Assets in top exchange-traded gold product up most since 2011

Assets in the world's biggest exchange-traded bullion product made their largest two-day gain since 2011 on Wednesday, with violence in Iraq and Ukraine buttressing demand.

Holdings in the SPDR Gold Trust increased 1.4% to 796.39 tonnes in the two sessions through Tuesday, Bloomberg reported, adding that it is the biggest two-day gain since November 2011.

Demand for the precious metal is especially strong in Asia, the most active bullion-buying region, with China and India accounting for the majority of the demand.

According to The Wall Street Journal, demand rose to a record 1,100 tonnes in China last year and was estimated at 975 tons in India.

“Market fundamentals in Asia remains intact and is getting stronger,” the newspaper quoted Albert Cheng, managing director for the Far East at the World Gold Council, as saying.

Gold futures for August delivery traded Wednesday morning at $1,329.80 per ounce on the Comex division of the New York Mercantile Exchange, up from the previous close of $1,326.60.

Gold has benefited from not only geopolitical tensions but also the US central bank saying that interest rates will remain low for the foreseeable future, sparking worries about inflation.

During times of political or financial turmoil, market participants tend to buy gold, which is seen as a safe-haven investment.

What Aluminum Canceled Warrants Mean for Stock and Trade

What are the key trends within the aluminum industry right now, specifically relating to the LME aluminum price? 

There are various interesting trends developing which, at first sight, appear contradictory. However, in reality, some common drivers exist. Obviously the LME price has risen from a rather range-bound $1,750-$1,800 level to nearly $1,900 over the last month or so. And despite what other analysts say about narrowing of forward spreads (in other words, less of a contango) we aren’t ready to say that the contango is gone, but it has become perhaps more volatile in recent days. The physical delivery premium has remained relatively steady at $385-460/ton – depending on whom you believe, and whether you work from the CME-priced premium or what buyers actually pay. We also see a massive shift in on-warrant stocks being liquidated (or at least put in the queue for liquidation). In fact, canceled metal in all LME locations now represents 67% of total stocks – that’s two-thirds heading for the door and one-third currently available for trade.

What do you think is causing spot prices to rise? Is there a metal shortage? Is demand up? Is the market being manipulated? 

The standard producer response goes like this: “the market has finally reacted to all the smelter closures causing a tightening of supply.” That makes sense, so one might expect the physical delivery premium would continue to rise too, but alas, that hasn’t occurred. Yes, a metal shortage exists. It has since the beginning of the year. We would argue, though, that the shortage is reflected in physical premiums. A different set of dynamics has driven the rise in the LME. Perhaps the trade has begun using the LME more now? Queues primarily exist at two locations. It’s unlikely the mass warrant cancellations and the increase in aluminum prices are not somehow related.

Conditions favourable for monsoon to advance into M.P., U.P.

The low-pressure area over West Bengal has started interacting with the western disturbance to bring monsoon rains over the hills in North-West India and parts of adjoining plains.

The India Met Department said that rain has occurred at most places over Himachal Pradesh and Uttarakhand in North-West India and Bihar, Jharkhand, West Bengal and Sikkim in East India.

Northern limit

But the northern limit of monsoon failed to make further progress after it broke the 15-day jinx to get a peep into parts of the North-West.

Conditions are favourable for its advance into some more parts of Madhya Pradesh, remaining parts of Uttar Pradesh, Haryana (including Delhi), Punjab and some parts of north Rajasthan during the next two days.

Many places over Jammu and Kashmir, east Uttar Pradesh, Assam, Meghalaya, Odisha, Konkan, Goa, and coastal Karnataka received heavy overnight rainfall on Wednesday.

But the rain was confined to few places over west Uttar Pradesh, Nagaland, Manipur, Mizoram, Tripura, Tamil Nadu and Lakshadweep.

Pacific churn

Isolated places over Haryana, Delhi, east Madhya Pradesh, Gujarat, coastal Andhra Pradesh and north interior Karnataka witnessed passing showers.

Global models suggested that the ‘low’ over East India may continue to be active until the weekend before weakening over Odisha.

