Commodity Research Report Ways2Capital 13 Febuary 2017

some of the gains made in the wake of U.S. President Donald Trump's promise of a major tax announcement

Gold prices steadied on Friday, but remained below the week’s three-month highs as the dollar pared back some of the gains made in the wake of U.S. President Donald Trump's promise of a major tax announcement. Gold for February delivery settled down 0.15% at $ 1,235.0 on the Comex division of the New York Mercantile Exchange. The precious metal was still 1.3% higher for the week. On Wednesday, gold reached its highest level since mid-November at $ 1,243.9. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 100.71 not far from the eleven-day highs of 101.02 set earlier Friday. The index ended the week with gains of 0.95%, the largest weekly percentage gain since mid-December after remarks from Trump indicted that his administration would soon reform tax policy. Trump said Thursday he would be announcing something over the next two or three weeks that would be “phenomenal” in terms of tax. A strong dollar is typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Elsewhere in precious metals trading, silver was at $ 17.95 a troy ounce late Friday, and ended the week with gains of 2.69% . Copper was up 4.65% at $ 2.777 a pound and ended the week up 6.03% amid fears over a supply disruption. Workers at BHP Billiton Escondida in Chile, the world's largest copper mine, went on strike on Thursday, bringing production to a standstill. Platinum was down 0.77% at $1,014.3 late Friday. In the week ahead, the U.S., the UK and China are to release what will be closely watched data on inflation. Meanwhile, Federal Reserve Chair Janet Yellen is due to testify to Congress for the first time since Donald Trump entered the White House. Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, February 13
Japan is to publish preliminary data on fourth quarter economic growth.
Tuesday, February 14
China is to release data on consumer and producer price inflation.
Germany is to put out a preliminary estimate of fourth quarter growth, while the euro zone is to release a revised estimate of fourth quarter growth.
The ZEW Institute is to report on German economic sentiment.
The U.K. is to publish data on consumer price inflation.
The U.S. is to release data on producer price inflation.
Fed Chair Janet Yellen is due to appear before the Senate Banking Committee, in Washington to testify on the bank’s latest monetary policy report.
Separately, Dallas Fed President Robert Kaplan is to speak at an event in Houston.

Wednesday, February 15
The U.K. is to publish its latest employment report.
The U.S. is to release a raft of economic data, including reports on inflation, retail sales, industrial production and manufacturing activity in the New York region.
Fed Chair Janet Yellen is due to testify on the bank’s latest monetary policy report to the House Banking Committee, in Washington.

Thursday, February 16
Australia is to publish its latest jobs report.
The European Central Bank is to publish the minutes of its latest meeting.
The U.S. is to publish reports on building permits, housing starts, jobless claims and manufacturing activity in the Philadelphia region.

