Gold, Silver and Crude Oil

 

Showing 1 of 3

Red’s Mid-week Report on Gold, Silver and Crude Oil

Gold ends its 3-day rally, WTI falls, USD rises

Gold futures on the COMEX Division of the New York Merc finished lower, ending a 3-day rally Wednesday, pressured by strength in the “Greenback” and players’ profit-taking.

The most active Gold contract for June delivery lost 15.5, or 1%, to 1,501.4 oz. The Dollar Index, rose on Wednesday, paring Gold’s appeal.

Silver for July delivery fell 2.971, or 7.7%, to 35.515 oz. and Platinum for July delivery declined 23.1, or 1.3% to 1,777.8 oz.

Total Crude Oil and petroleum products stocks rose +6.42 mmb to 1047.52 mmb on the week ended May 6.

Crude Oil stockpile rose +3.78 mmb to 370.33 mmb during the week with stock-build recorded in all PADDs. West Coast gained the most with 1.94 mmb added to storage. Cushing stocks rose for the 2nd week, by +1.12 mmb to 41.61 mmb. Utilization rate slipped for the 1st time in 4 weeks to 81.7%.

Gasoline inventory rose 1.28 mmb to 205.72 mmb as demand declined -1.31% to 8.8M bpd. Imports soared +9.67% to1.21 M bpd while production climbed 0.57% to 8.88 M bpd.

Distillate inventory dropped for a 5th week running, by -0.84 mmb to 144.29 mmb demand contracted -3.19% to 3.77M bpd. Imports declined -15.74% to 0.17M bpd, and production dipped-0.31% to 4.18M bpd.

WTI Crude Oil fell to 110.32 immediately after the report which showed that Crude inventory increased more than expected and gasoline stockpile unexpectedly gained. Prices, however, received buying interests above 100 and recovered, but faded in the afternoon.

June Crude Oil fell 5.5% to close at 98.21 bbl contributing factors to the 5.6% pullback Wednesday, included a stronger “Greenback”, Bearish inventory data, and a continued pullback in Gasoline futures.

Gasoline futures, which were halted intra-day for 5 minutes, were hammered following this morning’s data from the EIA, which showed that finished motor gasoline fell for the 3rd time in 4 weeks.
Support, Resistance and Trend
Gold

The general trend over the short term is to the Northside targeting 1600.00, the new psych mark, and Key support of 1430.00 remain intact into this week’s closing.

Support: 1513.00, 1505.00, 1500.00, 1494.00, 1480.00

Resistance: 1530.00, 1537.00, 1545.00, 1549.00, 1556.00

Recommendation Based on the charts selling Gold around 1523.00 gradually targeting 1513.00,1510.00 and 1494.00, a Stop Loss is a 4 hr closing above 1537.00 IMO is appropriate. Stay tuned…
Silver

The general trend over short term is to the Southside targeting 26.65, and 48.50, the Key resistance, remains intact into this week’s closing.

Support: 38.80, 38.50, 38.10, 37.45, 36.80

Resistance: 39.40, 39.75, 40.20, 40.85, 41.85

Recommendation Based on the charts selling silver around 39.40 targeting 37.45,36.45 and 35.65 , a Stop Loss is a 4 hr closing above 40.20 IMO is appropriate. Stay tuned…

Crude Oil

Crude had a strong Northside move and was not to mark the main resistance for the upside wave. The Stochastic and RSI dumped some of the buying saturation, and so the return to the downside and it was be confirmed with 4 hr closing below 103.50.

The trading range for Wednesday was at 98.21, just below the major support Zone, and the major resistance is at 107.65 into the week’s close.

The short term trend is to the Southside with steady daily closing below 109.75 targeting 85.40.