This is also the time around when the ground will have been prepared for the initiation of a cyclone/typhoon in the north-west Pacific, east of the Philippines. These models hinted that a preparatory low-pressure area may take shape by the weekend. It would go on to become a strong typhoon in the East China Sea. The system would concurrently become the prominent feature in the entire Asian monsoon system and would start pulling in flows from the Arabian Sea.

Heavy rain

These flows would be dragged into place over the West Coast first, before residual flows are hauled over peninsula, south Bay of Bengal, and onward into South China Sea/north-west Pacific.

Heavy to very heavy rain is likely over the West Coast right from Konkan-Mumbai down to north Kerala during the next week, according to a US Climate Prediction Centre.

The Best And Worst Performing Assets In Q2 And The First Half Of 2014

Here are the best and worst performing assets broken down by the three key time periods as we leave the first half of 2014 (it's not been a good year for wheat).

June

• Best: Silver
• Worst: Wheat

Q2

• Best: Russia's MICEX stock market
• Worst: Wheat

First Half

• Best: Italy's FTSE-MIB stock market and Spain's IBEX - thanks Draghi TLTRO
• Worst: Wheat

Some additional commentary from Deutsche Bank:

In YTD terms, of the main indices we track the FTSE-MIB (+14.5%) and the IBEX (+12.8%) have been the star performers. Spanish, Portuguese and Italian bonds have not been far behind. Interestingly commodities make up quite a few of the other top ten places (with the CRB index, Gold, Silver and Oil returning between 7-11%), but also 2 of the worst 3 with Wheat and Copper both down more than 6%. Also negative was Chinese equities (-1.5%) after disappointing growth in H1 which may explain some part of the weakness for certain commodities. The Nikkei (-6.1%) was the only other asset lower YTD in our sample. Apart from these four all the other assets saw a positive 2014 total return. Credit has put in a good performance in 2014 so far with most major indices returning between 4-7% which is impressive in the low yield, low spread environment.

Source: Deutsche Bank

Green energy may boost copper use

Power generation and automobiles account for about 7 percent of global copper demand, but a 20-percent shift in these markets to "green" alternatives could boost copper usage by up to 2.5 million tonnes by 2025, according to one industry analyst.

Per unit of power generated, some forms of renewable energy can be up to 37 times more copper intensive than conventional energy. Renewables have lower load factors than conventional energy sources so they use more copper to improve efficiency, according to Bernstein Investment Research & Management senior analyst Paul Gait. However, lack of government support and elevated copper prices could hinder copper usage in the renewable energy sector, according to Randy Butler, national sales manager for renewable energy at Southwire Co, which produces wire and cable products for wind and solar power systems. "(Renewables) will grow as long as they continue to garner support and tax incentives from Congress," Butler told Metal Bulletin sister title AMM.

http://www.metalbulletin.com/Article/3356902/Green-energy-may-boost-copper-use.html#ixzz36CDu8taf 

China Manufacturing Purchasing Managers Index (PMI) for June: 51.0 (vs. expected 51.0)

China Manufacturing Purchasing Managers Index (PMI) for June at 51.0, as expected.

• expected 51.0, prior was 50.8

• New orders improved to 52.8 from 52.3
• New export orders higher to 50.3 vs. 49.3 prior Production up also, to 53.0 from 52.8

Next up isat  0145GMT, the HSBC/Markit Manufacturing PMI for June, expected is 50.8, prior was 49.4, flash reading for June was 50.8

China HSBC/Markit Manufacturing PMI for June: 50.7 (expected 50.8)

China HSBC/Markit Manufacturing PMI for June,

• expected 50.8, prior was 49.4, flash reading for June was 50.8

Key points:

• Output rises for the first time since January
• Stocks of finished goods decline at strongest rate since September 2011
• Rate of job shedding eases

Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:

• “The HSBC China Manufacturing PMI final reading for June rebounded to 50.7, up from 49.4 in May, and relatively unchanged from the flash reading. This confirms the trend of stronger demand and faster destocking. The economy continues to show more signs of recovery, and this momentum will likely continue over the next few months, supported by stronger infrastructure investments. However there are still downside risks from a slowdown in the property market, which will continue to put pressure on growth in the second half of the year. We expect both fiscal and monetary policy to remain accommodative until the recovery is sustained.”