $1,684.77 an ounce on Dec. 7.
The dollar strengthened 0.1 percent against a basket of six major currencies including the yen after Shinzo Abe’s victory in Japan’s general election increased expectations that the central bank will add to stimulus. Gold increased 8 percent this year as central banks from the U.S. to China and Europe took action to prop up economies, debasing currencies and increasing haven demand. Abe has called for unlimited easing to revive growth.
“Headlines about potential stimulus are having little impact on the market at a time of light end-of-year trading,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. “Investment demand is holding up well, however the market needs buying on the physical side to move higher.”
Holdings in ETPs expanded 12 percent this year to 2,630.703 metric tons on Dec. 14, data compiled by Bloomberg show. In the physical market, the U.S. Mint has sold 35,500 ounces of gold coins so far in December, according to figures on the Mint’s website. At that pace, total sales for the month would be up 8.4 percent from a year earlier to 71,000 ounces, compared with 136,500 ounces in November.
Gold for February delivery slipped 0.4 percent to $1,690 an ounce on the Comex in New York. While money managers raised net- long positions in gold futures and options by 3 percent to 129,865 contracts in the week ended Dec. 11, the total number of speculative long positions fell 1.2 percent, dropping for a second week, U.S. Commodity Futures Trading Commission data show.
Cash silver lost as much as 0.5 percent to $32.1050 an ounce, the least expensive since Nov. 16, before trading at $32.1875. It’s still the best performing precious metal this year, rising 16 percent.
Spot platinum dropped 0.5 percent to $1,609.24 an ounce, and palladium declined 0.3 percent to $700.50 an ounce.

Source: Bloomberg


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Trading Edges Are The Foundation Of Success

Certain key factors have to be in place to succeed at trading the markets, and having a trading edge is the most important of them all. Security:   AAPL
Position:   Hold

Tune into the stock market on any given day and, most often than not, they are efficient in that all the available and unavailable information that pertains to them are already reflected in the current price. As a result, most of the time, prices will move randomly with no real force in any given direction and just drift aimlessly. If the markets were to trade in such a random fashion, most traders would be profitable, but the reality of attempting to trade such randomness is simply not profitable in the long run. Worse, it will be a fruitless and frustrating experience for the trader who can't overcome such randomness and identify those times in a stock or underlying instrument where price is slightly less random and statistically biased to form a sound trading edge. A reliable trading approach factors in positive expectancy where, over a series of trades, winners and losers are lumped together with their results averaged out and an expected value is calculated, the probability-weighted average of the payouts. Before either of these critical calculations can be formed in favorable terms, you have to have a trading edge that gives you a higher level of profitability and/or reward/risk ratio. See Figure 1.

FIGURE 1: B&H. A buy & hold strategy attempts to use time as its trading edge, but that is based on the premise that all stocks go up, no matter what, which is a bit flawed. No one can predict the future or be promised that a stock will eternally go up.

In theory, even a true zero-expectancy game can be traded in a random trading environment and break even but, as usual, reality is altogether different. In reality, costs such as commissions, slippage, missed trades, lack of discipline, missed profit targets, hesitation, and other factors can form a hurdle for traders who enter into trading without having accounted for them in the first place. Having laid the groundwork up to this point, the question remains how to find and develop a significant trading edge in order to develop an approach that suits your personality and forms the foundation of successful trading with positive expectancy and expected value. All trading edges start with observation that leads to a premise that acts as the starting point for a quantified trading edge.

FIGURE 2: AAPL, WEEKLY. Using the weekly chart, a 40-day simple moving average (SMA), and entering on AAPL's all-time high when the stock is trading above its 40-day SMA, you have a defined edge to exploit price action at its rising while exiting the market when price trades below a pivot low and the 40-day SMA. This combination of strategies keep you in the trade when it is moving in your direction without the risk of being exposed to the market until all the trading edges align in a low-risk setup.

In a perfect world, price would have no memory or recall of where it began or where it came from, but again, in reality, market memory is not the result of price but of the human beings who trade price altogether. If we observe that humans remember where price has come from then see price come to some price level, like support or resistance, then you can form the premise that most traders will trade off of support or resistance, depending on the context at the time, and the trade becomes a self-fulfilling prophecy. You can form an approach that trades between support and resistance since other traders and investors that make up the market are likely to lie in waiting at those price levels and ride the momentum back and forth between them. See Figure 2.

You can take it a step further by using moving averages to filter out which side you trade -- support or resistance -- to only take the trades that are likely to improve your profitability and risk/reward ratio overall, the two key metrics of your trading edge. The important thing is to track your results and then make concerted steps to improve each component -- positive expectancy, expectancy value, profitability, risk/reward ratio -- to refine your edge. More important, by tracking your results you can determine when a trading edge has lost its statistical bias and step away until it returns. Finally, remember, the most important thing about trading edges is to use them to develop a trading approach that matches your personality so you are psychologically able to keep following it even during losing streaks; otherwise, you may not bother following it at all.