Support: 103.50, 102.75, 102.20, 101.80, 101.05

Resistance: 104.30, 104.80, 105.25, 105.85, 106.50

Recommendation Based on the charts IMO selling Crude Oil with 4 hr closing below 103.50 and take profit in stages at 98.60, 96.60, and Stop Loss if there is close above 104.80 is appropriate. Stay tuned…

In some countries (for example, Spain and Greece), this has triggered a competition war for retail deposits, putting unsustainable pressures on interest margins. In other countries, covered bonds issuance has picked up, but over-collateralization required even for the best rated banks means that only a limited portion of their balance sheets can be funded in this way. And reliance on ECB funding has become entrenched for a number of second-tier banks in large European countries nearly all banks in Greece, Ireland, and Portugal and some small and mid-sized Spanish saving banks. With liquidity pressures remaining acute, a negative shock could rapidly spill over through the periphery and potentially beyond. Despite some reduction during the last year, cross-border exposures creditor countries (Waysand, Ross, and de Guzman, 2010) (Figure 1.9). Hence, the system would still be severely tested if euro area stresses were to intensify.

This story remains mainly about the exposures of Europe's largest banks to fringe eurozone debt. While in some countries, where banks are still exposed to private sector real estate losses, deleveraging is about writing down bad loans and raising capital, in the eurozone's core it's about divesting from risky fringe eurozone debt.

Banks in German and France are unlikely to be able to sell the bonds of Greece, Portugal, and Ireland at market, and so must wait for those bonds to expire or, the ECB to buy them, in order to escape their positions.

Don't miss: Who would get slammed in a Greek debt restructuring >

Note, German and France's slight decline in exposure to Greece, Ireland, and Portugal.

Good morning. Here's what you need to know.

 

• Asian indices were down in overnight trading, with the Nikkei down 1.50%. Major European indices are down and U.S. futures indicate a negative open.

• More weak economic data from the UK. Industrial production grew 0.3% in March missing expectations of 0.8%. Manufacturing output at 0.2% was just below estimates of 0.3%. Don't miss: Why Niall Ferguson believes the West is in decline >

• The People's Bank of China has increased its reserve ratio by 0.50%, effective May 18. Chinese CPI figures for April came in at 5.3% yesterday, slightly above estimates. Check out 17 facts about China that will blow your mind >

• Top executives of five private oil companies have been asked by Senate Democrats to explain why they need tax breaks. BP America’s Lamar McKay, Chevron’s John Watson, ConocoPhillips’s Jim Mulva, ExxonMobil’s Rex Tillerson, and Shell Oil’s Marvin Odum will all testify at a Senate Finance Committee hearing today. Here's where you can find the world's biggest oil reserves >

• The commodity sell-off continues. Crude oil is now below $97, silver is down to about $33, and gold is down to $1482. Don't miss: The 10 biggest gold hoarding countries in the world >

• Retail sales data for April will be released at 8:30 AM ET. Consensus is for 0.6% increase over March. Follow the release at Money Game >

• Computer networking giant Cisco reported strong earnings, but a weak outlook after the bell yesterday. CEO John Chambers said its Q4 earnings outlook however will remain weak at $0.37 to $0.39 non-GAAP EPS on $10.8 billion to $11 billion of revenue.

• Initial jobless claims of 430K came in line with expectations >

• PPI data for April will be out at 8:30 AM ET. Consensus is for a slight ease to 0.6%. Follow the release at Money Game >

• The True Finns will not be a part of Finland's new coalition government, according to party leader Timo Soini. The move comes after a disagreement with the country's top two parties over the Portuguese bailout. Will these countries raid their pensions next >

• BONUS: Angelina Jolie has confirmed that the coordinates tattooed on her arm are the latitude and longitude for Brad Pitt's birthplace.

Good morning! Here's what you need to know:

 

1. Newt Gingrich announced yesterday that he was a candidate for the 2012 GOP presidential nomination, citing his record as Speaker of the House as proof that he could accomplish big things in Washington. Dan Balz assesses Mr. Gingrich's weaknesses here. Our take is here.

2. Cherie Daniels, wife of Gov. Mitch Daniels (R-IN), will address a GOP gathering in Indiana today. Notoriously press-shy, Ms. Daniels speech will be watched carefully for signs that she has given her husband the go-ahead to run for president.

3. Mitt Romney will give a " major address" on the subject of health care today in Michigan. The issue is considered by many to be Mr. Romney's most glaring vulnerability as he gears up for the 2012 GOP presidential nomination campaign.

4. The Wall Street Journal editorial board today is sharply critical of the healthcare plan Mr. Romney proposed and eventually signed into law as governor of Massachusetts.

