Gold Heads for Worst Monthly Run Since 1997 as Demand Slumps

Gold headed for a fifth monthly decline in the longest run of losses since 1997 as investors reduced holdings by more than 100 metric tons on concern that U.S. stimulus may be curtailed as the economy recovers.

Spot gold was little changed at $1,597.50 an ounce at 9:18 a.m. in Singapore, down 4 percent in February. The metal reached $1,555.55 on Feb. 21, the lowest price since July, as some U.S. central bankers sought more flexibility on stimulus. Assets in bullion-backed exchange-traded products slumped to a five-month low of 2,508.53 tons yesterday and are poised to drop 4 percent this month, the biggest fall since April 2008. In volume terms, global holdings have dropped by 103.7 tons this month, more than five times the net sales in January.

Bullion is still 1 percent higher this week as volumes on the Shanghai Gold Exchange surged and data showed that Russia and Kazakhstan expanded gold reserves for a fourth month in January. Federal Reserve Chairman Ben S. Bernanke’s defense this week of the central bank’s asset purchases and political turmoil in Italy after an election also spurred demand.

“The bullion market now is focusing on the eventual withdrawal of monetary stimulus, compared to a year ago, when the market was more focused on expectations of further monetary policy easing,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note.

Equities Rally

Gold for April delivery was at $1,597.80 an ounce on the Comex in New York from $1,595.70 yesterday. Gold rallied for 12 years through 2012 as investors sought a hedge against falling equities, weakening currencies and potential inflation. The MSCI All-Country World Index of equities has risen 4.1 percent this year and the Standard & Poor’s Index is near a record.

Gold is having a “troubling loss of momentum” and is no longer a buy-and-hold asset, according to Davis Hall, global head of foreign exchange and precious metals advisory at Credit Agricole SA’s private-banking unit. The cycle for gold prices has probably turned as the U.S. recovery gathers momentum and holdings drop, Goldman Sachs Group Inc. said in a Feb. 25 report.

 (Source: Bloomberg)

Euro Near 7-Week Low as Italy Sells Bonds After Vote

The euro fell toward a seven-week low against the dollar before Italy sells bonds today after the nation’s inconclusive elections sparked the biggest advance in sovereign yields in 14 months.

The euro is heading for its first monthly loss since July as European Central Bank President Mario Draghi prepares to give a speech in Munich. This week’s vote in Italy produced a hung parliament, creating the risk of another election later this year and a retreat from austerity measures imposed to stem the debt crisis. The euro fell toward a seven-week low against the dollar before Italy sells bonds today after the nation’s inconclusive elections sparked the biggest advance in sovereign yields in 14 months.

 “These Italian elections are further evidence that Europeans are a bit over this whole austerity phase,” said Stan Shamu, a markets strategist with IG Markets Ltd. in Melbourne. “If we continue to see yields -- particularly in Italy -- spike higher, then that would be a further negative for the euro.”

The euro slid 0.1 percent to $1.3047 as of 10:31 a.m. in Tokyo from yesterday, when it fell as low as $1.3018, the least since Jan. 7. The single currency lost 0.4 percent to 119.69 yen. Japan’s currency rose 0.3 percent to 91.72 per dollar after earlier falling as much as 0.3 percent.

The euro is poised to fall 3.9 percent this month, snapping six months of gains.

(Source: Bloomberg)

Pound Slides to Lowest Since 2010 After Downgrade

The pound fell to its lowest level since July 2010 against the dollar after Moody’s Investors Service cut the U.K.’s AAA credit rating, sapping demand for the nation’s currency.

Sterling dropped to the weakest in almost 16 months against the euro as Moody’s said its decision was based on weakness in the nation’s growth outlook and challenges to the government’s plan to cut the deficit. U.K. government bonds gained after an aide of Democratic Party candidate Pier Luigi Bersani said there’s increasing risk another Italian election will be needed, spurring demand for safer assets.

“Although the timing of the downgrade was a surprise, overall the market has been anticipating a ratings change,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “In recent weeks we have seen sterling’s safe-haven status erode. After the initial knee-jerk reaction there is the potential for a rebound.”

The pound fell 0.3 percent to $1.5119 as of 5:20 p.m. London time after declining to $1.5073, the lowest level since July 13, 2010. The U.K. currency dropped 0.2 percent to 87.16 pence per euro after depreciating as much as 1.3 percent to 88.15 pence, the weakest since Oct. 28, 2011.

The U.K. currency has weakened 5.8 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. Only the yen has fallen more, losing 5.9 percent. The pound has slumped 7 percent in 2013 against the dollar and 6.9 percent against the euro.