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Oil Trades Near One-Month Low as Fuel Stockpiles Seen Rising

Oil traded near the lowest close in almost a month in New York on speculation that an Energy Department report will show fuel stockpiles climbed in the U.S., the world’s biggest crude consumer.
Futures were little changed after dropping for a fifth day yesterday, the longest losing streak since October. Distillate supplies, including diesel and heating oil, are projected to rise a second week while gasoline inventories may reach the highest level since April, according to a Bloomberg News survey before the government report tomorrow. The Organization of Petroleum Exporting Countries is gathering in Vienna to determine the group’s targets for crude production.
“Crude is starting to feel the weight of softer demand given lower refining activity expected in the first quarter,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm. “The market needs a clear statement or action from the Saudis that they will cut production to the already agreed upon quota.”
West Texas Intermediate crude for January delivery was at $85.74 a barrel in electronic trading on the New York Mercantile Exchange, up 18 cents, at 8:47 a.m. London time. The contract slid 37 cents to $85.56 yesterday, the lowest close since Nov. 15. Prices have fallen 13 percent this year and are headed for the first annual decrease since 2008.
Brent for January settlement on the London-based ICE Futures Europe exchange was at $107.67 a barrel, up 34 cents. The European benchmark crude was little changed at a premium of $21.97 to WTI, near the widest in a week.

Fuel Supplies

Oil may extend its decline in New York after settling below an upward-sloping trend line on the daily chart yesterday, according to data compiled by Bloomberg. Losses tend to accelerate when technical-support levels are breached. This line, connecting the intraday lows of June and November, is around $85.66 a barrel today.
U.S. distillate inventories probably increased 1.5 million barrels in the week ended Dec. 7, according to the median estimate of seven analysts surveyed by Bloomberg before tomorrow’s Energy Department report. Gasoline supplies may have gained 2 million barrels to 214.1 million. Crude stockpiles are expected to have shrunk 2.5 million barrels as refineries boosted fuel production, the survey showed.
The American Petroleum Institute in Washington will release separate inventory data today. The industry group collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

OPEC Quota

OPEC, which supplies about 40 percent of the world’s crude, is expected to maintain its output quota at 30 million barrels a day at its meeting tomorrow, according to a Bloomberg survey of 18 analysts published last week. The group will release its monthly oil market report at about midday today.
“My expectations are for oil to hold” at about $85 a barrel, said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We may see some rhetoric come out of OPEC that will support prices, but I don’t think they will change the quota.”
Saudi Arabia and other Gulf nations increased output this year to replace volumes lost from Iran, whose exports have been curbed by U.S. and European Union sanctions, relegating it from the rank of OPEC’s second-largest producer.
The 12-member group last month estimated demand for its crude at 29.72 million barrels a day in 2013, an assessment reaffirmed yesterday by a subcommittee in Vienna. The International Energy Agency in Paris on Nov. 13 predicted the so-called “call on OPEC” at 29.8 million barrels.
OPEC may temporarily extend the role of Secretary General Abdalla El-Badri as talks on a successor remain in deadlock, according to two people familiar with the matter. The meeting is scheduled to select a replacement for the Libyan, whose second three-year term ends Dec. 31.

Source: Bloomberg

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Euro Near 2-Week Low After Italy’s Monti Says He May Quit

The euro fell toward its lowest level in two weeks after Italy’s prime minister said he intends to resign, rekindling concern that a change in government will upend efforts to rein in debt.
The euro slid versus most of its 16 major counterparts before a Dec. 13-14 summit of European Union leaders to debate a road map to overhaul the currency bloc. Demand for the greenback was limited amid speculation the Federal Reserve may announce this week additional bond purchases. The Australian dollar fell after China reported weaker-than-expected trade figures.

 

The euro fell 0.1 percent to $1.2913 as of 6:41 a.m. in London. Photographer: Kiyoshi Ota/Bloomberg

Dec. 10 (Bloomberg) -- Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA, and Nick Beecroft, chairman of Saxo Capital Markets U.K. Ltd., discuss the prospects for the euro, yen, Swiss franc and pound in 2013. They talk with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)

 

Mario Monti, Italy's prime minister. Photographer: Alessia Pierdomenico/Bloomberg

“In the near term at least, it does look like the euro wants to go lower,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC) The report that Italy’s Mario Monti may quit “impacts the euro because it’s evidence of more political instability within the zone.”
The euro fell 0.1 percent to $1.2913 as of 6:41 a.m. in London after touching $1.2877 on Dec. 7, the weakest since Nov. 23. It slid 0.2 percent to 106.44 yen. The dollar bought 82.43 yen, 0.1 percent below the close last week, when it reached as high as 82.83, the strongest since Nov. 22.
Monti will try to corral his coalition, which includes his predecessor Silvio Berlusconi’s People of Liberty Party, for a vote to pass budget legislation before handing in his “irrevocable resignation,” national President Giorgio Napolitano’s office said in an e-mailed statement on Dec. 8.
The prime minister will quit immediately if his allies won’t comply, Monti’s spokeswoman, Elisabetta Olivi, said in a telephone interview.