5. Donald Trump, whose candidacy for the 2012 GOP nomination is widely perceived to be in free-fall, campaigned in New Hampshire yesterday. He mentioned President Obama's birth certificate only in passing.

6. The National Journal reports: " President Obama repeated on Wednesday his belief that any long-term agreement to cut the national debt must include tax increases as well as spending cuts, suggesting that the threat of incremental tax hikes, built in to negotiations if spending exceeds a certain amount, will push Republicans to the bargaining table."

7. Many Republican Congressional candidates in 2010 campaigned as " defenders" of Medicare. They now find themselves under attack for " threatening" Medicare.

8. Dow Jones reports: " The Treasury Department auctioned $56 billion in new debt Tuesday and Wednesday, enough to take the U.S. over its federal debt ceiling when the three- and 10-year notes settle on Monday."

9. The Assad regime in Syria stepped up its crackdown on popular uprisings across the country. The regime has indicated it will do whatever is necessary to maintain its grip on power.

10. Muammar Qaddafi appeared on Libyan television yesterday, dashing speculation that he might have been killed in a NATO airstrike. The war in Libya, meanwhile, grinds on. The latest dispatch from C. J. Chivers is here.

The U.S. raid into Pakistan's heartland that killed Osama bin Laden was possible only because America and NATO are engaged in Afghanistan.

 

The crucial linkage between our Afghan war policy and President Obama's goal of defeating al Qaeda was underscored by the Navy SEALs' mission.

Simply put, we can't put pressure on al Qaeda without Afghanistan forward operating bases, and we clearly can't trust Pakistan to handle al Qaeda alone.

Bin Laden was not in a cave cut off from the world as George W. Bush and others said he was. Instead, he was running a command center for al Qaeda and communicating with its franchises around the Islamic world, according to news accounts of what was found in his lair. Other accounts suggest bin Laden was planning to meet an Indonesian master terrorist named Um Patek, who was involved in the 2002 Bali bombing that killed more than 200 people. That was before Patek was caught in January—very near to bin Laden's hideout in Abbottabad.

In short, al Qaeda's leader was organizing global terrorism from a headquarters deep inside Pakistan. He may have dyed his hair and liked to rewatch his own propaganda videos, but he was also dangerous.

The notion that al Qaeda was neutered was just plain wrong. Al Qaeda will now rebuild a new leadership cadre and command center around its surviving bosses, like Ayman al-Zawahri and Muhammad Ilyas Kashmiri. They will get help from the support networks in Pakistan that helped hide bin Laden for a decade. Such allies as Lashkar-e-Taiba will assist. The extent of Pakistani support for al Qaeda—certainly from other terror groups and probably from parts of the army—is the most important revelation of the raid.

It is fantasy to think we can target these terrorist networks in Pakistan without a base nearby in Afghanistan. The Arabian Sea is too far away. Cruise missiles don't work. We need Afghanistan for both drone operations and commando raids. Without a substantial force, in-country human intelligence collection across the border will also dry up. The Afghans let us operate from their turf because we fight the Taliban, al Qaeda's ally. Unfortunately, our efforts in Afghanistan are still struggling to recover from years of neglect due to the Iraq War.

The Taliban's spring offensive began with an assault in Kandahar this week akin to the 1968 Tet offensive in Vietnam. The insurgents infiltrated the city and attacked government buildings. Their tactics were vintage al Qaeda: multiple suicide bombers and car bombs with fighters prepared to fight until killed. This followed a mass prison break in the city. Together, the two operations demonstrated the fragile nature of NATO's hold on Afghanistan's second city. It showed that any substantial drawdown of NATO forces this summer would be strategically unwise and risky. The Afghan army is getting stronger but it is not anywhere near ready to operate alone in the Pashtun south.

The Taliban offensive was planned from the group's safe havens in Pakistan. Those have enjoyed Pakistani army support for years. Of course, Pakistani duplicity means we can't rely on them to disrupt al Qaeda. As the intelligence community examines bin Laden's laptop and other gear, the extent of that duplicity will become clearer. Well-informed Pakistani press accounts hint it will point very high into the army command.

