Morning Gold & Silver Market Report – 10/4/2012

Silver to average $44/Oz in 2013 Gold at 2013/Oz: Deutsche Bank


  Gold prices are forecast to rise above $2,200 an ounce in 2013, supported by central bank stimulus action.

  NEW YORK (Commodity Online):  Silver prices are expected to average $44 an ounce in 2013, said Deutsche Bank in a quarterly commodity research note.

Deutsche Bank raises its 2013 silver prices forecast by 3% from their previous estimate. Their 2012 fourth-quarter average estimate for silver is $37 an ounce, also down 2.6% from their previous forecast.

According to the Deutsche Bank, gold prices are forecast to rise above $2,200 an ounce in 2013, supported by central bank stimulus action.

The move above $2,200 would be an extreme, if it occurred. Commodity prices can be prone to overshooting. Their 2013 average estimate for gold is $2,113, which is a 3% rise above their previous estimate. They see gold prices averaging $1,850 in the fourth quarter of this year, which is a 2.6% discount to their previous estimate, said the largest German bank.

“We believe the major beneficiary of a third round of quantitative easing by the U.S. Federal Reserve and fiscal cliff fears will be the precious metals complex. Not only will it keep U.S. real interest rates negative for the foreseeable future, but, it will sustain U.S. dollar weakness, in our view,” the bank added.

The German bank also noted that, PGMs will benefit not only from QE3, but also from the supply disruptions in South Africa, and the prices could rise further next year. Their one caveat is that “positioning risk” is building – referring to the growth in bullish positions in the PGM futures markets.

The South African strikes have left the market in balance in regards to supply and demand and any supply problems could push platinum prices to a premium over gold. There are limits to the strength in platinum, however, because of likely lowered European car sales, they added.

Their 2012 fourth-quarter average estimate for platinum is $1,575 an ounce, down 3.1% from their previous forecast. They put 2013 average platinum prices at $1,644, down 3.3% from their previous estimate. Palladium 2012 fourth-quarter prices are seen averaging $630 an ounce, down 12.5% from their previous outlook, while the 2013 forecast is $700, down 6.7% from before.

 

 

Silver on the Comex crossed $35 at one time and was seen trading at $34.785 a gain of 0.09 dollars. 

The markets look to be highly volatile as the ECB press meet continues. 

Gold Double Inside Day on an Outside Day Typical of False Moves

Daily Candles

Prepared by Jamie Saettele, CMT

A previously rare occurrence has popped up 3 times since June. That is, gold has traded in a double inside day AFTER an outside day. Before June, one had to look back to 2009 to find this pattern. The pattern is a function of volatility contraction and the plethora of orders on each side of the narrow range is conducive to false breaks. One can envision a spike to a new high (above 1790.55 and maybe 1802.80) following Fed minutes tomorrow before gold reverses and declines sharply.

LEVELS: 1736.05 1750.90 1763.25 1791.49 1802.80 1819.05

There will be important U.S. economic data released Thursday and Friday, including the FOMC minutes on Thursday and the employment report on Friday. The market place will also monitor the U.S. presidential debate Wednesday night. In Europe, the European Central Bank and Bank of England hold meetings Thursday. The Bank of Japan holds its monthly meeting Thursday and Friday.

The U.S. dollar index was firmer Wednesday, on short covering in a bear market. The U.S. dollar bears still have the solid overall near-term technical advantage. Meantime, Nymex crude oil prices were sharply lower Wednesday, partly on the weak China economic data. Crude oil bears gained fresh downside near-term technical momentum Wednesday. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

Signs Of The Gold Standard Emerging In China?

Crossing the Line in the Sand - IN THE END, NO LINE WILL BE VISIBLE NOR WILL BANKERS

Gold steady at 11-month high on expectation of more monetary easing

SINGAPORE (Oct 3) Gold held near an 11-month high on Wednesday, as uncertainty over Spain’s bail-out plan kept investors on their toes while they wait for a key US job market report to shed light on the effectiveness of the latest stimulus measures.

Gold barely moved from the end of last week after posting a fourth straight month of gains in September, spurred by the aggressive stimulus measures of central banks, including the US Federal Reserve and European Central Bank.

But the momentum has fizzled in the absence of a fresh catalyst. Investors are eyeing Spain, now the centre of the euro zone debt crisis, after the country’s Prime Minister Mariano Rajoy denied a Reuters report of an imminent request for bail-out.

" The real challenges will again drive the market," said Jeremy Friesen, a commodity strategist at Société Générale in Hong Kong.