Italian Yields

Italian 10-year bond yields rose 10 basis points, or 0.1 percentage point, in three days to 4.53 percent on Dec. 7. The yield is still almost 2.5 percentage points below its closing level of 7 percent on Nov. 16, 2011, when Monti was named prime minister.
Monti, 69, has been weakened as his tax increases push Italy deeper into recession. Berlusconi announced on Dec. 8 that he will seek the premiership in next year’s election and criticized Monti for running a “German-centric” program.
“Combined with the region’s economic prospects, the growing political risk in Italy may be a double whammy for the euro,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo.
The euro fell 0.9 percent in the past week, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The greenback rose 0.3 percent, while the yen was little changed.

More Purchases

In the U.S., the Federal Open Market Committee meets for the final time this year on Dec. 11-12. It will consider whether to expand purchases of assets after its so-called Operation Twist program of swapping $45 billion a month in short-term Treasuries for long-term debt expires this month.
“There is a good chance that the Fed will announce a new round of money printing and bond buying,” said Westpac’s Speizer.
Expectations of more central bank stimulus come as data released Dec. 7 by the Labor Department showed the unemployment rate in the world’s biggest economy dropped to 7.7 percent, the lowest level since December 2008.
Economists polled by Bloomberg News say U.S. retail sales probably rose 0.5 percent in November from the previous month, when they declined 0.3 percent. The Commerce Department will publish the figures on Dec. 13.
The central bank has already pumped $2.3 trillion into the financial system through two rounds of quantitative easing, known as QE, to stimulate the economy. In September, the Fed also announced a plan to buy $40 billion of mortgage-backed debt each month.

Chinese Exports

Australia’s currency weakened after data from China’s customs administration showed that exports rose 2.9 percent in November from a year earlier while imports were unchanged. Both trailed the median analyst estimates in a Bloomberg survey.
The Australian dollar slid 0.1 percent to $1.0482. It touched $1.0516 on Dec. 6, the highest since Sept. 21.
In Japan, gross domestic product shrank an annualized 3.5 percent in the three months ended Sept. 30, revised data from the Cabinet Office showed in Tokyo today, matching preliminary figures from November. The median estimate of economists surveyed by Bloomberg was for a 3.3 percent drop.
Futures traders increased bets that the yen will weaken against the dollar to the most since July 2007, figures from the Washington-based Commodity Futures Trading Commission show.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 90,326 on Dec. 4, compared with net shorts of 79,466 a week earlier.
“Extreme short market positioning will likely limit the ability of the currency pair to push higher,” Mitul Kotecha, Hong Kong-based head of currency strategy at Credit Agricole SA (ACA), wrote in a note to clients today in reference to the dollar-yen cross. “On the topside, 83.15 will market strong resistance for the currency pair,” he wrote, noting a level last seen on April 2. Resistance is an area on a chart where orders to sell may be clustered.

Source: Bloomberg

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Qatar LNG Spot Sales to Fall 40% by 2014, QNB Says

Qatar, the world’s biggest producer of liquefied natural gas, will reduce spot-market sales of the fuel by at least 40 percent by 2014, curbing supplies available for Europe, state-controlled Qatar National Bank (QNBK) said.
Spot volumes available for sale will drop to about 27 percent of total output this year from 28 percent, and to 16 percent by 2014 as long-term supply agreements go into effect and new ones are signed, the bank’s QNB Group said in a report.
“These new contracts are mainly to Asia Pacific and South America, meaning that Europe’s share of Qatar LNG exports is likely to fall,” according to today’s report.
A drop in Qatari LNG sales to Europe may boost dependence on Russian pipeline gas and push up prices on the continent nearer to Asian fees. Japanese LNG prices averaged $17 per million British thermal units this year, 16 percent higher than last year, the bank said. European prices rose 8 percent to $11.
“This provides a price incentive for spot-market deliveries to be exported to the Asia Pacific, in addition to the rising number of long-term” agreements, the bank said.
Asian demand for LNG, which is gas cooled to a liquid for transport by tanker, has grown as nations seek more fuel for power generation. Japan has increased purchases since shutting almost all its nuclear capacity following the Fukushima reactor disaster in 2011, while U.S. imports have dropped amid a boom in domestic shale-gas output.

