US GOLD OPEN – Comex drifts at start of New York trade


Gold futures were modestly lower in the US on Tuesday when a stronger dollar and the lack of meaningful newsflow weighed on commodity prices.

Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down $1.10 at $1,433.20 per ounce. Trade has ranged from $1,421.40 to $1,444.90.

"Gold is struggling at $1,430 despite the continued strong physical demand," Standard Bank, also noting that, while today is light on macroeconomic reports, US industrial production numbers are due tomorrow. The market expects a -0.2 percent decline in April.

"Should this data surprise on the upside, gold could come under more pressure. Technically, gold looks vulnerable as long as it stays below $1,450," Standard Bank said.

In wider markets, the euro was modestly weaker at 1.2967 against the dollar, while the Dow Jones industrial average and S&P 500 opened up 0.18 percent and 0.33 percent respectively.

As for the more industrial commodities, light sweet crude (WTI) oil futures for June delivery on the Nymex were off 29 cents at $94.88 per barrel and the most actively traded Comex copper contract was at $3.2850 per pound, down 7.45 cents.

"Bullion was put under pressure yesterday as the market digested recent market chatter about the timing of a quantitative easing (QE) exit by the Federal Reserve," said HSBC’s James Steel, who noted that the Wall Street Journal published an article that raised the notion that the timing to a QE exit was still being debated by Fed members.

"The article highlighted the potential for clearer signals on the Fed’s QE intentions to emerge this week, as five regional Fed bank presidents are scheduled to give speeches, along with Fed Chairman Ben Bernanke," he added.

Thee also has been a negative reaction to new restrictions on bullion imports from the Reserve Bank of India (RBI), which dictated that banks are strictly limited to a consignment basis to meet the genuine needs of exporters of gold jewellery. Gold imports could drop 50 percent this year given the new rules, analysts said.

"While the RBI announcement is ostensibly negative for bullion prices, the curb on gold imports may encourage local buyers to seek alternative means to secure bullion supplies," Steel said.

As for the other precious metals, Comex silver for July delivery was down 30.1 cents at $23.395 per ounce. Trade has ranged from $23.295 to $23.760.

"The July silver market appears to be forging a very tight coiling pattern on the charts, but the bear camp might suggest that the tilt on the consolidation pattern somewhat favours the downside," the CME Group said in a market commentary.

"Clearly an extending pattern of lower highs and periodic pressure from the currency markets has given the bear camp a leg up recently and its probably a good bet that silver bulls aren’t happy with periodic talk of a coming end to US quantitative easing efforts," CME added.

Platinum futures for July delivery on the Nymex are outperforming the rest of the complex – they were last up $15.60 at $1,501.00 per ounce – while the June palladium contract was at $711.95, down $6.75.

On Monday, Johnson Matthey (JM), the world’s largest PGM fabricator, said that global platinum posted a deficit of 375,000 ounces in 2012 from a surplus of 450,000 ounces the prior years and is likely to remain in a slight deficit this year.

Meanwhile, the palladium market recorded a 1.07-million-ounce deficit in 2012 from a surplus of 1,185,000 in 2011 and will likely remain in a deficit this year, the firm added.

Over the next six months, JM expects platinum to fluctuate in a range of $1,415-1,710 per ounce, averaging $1,570, with palladium averaging $740 and trading in a range of $635-830.

The PGMs also benefited from reports that Lonmin workers in South Africa have refused to go underground for their shift following a shooting of an Association of Mineworkers and Construction Union (Amcu) representative on Monday.

"As always, there are no guarantees on how long the strike can continue, we do on balance expect the shifts to continue sooner rather than later. The dispute sits between the two unions, AMCU and NUM, and not necessarily with the company," Standard Bank said.

"Ultimately, the strike is illegal and chances seem good that they will embark on strikes in the upcoming wage negotiations, thereby impacting on wages," it added.

By Tom Jennemann on 14 May 2013 --

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