So, Bin Laden's demise is a victory, but the end of this conflict is not yet in sight. It is tempting to declare mission accomplished and run for the exit, but we know from bitter experience that pretending victory is at hand is a terrible delusion.

Dow jones will close negative today !!

OH YES !!

US Fed QE-2 Update

US Fed’s QE-2 sidetracked deflation

Fed Chairman Ben S. Bernanke’s US$600B+ move against deflation is paying off, as stock and debt markets rise, bank lending grows, and economists forecast faster growth in the country.

The Standard & Poor’s 500 has gained 13.5% since he announced his plan to buy Treasuries the Quantitative Easing policy.

Government bond yields show investors expect consumer prices to rise in line with historical averages. The riskiest companies are obtaining credit at the cheapest borrowing costs ever and Fed data show that commercial and industrial loans outstanding are rising for the 1st since Y 2008.

The US Fed said last month it will not need to extend the US$600B+ buying program beyond its scheduled end June.

Payrolls expanded by 244,000 in April, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said May 6.

The jobless rate climbed to 9%, the 1st increase since November, a separate survey of households showed.

Chairman Bernanke’s Quantitative Easing program, dubbed QE-2 by analysts and investors because it followed an earlier round of US$1.7B in bond purchases in Y 2009 and Q-1 of Y 2010, was criticized by officials around the World.

In November, the big concern for the US Fed was preventing a general decline in prices, which can paralyze an economy by hindering investment, as the jobless rate held at 9.5% or higher for 14 months.

Core consumer prices rose 0.6% in October from a year earlier, the smallest gain since records began in Y 1958, government data at the time showed.

“Measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate” of promoting full employment and containing consumer prices gains, the central bank’s Federal Open Market Committee said in a November 3 statement.

Since reaching a 20-month low of 2.18%in August, a bond market measure of inflation expectations the Fed uses to help determine monetary policy has risen to 2.87%. The 5-yr forward break even rate projects what consumer price increases may be beginning in Y 2016, smoothing blips in inflation expectations from swings in Crude Oil prices and other temporary events.

QE-2 has contributed to a 12% decline since August in the dollar based on Bloomberg Correlation-Weighted Indexes, which measure its performance against nine of the most-traded currencies in the world, including the Euro, Yen and GBP.

Gold and Silver reached records in April as investors sought to hedge financial assets against the weakening dollar and accelerating inflation.

Gold advanced 25.8% in the past year, while silver more than doubled as investors increased their holdings in exchange-traded products to a record 15,518 metric tons on April 26.

Rising commodities may be restraining the economy. The Commerce Department said April 28 that the gross domestic product rose at a 1.8% annual rate in Q-1 after a 3.1%pace in the final 3 months of Y 2010. The Bloomberg Consumer Comfort Index fell to minus 46.2 in the week ended May 1, the lowest level since the end of March, as the highest gasoline prices in almost three years soured Americans’ views of the buying climate.

Fifty-five percent of domestic banks surveyed reported improvements in the credit quality of large and middle-sized loan applicants, the Fed said. About 35 percent reported improvements in small firms, according to the survey.

Commercial and industrial loans totaled US$1.25T as of April 20, according to the Fed. While that is down from the peak of $1.62 trillion in October 2008, it’s up from last year’s low of US$1.21T in September, marking the longest sustained increase since Y 2008.

Singapore Attracts Hedge Funds

More and more global hedge fund are finding Singapore attractive and drawn to Asia’s economic growth as the regulator seeks to further develop the industry there, including building up fund administration services.

“We continue to see interest from fund managers as well as alternative investment managers, including global and indigenous hedge funds, which add diversity to the broader asset management industry,” Ng Nam Sin, assistant managing director of the Monetary Authority of Singapore, wrote in an e-mailed response to questions.

Global fund managers including Fortress Investment Group LLC and Algebris Investments LLP have set up in Singapore as Asia’s economic growth outpaces the World, and over time, more managers will look at Asia as a place to establish themselves IMO.

The region now has as many millionaires as Europe and they are set to increase allocations to alternative investments, including hedge funds, to 8% of their portfolios this year, up from 5% in Y 2009, according to a Capgemini SA report.