Japanese Demand

Japan, the world’s biggest LNG buyer, will have to purchase at least 21 million metric tons on the spot market this year, according to data from Tri-Zen International Inc. The country paid an average of $16.84 per million Btus in September, down from $18.07 in July, which was the highest price since Bloomberg began compiling the data in 2006.
Qatar, which can produce 77 million tons of LNG a year, is diversifying its customer base, increasing its shipments of the fuel to 23 countries last year from eight in 2007, the bank said. The country is planning its first LNG delivery to Singapore and is reported to have signed a sales agreement with Thailand, the bank said. Jordan is also seeking to buy LNG from Qatar, which is helping it build a re-gasification terminal.
Qatar exported 47 percent of its supplies to Asia last year, with Japan purchasing 12 million tons, India 10 million and South Korea 8 million, according to the report.
Europe bought 42 percent of Qatari production, with the U.K. being the single largest buyer. Britain has a long-term agreement for an annual 12 million tons and purchased 4 million tons on the spot market, the bank said. Italy bought 6.1 million tons, Spain 4.8 million tons and France 3.2 million tons.

Source: Bloomberg


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Gold Drops to Four-Week Low as Commodities Fall on Budget Talks

Gold fell to a four-week low in London, dropping below $1,700 an ounce, as a stalemate in U.S. budget talks weighed on commodities.
Commodities retreated for the first time in four days as talks over the so-called fiscal cliff of spending cuts and tax increases remained deadlocked. European Union finance ministers meet in Brussels today to discuss measures to stem the debt crisis. Bullion pared some losses as the dollar reached a six- week low versus the euro.
“It’s more the risk aversion out of commodities which is probably having an impact on gold,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. Still, “there are arguments investors should buy gold on worries the U.S. economy could fall over the fiscal cliff,” he said, citing demand for a haven investment.
Gold for immediate delivery dropped 0.6 percent to $1,705.41 an ounce by 9:23 a.m. in London. Prices reached $1,696.78, the lowest since Nov. 6. Gold for February delivery was 0.9 percent lower at $1,706.40 on the Comex in New York.
Holdings in gold-backed exchange-traded products climbed 1.7 metric tons to a record 2,623.4 tons yesterday, data compiled by Bloomberg show. Prices are up 9.1 percent this year as central banks from Europe to China pledged more steps to spur economic growth.
Gold may gain as businesses temper spending and stimulus falls short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), wrote in a newsletter. Buffett said in a February letter that investors should avoid bullion as it doesn’t have the potential of farmland or companies to produce wealth.
Silver for immediate delivery fell 1.1 percent to $33.2950 an ounce. Platinum was 0.6 percent lower at $1,596.13 an ounce. Palladium declined 1.2 percent to $683 an ounce.

Source: Bloomberg

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Italy Sells 7.5 Billion Euros of Bills as Yield Drops

Italy sold 7.5 billion euros ($9.7 billion) of six-month Treasury bills, the maximum set for the auction, at the lowest yield on a similar note in more than two and a half years.
The Treasury in Rome today sold the 182-day bills at 0.919 percent, the lowest since April 2010 and down from 1.347 percent at the last auction on Oct. 29. Investors bid for 1.65 times the amount of bills offered, up from 1.52 times last month. Italy returns to the market tomorrow with the sale of as much as 6 billion euros of five and 10-year bonds.
“From a pricing perspective, Italy has overcome the euro- zone crisis,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Italy is by no means out of the woods and has become a tale of two halves: an increasingly resilient and externally driven bond market and an economy in deep recession amid mounting political uncertainty.”
Italy’s 10-year yield declined 6 basis points to 4.67 percent at 12:07 p.m. in Rome, the lowest since June 2011. That left the difference with comparable-maturity German debt at 328 basis points.

Falling Yields

Italy sold 3.5 billion euros of zero-coupon bonds yesterday at the lowest yield on a similar bond since October 2010.
The country’s bond yields have fallen since European Central Bank President Mario Draghi said in July that the Frankfurt-based institute would do what’s needed to keep the euro and announce in September a bond-buying program for nations in financing stress.
Italy needs to uphold Prime Minister Mario Monti’s pledge to shore up public finances in order to enjoy investor confidence even after elections due by April, the Organization for Economic Cooperation and Development said in its latest Economic Outlook report this week.
The Paris-based OECD also said that Monti’s efforts to reduce the deficit won’t allow Italy to start trimming the euro region’s second-biggest debt next year and that “further fiscal tightening in 2014 would be necessary.”