" We are going through a bit of a consolidation period until we see what happens. My suspicion is that we’ll get more monetary policy responses from other central banks as the Fed programme kicks off and the ECB programme starts, probably by the end of this month. That’s bullish for commodities like gold."

Gold is forecast to reach an average of $1,800 an ounce in the first quarter of 2013 as a result, he added.

Spot gold was little changed at $1,772.69 an ounce by 6.24am GMT. It hit $1,791.20 this week, its highest level since last November.

US gold traded nearly flat at $1,775.10.

Data from China and Australia showing further weakness in those economies added to expectations for more action from central banks, after Australia’s surprise rate cut on Tuesday.

The dollar index rose as the global outlook darkened, weighing on commodities priced in the greenback by making them more expensive for buyers holding other currencies.

Technical analysis suggested that spot gold could fall to $1,737.50 an ounce during the day, Reuters market analyst Wang Tao said.

Trade was thin as key player China is closed for the entire week for a public holiday, and investors turned cautious ahead of the US job market report due on Friday.

Job growth is likely to have improved only slightly in September as businesses remained cautious out of fear a sharp tightening of the government’s budget could deliver a big blow to the economic recovery early next year.

Elsewhere in Asia, the sale of physical material from Indonesia ebbed after rupiah-priced gold hit a record high earlier in the week, dealers said.

" There was much selling earlier and now it’s drying up slowly," said a dealer based in Singapore.

Anglo American Platinum, the world’s top platinum producer, warned on Tuesday that security had worsened at its strike-hit South African mines as several thousand gold miners rallied over pay in the dispute-plagued industry.

Strong US auto sales data helped platinum group metals, widely used in making automotive catalysts. Sales last month posted their best showing in four-and-a-half years, helped by cheap financing, rising consumer confidence and a major rebound by Toyota.

“August and September are traditionally strong months for gold, while there is usually a pullback in October, before resumption in November picking up at the end of the year,” said the Fund manager.

“So such a price retreat in the immediate term will not cause too much concern, though we are taking some gains in the gold stocks before this correction. We fully expect new highs by early next year, if not this,” Adrian added.

Gold’s fundamentals remain constructive, citing central-bank buying and investor interest as a defense against depreciating currencies. These factors offset the recent declines in buying from India and China, the two largest gold markets.

“Purchases of physical gold ETFs continue to increase, clear evidence of the net buying. At the same time, the supply of gold is not increasing much,” he continued.

Further, he noted that Japanese pension funds have begun buying gold, as others around the world may as well.

Global gold prices ended the United States day session modestly lower on Tuesday, on some profit-taking pressure and chart consolidation following Monday’s gains that saw prices hit a seven-month high.

December gold last traded down $6.50 at $1,776.80 an ounce on the Comex division of the New York Mercantile Exchange. Spot gold was last quoted down $0.80 an ounce at $1,775.25. December Comex silver last traded down $0.282 at $34.67 an ounce.

LONDON (Commodity Online):  British bank Barclays Capital recommends buying March gold futures as precious metals receive support from a third round of quantitative easing.

" With the dollar weakening and debates over inflation and fiat currency debasement now likely to move back to center stage, QE3 is likely to support the recent pickup in physical and futures market buying, which should help to bring to end gold's position as one of the weakest commodity markets in 2012," the bank added.

According to Barclays, the base metals have benefited from QE3, but the outlook for sluggish economic growth will hurt demand for base metals and the firm recommends shorting selective metals, including aluminum.

For oil, the investors should guard against potential geopolitical flare-ups in the Middle East which could push up prices. “We recommend buying a bullish play, suggesting buying out-of-the-money calls at $125 a barrel or higher,” Barclays noted.

Cotton prices have bearish fundamentals and likely lackluster demand if the global economy deteriorates and the bank recommend shorting the fiber.

Gold Inside Day at Elevated Level Portends Exhuastion

Daily Candles

Prepared by Jamie Saettele, CMT

“After trading to a new high for 2012, gold reversed to close over $15 off of its high. Despite the action, trading from the short side is dangerous. The 1740 area was identified as a high risk area for bulls and that level was not only overcome, but also held as support on 9/26. The next high risk area isn’t until 1856/75. 1753 is now support.” Tuesday’s inside day (after an outside day nonetheless) produces a new objective risk level to operate from the short side. A drop below Monday’s low would warrant a bearish bias against Monday’s high.

LEVELS: 1736.05 1750.90 1763.25 1791.49 1802.80 1819.05

Platinum eased by 0.2 percent to $1,668.25 an ounce.

The price has risen by 9 percent in the last month after a rash of strikes broke out in South Africa's platinum belt, where most of the world's supply of metal comes from.