Friendly tone towards potential gold price developments
Gold was the benefactor from a much more positive outlook for commodities, in the wake of a more positive view for the world economy
- The US Non-farm-payroll (NFP) figures for the month of July were released and 163,000 jobs have been created, against a median expectation from analysts of about 100,000. The overall rate of unemployment rose from 8.2 to 8.3 per cent.
- According to President Rajoy, the Spanish government considers – for the first time – a request for a full bailout, after ECB President Mario Draghi outlined the procedure, which would allow the EFSF to help member states.
- The yield for Spanish 10-year bonds rose last Friday to 7.44 per cent, before comments from Spanish President Rajoy, about a possible full bailout request, pushed the yield on Friday afternoon down to 6.85 per cent.
- Argentina has repaid the last annuity of their 10-year bonds, issued when Argentina went into a state bankruptcy in 2002. It appears that the tough decisions, taken 10 years ago, have worked and that there might be a life after such kind of crisis events after all.
- The Indian rupee finished the week at 55.75 to the dollar.
US$1603.00 – down US$20.00 from last week. Gold finished the week being back above the US$1600 level, after having spent most of the second half of the week between US$1588 and US$1598. There have been several outside events which influenced the gold price during the last week. The statement from the Federal Reserve Bank did not contain any specific mentioning of QE3 (which was NOT expected). This was followed on Thursday by interest rate decisions from the Bank of England and the European Central Bank (ECB). Both Central Banks left their interest rates unchanged. he press conference that followed from ECB President Mario Draghi disappointed and encouraged the markets in equal measure. It seems that the ECB will be able and willing to act, if the clearly outlined requirements from member states are met. Finally, the better-than-expected NFP numbers in the US for the month of July could have led to more downside pressure on the Gold price, but gold was this week, the benefactor from a much more positive outlook for commodities, in the wake of a more positive view for the world economy. Physical buying has been visible sub US$1600 level, but the amounts are still subdued. There appears to be a more moderate or friendly tone towards the potential gold price developments in the market, with investors targeting a break-out above US$1650 level before committing more money for the cause.
Option volatilities midrates: Gold atm (at the money)
1 month 14.50% down 2.00%
3 month 17.00% down 1.50%
6 month 19.25% down 1.00%
1 year 22.00% down 0.50%
Discount 1kg Gold bars loco Dubai (DGD 995 fine) against loco London: US$0.35
EFP Spot Gold to December Comex: US$2.70
ETF: Holdings are at 2512 tons
Support: 1590 and 1550 Resistance: 1632 and 1654
US$27.78 – up US$0.06 from last week. Silver finished the week slightly higher, in line and in sympathy with the price movement of gold. Silver did attempt trading under the US$27 level again but a strong performance on Friday led to a smallish gain on the week. The development on Friday in the stock markets led to a more positive view of the
economic outlook and that spurred Silver, as well as Platinum and Palladium. It appears that silver and other white precious metals have helped gold to limit this week’s losses. Silver ETF holdings experienced very strong inflows and are now on new 2012 highs. This does not mean that much on its own, but the assumption is that Silver investments have gotten into stronger hands, with renewed upside fantasy. he COTR report shows that both, fresh long as well as short positions have been added.
Option volatilities midrates: Silver atm (at the money)
1 month 28.00% down 1.00%
3 month 30.50% down 1.50%
6 month 32.50% down 1.00%
1 year 35.00% unchanged
EFP Spot Silver to September Comex: US $ minus 6.25 cents
ETF: Holdings are at 15450 tons
Support: 26.78 and 26.09 Resistance: 28.00 and 28.50
US$1403 – down US$2 from last week. The discount to Gold has decreased to US$200. The outlook for Platinum appears to be still weak, but the rally on Friday, with a close back above the US$1400 level, was important. There has been no visible new interest from the investment community in platinum and there seem to be no tangible steps visible to close the gap of oversupply to an already saturated market. Platinum will stay on relatively loose grounds, unless the price level could overcome the current resistance levels and move decisively above US$1500, where it is likely to find fresh investments.
Option volatilities midrates: Platinum atm (at the money)
1 month 17.75% down 1.25%
3 month 20.00% down 0.90%
6 month 21.00% down 1.00%
1 year 23.00% down 1.00%
EFP Spot Platinum loco Zurich to October NYMEX: US$0.65
ETF: Holdings are at 46 tons.
Support: 1380 and 1350 Resistance: 1430 and 1478
US$577 – up US$3 from last week. Palladium has held relatively well, but the performance is very uninspiring. The equities rally last Friday was well received in the palladium market and that was the major contributing factor for this relatively good close of the week. ETF holdings have seen some small outflows in the week but the interest and the price movements of palladium are very subdued.
Option volatilities midrates: Palladium atm (at the money)
1 month 21.00% unchanged
3 month 23.00% unchanged
6 month 25.00% unchanged
1 year 28.50% up 0.50 %
EFP Spot Palladium loco Zurich to September NYMEX: US$ minus 0.40
ETF: Holdings are at 62 tons
Support: 558 and 538 Resistance: 595 and 607