Source: Bloomberg


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Euro Gains Most in Nine Months Versus Yen on Greek-Deal Optimism

The euro had its biggest gain against the yen in nine months on speculation Europe’s policy makers will agree to keep aid flowing to Greece next week.
The shared currency gained the most in two months versus the dollar as German business confidence unexpectedly rose from the lowest in 2 1/2 years. The yen fell at least 1.2 percent against all of its 16 most-traded counterparts as exports waned and amid speculation Japanese elections next month will hand power to an opposition party that advocates aggressive monetary easing. The dollars of Australia and Canada gained after the International Monetary Fund said the two may be classified as reserve currencies.

3:19

Nov. 23 (Bloomberg) -- Ulrich Leuchtmann, head of currency strategy at Commerzbank AG, talks about the outlook for the euro, dollar and yen ahead of the Nov. 26 emergency meeting on Greece. He speaks from Frankfurt with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)

“The euro’s strength is mostly short covering -- investors getting nervous in case we do get some kind of announcement on a Greek debt buyback or cuts to the interest rates on loans,” Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London said Nov. 23. “Comments by the potentially new political leader have really been driving the yen in a way we really haven’t seen play out before. Low market volatility is really letting the yen weaken off.”
A short is wager an asset will weaken, and short covering involves investors buying an asset to offset a prior sale.
The euro rallied to 106.98 yen on Nov. 23, the highest since April, before trading at 106.94 for a 3.2 percent weekly advance, the most since the five days ended Feb. 24. The shared currency touched $1.2991 on Nov. 23, the strongest in three weeks versus the dollar, and ended the week 1.8 percent stronger at $1.2976. The yen fell for a second week against the dollar, declining 1.3 percent to 82.40. It reached 82.84 on Nov. 22, the weakest in more than seven months.

‘Technical Problems’

European finance ministers said a further meeting on Greece had been arranged for Nov. 26 and that only “technical problems” are holding up a deal. Among the options they are considering include recycling European Central Bank profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines.
The Munich-based Ifo institute said its business climate index climbed to 101.4 this month, compared with an estimated reading of 99.5 based on the median of 48 forecasts in a Bloomberg survey.
The yen has fallen 3.8 percent in the past month, the most among the 10 developed currencies measured by Bloomberg Correlation-Weighted Indexes. The euro is the second-worst performer, losing 0.5 percent, while the dollar has declined 0.4 percent.

Yen Declines

Shinzo Abe, leader of the Liberal Democratic Party that is favored to topple the ruling Democratic Party in Dec. 16 elections, has advocated an increase in the central bank’s inflation goal to as much as 3 percent from 1 percent.
The yen extended its decline even after the Bank of Japan (8301) completed a two-day policy meeting this week where Bank of Japan Governor Masaaki Shirakawa said the opposition party’s proposals to weaken the currency are unrealistic.
Japan’s exports decreased for a fifth straight month, falling 6.5 percent in October from a year earlier, leaving a trade deficit of 549 billion yen ($6.7 billion), according to a report on Nov. 20.
“The yen got an extra push because of the trade-balance figures,” Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York, said Nov. 21. “It showed a deficit that was larger than expected, which is putting pressure on the yen because Japan is an export-driven economy.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, dropped 1.3 percent to 80.217. It was the first weekly decline since the five days ended Oct. 19.

‘Aren’t Stupid’

The dollar fell against most of its major counterparts as U.S. lawmakers expressed optimism the $607 billion in automatic tax increases and spending cuts scheduled to take effect at the beginning of 2013 unless Congress acts would be avoided. The dollar usually gains in times of economic stress as investors seek the world’s reserve currency as a haven.
House Speaker John Boehner, who called Nov. 16 discussions with Obama “constructive,” said Republicans are willing to put revenue on the table in exchange for spending cuts.
“I’m assuming these people aren’t stupid, but I’d like them to prove it,” Kit Juckes, head of foreign-exchange research at Societe Generale SA in London, said Nov. 23. “If you remove the problem of the fiscal cliff, there is a danger the U.S. economy could surprise on the upside next year.”

Aussie, Loonie

The Canadian and Australian dollars advanced after the International Monetary Fund said in a Nov. 14 report that the two currencies “are to be considered for inclusion” separately in the IMF’s “Currency Composition of Official Foreign-Exchange Reserves” data. They’ve previously been included in an “other currencies” category in the Washington-based lender’s COFER reports.
The Canadian dollar, nicknamed the loonie, advanced 0.8 percent to 99.29 cents per U.S. dollar, in the biggest weekly gain since Aug. 10. The Aussie was 1.2 percent stronger at $1.0461.
Sweden’s krona was the best performer against the dollar after a survey of Swedish industrial companies showed investments are expected to rise 9 percent this year, Statistics Sweden said Nov. 21. The report damped concern over the economy amid reports of slumping exports and job cuts.
The krona rallied 2.5 percent against the dollar to 6.6228, the largest weekly gain in nine months. The Swedish currency advanced 0.7 percent to 8.5937 versus the euro.