Friday, February 17
New Zealand is to publish a report on retail sales.
The U.K. is also to report on retail sales.
Canada is to round up the week with figures on foreign securities purchases.
Gold steadied on Friday, but remained below this week's three-month top as the U.S. dollar and Treasury yields came off their highs after the currency initially jumped on U.S. President Donald Trump's promise of a major tax announcement. Spot gold XAU= was up 0.02 percent at $1,230.78 an ounce by 2:24 p.m. EST (1924 GMT), while U.S. gold futures GCv1 for April delivery settled down 0.07 percent at $1,235.90. On Wednesday, spot gold reached its highest since mid-November at $1,244.67. Gold prices were on track for a second weekly gain, up 1 percent from late last Friday. The dollar .DXY pared gains against a currency basket on Friday after earlier strength from U.S. President Donald Trump's pledge to announce a major tax plan within weeks cooled some market nerves, reinvigorating dollar bulls. Wall Street hit record highs for a second day on hopes of the business-friendly tax cuts. "The dollar puts a little pressure on gold however the strength in the equity markets and the strength in the other precious metals is lifting gold up. gold prices moved into positive territory. "It's really the intermarket relationship that's stabilizing gold right now." Silver XAG= was up 1.5 percent at $17.91 an ounce, after tapping $ 17.99, the highest since Nov. 11. Palladium XPD= rose 1.6 percent to $ 782, after rising to $786.40, the highest since Jan. 25. "Both silver and palladium are up on the day as an improving China signals a better global economy and gives support to the more industrial metals of the group," said aid Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York. Earlier in the session, however, gold prices were lower. "The Trumpflation trade is back on the agenda, which is negative for gold. U.S. economic data has also stoked talk that the Federal Reserve would press ahead with U.S. interest rate hikes sooner rather than later. U.S. import prices rose more than expected in January, while initial jobless claims dropped unexpectedly last week to the lowest in nearly 43 years. is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. The major physical markets in Asia were mixed this week as Indian jewelers stocked up for wedding season, while rising prices sidelined buyers elsewhere.
Platinum XPT= was down 0.6 percent at $1,006.10.
Gold prices tumbled on Friday, as the U.S. dollar remained broadly supported following recent comments by U.S. President Donald Trump on tax reform and an upbeat jobless claims report added to optimism over the strength of the U.S. economy. On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 1.12% at $1,223.00, the lowest since February 6. The April contract ended Thursday’s session 0.22% lower at $ 1,236.80 an ounce.
Futures were likely to find support at $ 1,206.20, the low of February 3 and resistance at $1,243.50, Thursday’s high. The dollar strengthened after U.S. President Donald Trump said on Thursday that he would announce the most ambitious tax reform plan since the Reagan era in the next few weeks. During a meeting with airline CEOs on Thursday, Trump promised a “phenomenal” tax plan, without giving any specific details of the plan. The comments came after the U.S. Department of Labor said initial jobless claims decreased by 12,000 to 234,000 in the week ending February 4. Analysts had expected jobless claims to rise by 4,000. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 100.69, just off a two-week high of 100.75 hit overnight. Elsewhere in metals trading, silver futures for March delivery lost 1.01% to $17.562 a troy ounce, while copper futures for March delivery gained 0.77% to $2.675 a pound. Copper prices remained under pressure however, as workers at the Escondida copper mine in Chile, the largest in the world, launched a strike on Thursday. The workers union has warned that the strike could be lengthy, potentially affecting global supplies.
Chile is the world’s biggest producer of the red metal, providing almost a third of the world's supply. Asian gold demand was mixed this week with Indian jewellers stocking up for the wedding season while rising prices kept buyers on the sidelines elsewhere. After delaying purchases last month in anticipation of an import duty cut in the federal budget, jewellers in India have started rebuilding inventories on the back of an uptick in retail demand due to the wedding season. "The uncertainty over the duty cut is over. Jewellers are building inventory. Last week, the Indian government presented its budget for the 2017/18 financial year, but didn't change the import duty on gold. bullion industry had urged the government to reduce the duty to combat smuggling, which has increased since India raised it to 10 percent in August 2013 in an effort to narrow a gaping current account deficit. "Retail demand has been improving due to the wedding season. Prices in the world market have jumped in the last few weeks, but comparatively, Indian prices rose less due to an appreciation in the rupee. In the local market, gold MAUc1 was trading around 28,952 rupees per 10 gram on Friday, after falling to 26,862 rupees in December, the lowest since Feb. 2, 2016. Dealers in the world's second-largest consumer of the metal were charging a premium of up to $3 an ounce this week over official domestic prices, compared with a premium of $ 2 last week. The domestic price includes the 10 percent import tax. "Demand for coins and bars is still weak. Investors are more interested in equities," said a Mumbai-based dealer with a private bank. Meanwhile, rising prices took the sheen off gold in other regions of Asia. "The physical side is still is very slow as people have to adjust to prices at this level. There was not much buying from China too.
Premiums in China, the top consumer, were $7-$8 over international spot prices, while premiums in Hong Kong and Singapore dropped slightly to 80 cents to $1.20 from last week's $1-$1.40. In Japan, prices were at a discount of 75 cents, due to increasing selling volume, said a Tokyo-based trader.
Gold slipped on Thursday from a three-month high in the previous session after robust U.S. economic data pointed to a stronger economy, increasing the likelihood that the Federal Reserve will raise U.S. interest rates. The data showing rising U.S. wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits also pushed up the dollar .DXY and U.S. bond yields US10YT=RR . A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion. Higher interest rates would lift yields further. Spot gold XAU= was down 0.85 percent at $1,231.03 an ounce by 3:53 p.m. EST , while U.S. gold futures GCcv1 settled down 0.2 percent at $1,236.80. "If people were betting on the Fed being more relaxed and rates being lower for longer, this has muddied that picture. Still, Chicago Fed President Charles Evans, a voter on policy this year, told reporters it is reasonable to expect the Fed to raise rates three times this year. gold striking $1,244.67, its highest since Nov. 11, on Wednesday, some investors had turned cautious and were cashing in their bets on higher prices. Gold has risen about 10 percent from a mid-December low as political risk in Europe and the United States has driven demand for bullion as a safe haven. Those worries were fueled on Thursday by official data that showed Germany's trade surplus climbed to a record high in 2016, setting the scene for conflict between Berlin and Washington after Trump's top trade adviser last week accused Berlin of exploiting a "grossly undervalued" euro to gain trading advantage. about a possible trade and currency war therefore seem justified and are likely to keep demand for gold at a high level. Adding support to prices, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased its bullion holdings for a sixth day on Wednesday. "We see gold as relatively underpriced, given the rally in commodities and high level of political uncertainty. In other precious metals, platinum XPT= was down 0.2 percent at $1,012.99 an ounce. The metal used in jewelry and autocatalysts touched $1,028.50, its highest since Oct. 3, earlier in the session. Spot silver XAG= fell by 0.9 percent to $17.62 an ounce, while palladium XPD= was up 0.2 percent at $770.
Gold rose to a three-month peak on Wednesday, as political risks posed by elections in Europe and worries over U.S. President Donald Trump's policies stoked safe haven demand. Investors are concerned about the strong showing in the French presidential race of far-right candidate Marine Le Pen, who has promised to take France out of the euro zone and to hold a referendum on European Union membership. The euro EUR= recovered after falling against the dollar on political risks, as the single currency gained from investors' wariness over Trump's protectionism and immigration policy and his hints that he would prefer a weaker dollar. There's underlying demand for gold as a hedge against political uncertainties on both sides of the Atlantic.Retracements have been quite shallow the past couple of weeks, especially the signal that gold wasn't going down when the dollar started going up. Spot gold XAU= rose 0.5 percent at $ 1,239.27 an ounce by 2:45 p.m. EST, after rising to its highest since Nov. 11 at $ 1,244.67. "This discussion over the immigration ban and the court fight is leaving investors in a realm of uncertainty which is also leaving room for them to take on new gold positions or to reduce their shorts. U.S. gold futures GCcv1 settled up 0.3 percent at $ 1,239.50. Indicating heightened worries over the French elections, the gap between French 10-year government bond yields and their low-risk German equivalents was at its widest since November 2012. "Gold prices will continue to rise until mid-February on uncertainties in the U.S. and Europe. But once January CPI data is released, it will give an idea about the possibility of a rate hike in March.
Holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose for a fifth straight session on Tuesday. Spot silver XAG= rose 0.3 percent to $ 17.76 an ounce, after marking its highest since Nov. 11 at $ 17.87.
Gold prices were little changed in European morning trade on Tuesday, holding steady near the prior session's three-month high as investors sought the perceived safety of the yellow metal amid growing concerns over political risks in Europe and around the globe. Gold for April delivery on the Comex division of the New York Mercantile Exchange tacked on 25 cents, or less than 0.1%, to $1,232.45 a troy ounce by 5:30AM ET, after rallying $ 11.30, or almost 1%, a day earlier. Prices of the yellow metal touched $ 1,237.50 on Monday, the most since November 11. Investors were largely focused on French politics, as far-right National Front leader Marine Le Pen launched her presidential bid over the weekend, vowing to fight globalization and take France out of the euro zone. Apart from France, market players also have to factor in elections in other parts of the European Union this year. Dutch elections are in March followed by Germany in September. In Italy, another presidential election looms, even as former Italian prime minister Matteo Renzi said he was willing to shelve his push for early voting. Traders also eyed political risk elements in the U.S., with President Donald Trump's administration on the back foot over its immigration and other policies. Headlines from Washington will continue to dictate market sentiment as traders focus on Trump for further details on his promises of tax reform, infrastructure spending and deregulation as well as trade policies. Investors often buy gold as a refuge against economic and political uncertainty. Gains were limited due to a stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.8 % at 100.62 in early trade, pulling away from last week's two-month low of 99.19. Fed fund futures priced in a less than 10% chance of a rate hike in March. However, odds of a June increase was seen at more than 60 %. The Fed, which raised rates in December, has forecast three rate increases this year. However, traders remained unconvinced, with markets continuing to price in just two rate hikes during the course of this year. Also on the Comex, silver futures for March delivery shed 8.1 cents, or 0.5%, to $ 17.61 a troy ounce. Meanwhile, platinum dipped 0.3% to $ 1,011.00, while palladium dropped around 1.8% to $ 760.65 an ounce. Elsewhere in metals trading, copper futures inched down 1.8 cents, or 0.7%, to $ 2.634 a pound.

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