09 December 2010, 9:12 a.m. | |
(Kitco News) --The recent break in gold prices offers a chance to build positions, says SEB. “The gold market currently offers a substantial potential upside with a limited downside risk. When trust in both the dollar and the euro is low, there are few places to go,” the bank says. They have both a bullish strategic and tactical view on gold, noting the “frenetic money printing” in the U.S. and the European situation could turn worse, while Chinese inflation encourages hedging demand. A Chinese interest rate hike could pressure gold prices, but it is viewed as a temporary setback. By Debbie Carlson of Kitco News; Market Nuggets: Copper Pushes To New High, But Higher Interest Rates Could Limit Gains – MF Global (Kitco News) --Tight inventory conditions and talk of looming base metal exchange-traded funds helped push copper prices to a record high on the LME, although profit-taking curbed some of the gains. The strength in copper has helped other base metals such as aluminum, says MF Global. The firm cautions, however, with global interest rates creeping higher it could limit upside. They note a rise in 10-year yields in the U.S. Treasury market, talk of a Chinese rate hike as soon as this weekend, the potential for India’s central bank to raise rates next month and Russia might move to raise rates in the first quarter of 2011. German yields are also at their highest level since May. By Debbie Carlson of Kitco News; Market Nuggets: Gold, Silver Among BMO's 'Preferred Commodities' (Kitco News) -- Analysts with BMO Capital Markets say they have upgraded their outlook for gold and silver and that the metals remain among BMO's “preferred commodities.” BMO Research increased its 2011 average estimate of gold and silver prices to $1,450 and $28 an ounce, respectively. “Gold and silver price assumptions beyond 2011E have been increased on average 8.2% and 18.7% respectively…” BMO says. “Silver and gold are expected to benefit from their quasi-money status, as investors continue to use precious metals to protect against a very uncertain outlook for Western currencies, long-term inflation and systemic risk associated with European and U.S. debt. Risk is to the upside amid a possible more aggressive QE2 implementation. Robust demand growth and supply constraints are projected to tighten the physical market conditions for gold and silver. Silver is expected to be in a deficit position in 2011, making it an outperformer.” By Allen Sykora of Kitco News; Market Nuggets: Rise In U.S. Treasury Yields Takes Away Some Commodities Appeal--Barclays (Kitco News) -- U.S. 10-year Treasury notes are “breaking down” similar to spring 2009, prompting some of the recent pressure on commodities, say technical-chart analysts with Barclays Capital in a research note. Cash yields, which move inversely to the price, have closed through the 200-day moving average and pivotal support in the 3.15%-3.25% area, leaving little on the charts to be bullish about, Barclays says. The rise in 10-year yields is expected to draw some appeal away from the commodities, and this can be seen in the precious-metals complex, with gold and silver posting reversal days on Tuesday, Barclays technicians say. “However, we maintain our underlying bullish view for commodities and rather than looking for any significant setback, we expect this to translate into a choppy move higher.” By Allen Sykora of Kitco News; Market Nuggets: Goldessential: Gold Futures Recover Some As Physical Demand Emerges (Kitco News) -- Comex gold futures, which were under pressure Wednesday, have recovered some on increased risk aversion in equity markets and sound physical demand originating from Asia, say analysts with Goldessential.com. Still, the move has been countered some by a softer euro against the dollar. Matthias Detremmerie, founder of Goldessential, says gold has “nicely bounced off a three-week-old uptrend line. However, a failure to regain past $1,400 still opens for charts to deteriorate further, targeting $1,352 as next target.” Fresh strength in the U.S. dollar could also limit recovery, he says. Goldessential reports that holdings in the 13 exchange-traded funds that it continuously tracks fell by 3.14 metric tons Wednesday in a market weighed down by long liquidation. Total holdings stood at 1,911.88 tons. At 8:01 a.m. EST, February gold was up 90 cents at $1,384.10 an ounce but had traded up as high as $1,393.30. By Allen Sykora of Kitco News; | |
Thursday, December 9, 2010
Market Nuggets: Current Sell-Off In Gold Is A Chance To Build Positions – SEB
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