Source: Bloomberg


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Gold Futures Top $1,750, Silver Rises as Dollar Declines

Gold futures topped $1,750 an ounce and silver climbed to a six-week high as the dollar’s drop spurred demand for the metals as alternative investments.
The greenback fell to a three-week low against a basket of major currencies as data showed German business confidence rose in November and speculation mounted that Europe’s policy makers will agree to keep aid flowing to Greece. Gold reached a five- week high.

“The dollar weakness is supporting gold,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview.
Gold futures for December delivery rose 1.3 percent to $1,751.40 at 12:45 p.m. on the Comex in New York. That’s the biggest gain for a most-active contract since Nov. 6. Earlier, the metal touched $1,755, the highest since Oct. 17.
Floor trading was closed yesterday for the U.S. Thanksgiving holiday.
Holdings in gold-backed exchange-traded products rose to a record 2,605.3 metric tons on Nov. 21, data compiled by Bloomberg show. The U.S. Mint sold 67,000 ounces of American Eagle gold coins this month, exceeding the 59,000 ounces for all of October, data on its website showed.
Silver futures for March delivery gained 2.3 percent to $34.206 an ounce. Earlier, the price reached $34.25, the highest since Oct. 11.
Platinum futures for January delivery advanced 2.1 percent to $1,617.10 an ounce on the New York Mercantile Exchange, while palladium futures for December delivery increased 2.5 percent to $667.60 an ounce.

Source: Bloomberg

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Yen Rallies From 7-Month Low as BOJ Refrains From Easing

The yen rallied from near its weakest level in almost seven months against the dollar after Bank of Japan (8301) Governor Masaaki Shirakawa said the opposition party’s proposals to weaken the currency are unrealistic.
The Japanese currency rose versus most of its 16 major counterparts as the BOJ refrained from adding to stimulus measures. Shinzo Abe, favored to topple Japan’s prime minister in Dec. 16 elections, has advocated unlimited easing. The euro weakened against the pound after Moody’s Investors Service cut France’s top rating, renewing concern that Europe’s debt crisis will deepen.

 

The euro slid versus most of its 16 major counterparts after Moody’s Investors Service lowered France’s government bond rating, renewing concern the currency bloc’s debt crisis is deepening. Photographer: Chris Ratcliffe/Bloomberg

2:55

France lost its top credit rating with Moody’s Investors Service, dealing a blow to President Francois Hollande’s efforts to show budget credibility in the face of a stalled economy.

“Shirakawa is being cautious, pouring some cold water on some of the ideas that have been put out by the opposition,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “It’s a reason to pare short positions on the yen.” A short position is a bet that an asset will fall in price.
The yen climbed 0.2 percent to 81.28 per dollar at 11 a.m. London time. It touched 81.59 yesterday, the weakest level since April 25. Japan’s currency rose 0.2 percent to 104.10 per euro. Europe’s currency was little changed at $1.2807.
The pound appreciated 0.2 percent to 80.43 pence per euro, after depreciating to 80.65 pence on Nov. 15, the weakest since Oct. 31.
The yen will strengthen toward 79 per dollar within the next six weeks, amid demand for the safest assets, Halpenny forecast.

BOJ Independence

Shirakawa told reporters in Tokyo he wants people to respect the BOJ’s independence and that unlimited money printing would be damaging. He spoke after the central bank said it would keep its asset fund at 66 trillion yen and a credit-lending facility unchanged at 25 trillion yen. All of 22 economists surveyed by Bloomberg News had forecast no change.
Abe, leader of Japan’s Liberal Democratic Party, has advocated an increase in the central bank’s inflation goal to as much as 3 percent from 1 percent. The BOJ is scheduled to hold a policy meeting three days after the election, with 16 economists forecasting easing.
“The markets are pausing for breath in dollar-yen,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “They’re now thinking about the election, who’s likely to win it and what form the next government would take.”

Dollar-Yen Overdone

The 14-day relative strength index for the dollar against the Japanese currency rose to 71 yesterday, above the 70 level that some traders see as a sign an asset’s move may change direction.
“The move looks a bit overdone,” Mitul Kotecha, Hong Kong-based head of currency strategy at Credit Agricole SA (ACA), said in an interview on Bloomberg Television. “I don’t think we’re going to see a quick move up to 85.”
The yen has declined 3.7 percent over the past three months, the biggest decline among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro has gained 2.9 percent, while the dollar has dropped 1.2 percent.
Moody’s cut France by one grade to Aa1 from Aaa late yesterday and said the nation’s outlook remains negative “as a result of its deteriorating economic prospects.”
The move follows similar action by Standard & Poor’s in January. Since S&P’s rating action, French government bonds have returned 9.4 percent, compared with 3.4 percent for German debt, and 2.5 percent for that of the U.S., according to Bank of America Merrill Lynch data.