Boston-based Sirios Capital Management LP, an equity hedge fund co-founded by former MFS Investment Management portfolio manager John Brennan, just registered to open an office in Singapore, according to the Accounting and Corporate Regulatory Authority, which regulates businesses in Singapore.

Improved fundamentals in emerging Asian economies and the search for higher yields, with low interest rates in advanced economies, have fueled capital flows into the region.

The MAS, both the central bank and regulator of Singapore’s financial system continues to “enhance the eco-system for fund managers,” including building fund administration services and developing the City-State as a domicile center.

Singapore has made it easier for hedge funds to set up shop on the Island than in other Asian cities such as Hong Kong, where hedge-fund managers face the same licensing requirements as mutual-fund managers.

While Singapore is introducing new rules to increase oversight of the industry, small funds can operate without a license. Hong Kong and Singapore are the 2 biggest centers for hedge funds in Asia.

Singapore, where the top tax rate for individuals is 20%, is also attracting more managers after the UK increased the maximum rate for income tax to 50%, and US and European regulators are setting up to make the rules much tougher.

Singapore’s hedge-fund industry grew to S$59B (US$48B) at the end of Y2009, from about US$10B in Y2005, according to the central bank. T

here were 320 hedge fund managers in the City-State inY 2009, compared with fewer than 20 before Y 2001, according to the MAS.

Over the next 12 months, Singapore will continue to see interest by hedge funds seeking to tap Asia as a source of funds as well as a source of excess returns. The increasing number of Global hedge funds is not likely to crowd out smaller Singapore-based managers

After the Closing Bell

Red’s Bull Trader Alert: This recent rally is underpinned by the Buy-the-Dip strategy that players have used since the Bull Run began on March 9, 2009.

Despite what some believe are structural economic questions, such as the the fiscal health of the EuroZone states, growth and interest rates in China, and geo-political chaos in the MENA region, the trade has turned on the positive side.

Players are confident that buying stocks following a series of losses leads to gains, as market has been quick to recover from any short-term dips since it bottomed on March 9, 2009.

Strong earnings overall are the source of fundamental support for the US stock market’s rise from its Bear market floor.

After a Strong advance last Thursday and Friday, the USD ended lower in each of the past 2 sessions. Today’s loss was 0.2%.
US Stocks extend the rally as utilities and defensive issue lead the way
US equities rose for a 3rd day running Tuesday the leaders were utilities and other defensive shares plus the prospect of Strong profit growth.

The S& P 500 tapped at a 1% gainer, all 10 sectors closed in the Green.

Consumer discretionary, and utilities stocks were the session’s Top performers. They are up 1.3% and 1.5%, respectively on the day.

The DJIA .DJI closed up 75.68 pts, or 0.60%, at 12,760.36.

The S & P 500 .SPX closed up 10.87 pts. or 0.81%, at 1,357.16.

The NAS Composite Index .IXIC finished up 28.46 pts, or 1.01%, at 2,871.89.

The Euro closed up against the USD and Japanese Yen Tuesday.

Gold and Silver prices rose for a 3rd straight session Tuesday after last week’s sell-off, driven by intense fighting in Libya, uncertainty about debt-laden Greece and the rising cost of Crude Oil and Grain.

Crude Oil rose Tuesday, boosted by concerns that flooding could hit the US Gulf Coast refining hub, and data showing Strong Chinese Crude Oil imports in April.

Gasoline futures led the Crude Oil market higher, with the flood threat adding to concerns about 11 straight weeks of inventory declines as the United States gears up for the peak Summer holiday period.

US Treasuries limited losses against a stronger equity market. Their recovery came after session lows were set following solid auction results for US$32B in 3-yr T-Notes. The auction drew a bid-to-cover of 3.29, Dollar demand of US$105.3B, and an indirect bidder participation rate of 34.4%.

Advancing Sectors: Consumer Discretionary (+1.3%), Utilities (+1.3%), Telecom (+1.1%), Financials (+0.9%), Tech (+0.9%), Industrials (+0.8%), Materials (+0.7%), Consumer Staples (+0.6%), Health Care (+0.6%)