(Source: Bloomberg)

WTI Oil Trades Near Two-Day High; China Increases Fuel Prices

West Texas Intermediate oil traded near the highest level in two days as China increased fuel prices for the first time since September and Iran prepared for international talks on its nuclear program.

Futures were little changed after climbing the first day in three on Feb. 22. Gasoline in China will rise by 300 yuan ($48) a metric ton and diesel by 290 yuan a ton today, the National Development and Reform Commission said. Iran, which is under a Western embargo on its oil exports, will meet the U.S. and five other nations tomorrow in Almaty, Kazakhstan, after an eight- month lapse.

“There’s not much sign there will be any advancement in the negotiations this week,” Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said yesterday. “I’m not hopeful for any deal being reached in Kazakhstan. I haven’t seen any signs the U.S. will offer Iran any sanctions relief.”

WTI for April delivery was at $93.28 a barrel, up 15 cents, in electronic trading on the New York Mercantile Exchange at 10:47 a.m. Sydney time. The contract rose to $93.13 on Feb. 22, the highest since Feb. 20. The volume of all futures traded was 21 percent below the 100-day average. Prices dropped 2.9 percent last week, the most since December.

Brent oil for April settlement climbed 14 cents to $114.24 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $20.96 to WTI futures, from $20.97 on Feb. 22.

(source: Bloomberg)

Euro Trades Near Six-Week Low Before Italian Vote; Yen Falls

The euro traded 0.2 percent from the lowest in six weeks against the U.S. dollar before Italy’s parliamentary election starts this weekend.

The 17-nation currency headed for a third weekly loss ahead of the Feb. 24-25 voting, with opinion polls from earlier this month showing former premier Silvio Berlusconi closing a gap with front-runner Pier Luigi Bersani. The yen fell against most of its major peers amid speculation over who will take the reins at the Bank of Japan.

“The Italian election is weighing on the euro,” said Noriaki Murao, managing director of the marketing group at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “If it becomes a close race, it may result in a hung parliament, making it more difficult to push forward with reforms.”

The euro traded little changed at $1.3193 as of 9:16 a.m. in Tokyo from yesterday, when it touched $1.3161, the lowest since Jan. 10. The shared currency gained 0.2 percent to 123.08 yen, after dropping to 122.26 yesterday, the weakest since Jan. 29. For the week, the euro was set for a 1.3 percent decline versus the greenback and 1.5 percent drop against the yen. The Japanese currency slid 0.2 percent to 93.26 per dollar, still headed for a 0.3 percent gain this week.

(source: Bloomberg)

Dollar Holds Gains

In the U.S., the index of leading indicators probably rose 0.2 percent in January, a second month of gains, according to the median estimate of economists surveyed by Bloomberg News. A Fed report on manufacturing in the Philadelphia area is projected to show a rebound.

‘Gaining Momentum’

“Dollar strength is gradually gaining momentum,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “There are clearer signs of a U.S. economic recovery.”

Some officials on the Federal Open Market Committee “emphasized that the committee should be prepared to vary the pace of asset purchases,” according to the minutes of the FOMC’s Jan. 29-30 meeting released yesterday in Washington.

The U.S. central bank buys about $85 billion of government and mortgage securities a month to support growth, in the third round of quantitative easing that tends to debase the dollar.

In Europe, manufacturing and services industries probably shrank in February, albeit by less than the previous month, according to a Bloomberg survey of economists. The manufacturing purchasing managers index is projected to be 48.5 compared with 47.9 in January, and services PMI may come in at 49.0 from 48.6 a month earlier. A reading below 50 indicates contraction.

“The debt crisis in the euro region has eased, but its economic recovery is lagging globally,” said FX Prime’s Ueda. “When the U.S. economy picks up and the dollar’s strength starts to stand out, the euro’s weakness will be highlighted.”

(source: Bloomberg)

WTI Oil Fluctuates After Rising Most in Week; Seaway Flow Climbs

West Texas Intermediate crude fluctuated after rising the most in a week as Enterprise Products Partners LP said oil volumes through the Seaway pipeline will climb, helping reduce a glut in the U.S. Midwest.

Futures swung between gains and losses after climbing 0.8 percent in New York yesterday, the most since Feb. 11. Seaway flows will average 295,000 barrels a day between February and May, up from 180,000 barrels in January, said William Ordemann, senior vice president at Enterprise, in Feb. 15 testimony to the Federal Energy Regulatory Commission. U.S. crude stockpiles probably rose a fifth week, according to a Bloomberg News survey before a government report tomorrow.

WTI for March delivery, which expires today, gained 3 cents to $96.69 a barrel in electronic trading on the New York Mercantile Exchange at 10:39 a.m. Sydney time. The contract rose 80 cents to $96.66 yesterday. The more-active April future climbed 3 cents to $97.13. The volume of all futures traded was 58 percent below the 100-day average.

Brent for April settlement gained 14 cents to $117.52 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month European benchmark grade closed at a premium of $20.42 to WTI futures. The gap expanded to $23.18 on Feb. 8, the widest since Nov. 26.

U.S. crude supplies probably gained 2 million barrels last week, according to the median estimate of nine analysts in a Bloomberg survey. It will be the longest streak of gains since May. Gasoline stockpiles likely fell 900,000 barrels, the Bloomberg survey shows.

(sumber: Bloomberg)

Aussie Gains Against Major Peers After RBA Minutes

Australia’s dollar gained against most major peers after the country’s central bank said stronger demand from China and an improved global outlook have spurred prices for commodities.

The so-called Aussie also rose against the U.S. dollar ahead of Reserve Bank of Australia Governor Glenn Stevens’ semi- annual testimony before a parliamentary panel on Feb. 22. New Zealand’s dollar was little changed for a second day, maintaining last week’s advance against the greenback, as swap rates climb in the smaller nation.

“The RBA did acknowledge the better run of international data received between the two meetings and the effect that has had on commodity prices,” said Andrew Salter, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. The Aussie “has caught a bid,” he said.

Australia’s dollar rose 0.1 percent to $1.0320 as of 12:10 p.m. in Sydney from $1.0306 yesterday. It fetched 96.85 yen, little changed from yesterday.

New Zealand’s currency traded little changed at 84.47 U.S. cents and dropped 0.2 percent to 79.27 yen.

(Source: Bloomberg)

Bull Wagers Tumble Most This Year as Gold Bets Drop

Investors cut wagers on a rally in commodities by the most since November as signs of improving U.S. growth reduced demand for gold and rains in South America added to signs that crop harvests will be bigger.

Hedge funds and other large speculators reduced net-long positions across 18 U.S. futures and options in the week ended Feb. 12 by 15 percent to 757,060 contracts, the largest decline since Nov. 13, U.S. Commodity Futures Trading Commission data show. Bets on higher gold prices fell to the lowest since December 2008, while a measure for 11 farm goods slumped the most since November 2011.

Gold prices are down 4 percent since Dec. 31, the worst start to a year since 2001, as U.S. retail sales climbed for a third month in January and consumer confidence rose more than forecast in February. Combined soybean production in Argentina and Brazil will increase to a record and rising output of corn will help replenish global inventories after drought last year sent prices of both crops to a record.

“As confidence is building in an economic recovery that’s sustainable globally, you could lose a bid to gold,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $325 billion of assets. “Agricultural commodities to me are going to have a pullback year as weather normalizes.”

The Standard & Poor’s GSCI Spot Index of 24 commodities fell 0.3 percent last week, led by declines in silver and cocoa. The MSCI All-Country World Index of equities slid 0.2 percent, while the dollar rose 0.4 percent against a basket of six trading partners. Treasuries fell 0.1 percent, a Bank of America Corp. index shows.

(Source: Bloomberg)

Gold Bears Braced for U.S. to China Growth Recovery

Gold traders are the most bearish in more than a year on mounting speculation that improving economic growth from the U.S. to China will curb demand for this year’s worst-performing precious metal.

Twenty analysts surveyed by Bloomberg this week expect prices to fall next week, while 11 were bullish and three were neutral, making the proportion of bears the highest since Dec. 30, 2011. Hedge funds cut bets on higher prices by 56 percent since October and are approaching their least bullish stance on gold since August, government data show. The metal fell to a five-week low yesterday, and billionaire investors George Soros and Louis Moore Bacon reported reduced stakes in exchange-traded products backed by gold.

Gold Price

The metal fell 2 percent to $1,641.88 an ounce in London this year, reaching $1,637.95 yesterday, the lowest since Jan. 4. Gold climbed 7.1 percent last year in the longest annual rally in at least nine decades. The Standard & Poor’s GSCI gauge of 24 commodities is up 5 percent this year and the MSCI All- Country World Index of equities gained 4.8 percent. Treasuries lost 1.1 percent, a Bank of America Corp. 

index shows.

Gold’s drop compares with a 0.6 percent gain for silver this year. Platinum and palladium rose at least 9.4 percent on concern mine supply will fall as demand increases. An ounce of platinum bought as much as 1.054 ounces of gold yesterday, the most in 17 months, data compiled by Bloomberg show. Industrial usage accounts for about 10 percent of bullion consumption, compared with more than half for the other three metals.

(Source: Bloomberg)