‘Kneejerk Reaction’

“There is probably more downside ’til the kneejerk reaction is out of the way,” Steven Englander, Citigroup Inc.’s New York-based global head of Group of 10 strategy wrote of the euro in an e-mail to clients. “On the whole, it seems likely that this more reflects an already existing reality than new information for the market, so the downside should be relatively limited.”
Europe’s shared currency may slide as it trades near the so-called neck line of an M-shaped trading pattern known as a double-top formation, according to Brown Brothers Harriman & Co.
The euro may drop toward $1.2450 as it trades near $1.28, the neck line between a high of $1.3172 on Sept. 17 and a peak of $1.3140 on Oct. 17, Marc Chandler, New York-based global head of currency strategy at BBH, wrote in an e-mailed note to clients yesterday. The $1.2450 level was last seen on Aug. 22, when it dipped to as low as $1.2431.

Source: Bloomberg


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Oil Drops in New York as Supplies Seen Increasing

Oil declined for a second day in New York amid speculation that U.S. crude inventories rose last week and after the International Energy Agency cut its forecast for global demand growth this quarter.
Futures slipped as much as 1.2 percent. U.S. crude stockpiles probably increased last week to the highest level in more than three months, according to a Bloomberg survey before an Energy Department report on Nov. 15. OPEC will need to pump less crude this quarter as demand growth slows, the IEA said. Oil slid yesterday as investors awaited budget talks in the U.S., and extended losses after European leaders said they’ll meet again Nov. 20 to discuss additional funding for Greece.
“Primarily bearish winds are blowing in oil markets at the moment,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm who predicts Brent crude will average $110 a barrel this quarter. “On the macro side, bearish influences are coming from a new wave of Greek worries and the approaching U.S. fiscal cliff.”
Crude for December delivery slid as much as 99 cents to $84.58 a barrel in electronic trading on the New York Mercantile Exchange and was at $85.49 at 12:10 p.m. London time. The contract fell 50 cents to $85.57 yesterday. Prices are down 13 percent this year.
Brent for December settlement declined 31 cents, or 0.3 percent, to $108.76 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.27 to West Texas Intermediate futures, compared with $23.50 yesterday.

Crude Output

U.S. crude inventories probably rose 2.5 million barrels to 377.3 million, according to the median estimate of seven analysts in the Bloomberg survey before the Energy Department report. Gasoline supplies climbed 800,000 barrels while distillate stockpiles declined 500,000 barrels, according to the survey. The inventory data will be released Nov. 15, a day later than usual because of the Veterans Day holiday yesterday.
Global oil consumption will average 90.1 million barrels a day this quarter, which is 290,000 barrels a day, or 0.3 percent less than previously forecast, the Paris-based IEA said in its monthly report today.
“The market is very well supplied,” Abdalla El-Badri, OPEC’s secretary-general, said today at the Oil & Money conference in London. “There is no doubt about it. Stocks are very high.”
The Organization of Petroleum Exporting Countries will need to supply 30 million barrels a day this quarter, 500,000 barrels a day less than previously projected because of the weaker demand outlook and expectations for increased non-OPEC supply, the IEA said. Global demand will rise by 830,000 barrels a day in 2013 to 90.4 million, 70,000 barrels less than last month’s forecast.

U.S., Europe

President Barack Obama invited the Democratic and Republican leaders in Congress to the White House this week to begin talks on a plan to avert the so-called fiscal cliff. If Congress doesn’t act by the end of the year, $607 billion in automatic spending cuts and tax increases are scheduled to take effect starting in January.
“The biggest challenge we are facing is the U.S. fiscal cliff,” El-Badri said.
European finance ministers meeting in Brussels yesterday put off until Nov. 20 a decision on how to cover additional Greek needs of as much as 32.6 billion euros ($41 billion) and left unclear whether the International Monetary Fund will continue to contribute. They granted the country a two-year extension to 2016 to cut its budget deficit to 2 percent of gross domestic product.

Buzzard Field

The Buzzard oil field in the North Sea resumed production late yesterday after halting during the Nov. 10 to Nov. 11 weekend, according to three people with knowledge of the matter, who declined to be identified as the information is confidential.
The 200,000 barrel-a-day Buzzard field is the biggest contributor to Forties crude. Buzzard restarted production on Nov. 3 after two months of maintenance, Nexen Inc., the operator of the field, said on Nov. 5. Two officials at Nexen, based in Calgary, Canada, didn’t immediately respond to e-mails from Bloomberg today seeking comment.


Source: Blommberg

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Saudi Shares Drop to 3-Week Low as Sabic Declines on Lower Sales

Saudi Arabia’s benchmark stock index dropped the most in three weeks on investor concern over U.S. budget cuts and a decline in third-quarter sales at Saudi Basic Industries Corp. (SABIC)
The world’s largest petrochemicals maker by market value known as Sabic fell to the lowest level in a week. Al Rajhi Bank, the kingdom’s biggest publicly traded lender, declined for a second day. The Tadawul All Share Index lost 0.5 percent, the most since Oct. 22, to 6,884.29 at the close in Riyadh. The measure gained 2.2 percent last week. The Bloomberg GCC 200 Index (BGCC200) of regional stocks and Qatar’s QE Index lost 0.5 percent.
The Stoxx 600 Index dropped 1.7 percent last week and the MSCI Emerging Markets Index (MXEF) lost 1.4 percent on concern the U.S. will slip back into recession if lawmakers fail to reach a budget compromise on the so-called fiscal cliff, which refers to about $607 billion of tax increases and federal spending cuts set to kick in automatically in January. Saudi Arabia relies on oil exports for about 90 percent of government revenue, making it vulnerable to swings in global demand.
“Petrochemical stocks have high sensitivity to news about the global economy,” Turki Fadaak, head of research at Albilad Investment Co. in Riyadh, said by phone. “Any positive news has a good impact on the companies and any negative news has the opposite effect.”
Sabic’s sales dropped to 44.8 billion riyals ($11.9 billion), the company said in a regulatory filing today. Sabic said on Oct. 17 third-quarter profit tumbled 23 percent as prices for its products dropped amid slower global economic growth. Profit has fallen in the past four quarters as the maker of fertilizers, plastics and steel suffers from the effects of slowing growth in developed economies.

‘Below Expectations’

Sabic’s third-quarter sales were “a bit below expectations, primarily due to lower petrochemical prices in the third quarter,” Muhammad Faisal Potrik, an analyst at Riyad Capital, said by phone. “Ethylene prices were down 5 percent quarter on quarter, so that also had an impact.” He had estimated third-quarter sales at around 46 billion.
Sabic shares fell 0.6 percent to 90.25 riyals, the lowest since Nov. 5. Al Rajhi declined 0.4 percent to 69.50 riyals.
Elsewhere in the Middle East, Dubai’s DFM General Index lost 0.2 percent and Abu Dhabi’s index slipped 0.1 percent. Kuwait’s gauge gained 0.2 percent. Oman’s MSM30 Index (MSM30) and Egypt’s EGX 30 Index were little changed.
Israel’s TA-25 Index (TA-25) dropped 0.3 percent. The yield on the nation’s 5.5 percent bonds maturing in January 2022 fell two basis points, or 0.02 percentage point, to 3.9 percent.

Source: Bloomberg

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Dubai Index Drops as U.S. Fiscal Cliff Pressures Global Stocks

Dubai’s shares fell, leading declines in the Persian Gulf, after concern over U.S. budget cuts and a delay in the European Union’s bailout of Greece spurred drops in global shares.
Emirates Integrated Telecommunications Co (DU), the United Arab Emirates phone services company known as Du, and construction company Arabtec Holding Co. fell for a second time in three days. The benchmark DFM General Index (DFMGI) dropped 0.3 percent to 1,612.92 points at 12:31 p.m. in the emirate. The Bloomberg GCC 200 Index (BGCC200) of regional stocks lost 0.2 percent and Qatar’s QE Index decreased 0.3 percent.
The Stoxx 600 Index dropped 1.7 percent last week and the MSCI Emerging Markets Index (MXEF) lost 1.4 percent on concern the U.S. will slip back into recession if lawmakers fail to reach a budget compromise on the so-called fiscal cliff, which refers to about $607 billion of tax increases and federal spending cuts set to kick in automatically in January. Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November, a European Union official said last week.
Share price declines in Dubai are “mostly due to the fears that global markets now face due to the fiscal cliff in the U.S. with their budget as well as fears of the Greek bailout being delayed,” Marwan Shurrab, vice-president at Gulfmena Investments Ltd. said by phone today. “What we are going to see is consolidation around these levels, until there is greater clarity on the views and direction from international markets and sentiment.”
Du retreated 1 percent to 3.79 dirhams. Arabtec, which fell 3.1 percent last week, lost 1.2 percent to 2.46 dirhams, set for the lowest close since Nov. 7. The biggest builder in the U.A.E. last week said it revived plans to increase capital and sell convertible bonds as it seeks financing for expansion amid a decline in quarterly profit.
Elsewhere in the Middle East, Abu Dhabi’s index slipped 0.3 percent and Kuwait’s gauge lost 0.2 percent. Oman’s MSM30 Index (MSM30) and Saudi Arabia’s Tadawul All Share Index (SASEIDX) were little changed.
Israel’s TA-25 Index (TA-25) dropped 1 percent. The yield on the nation’s 5.5 percent bonds maturing in January 2022 fell two basis points to 3.9 percent.

Source:Bloomberg: