Gold Climbs to Six-Month High as Crisis in Ukraine Spurs Demand

Gold advanced to the highest level in almost six months as worsening tension between Ukraine and Russia boosted haven demand, with prices heading for the best run of weekly gains since August 2011.

Bullion for immediate delivery rose as much as 0.6 percent to $1,374.69 an ounce, the highest level since Sept. 19, climbing for a third day. Gold traded at $1,373.39 at 1:04 p.m. in Singapore, poised for a sixth weekly gain.

The precious metal advanced 14 percent this year as demand for a store of value increased on the confrontation in Ukraine and concern growth in China is slowing. Crimea is preparing for a March 16 referendum that may pave the way for the Ukrainian region to join Russia. Barack Obama met Prime Minister Arseniy Yatsenyuk yesterday and said the U.S. stood with Ukraine to protect its sovereignty and territory.

“Gold should be supported as long as the situation in Ukraine remains uncertain,” said Zhu Siquan, an analyst at GF Futures Co., a unit of the Guangzhou-based company that bought Natixis Commodity Markets Ltd. “Technically, gold is starting to look a bit overbought.”

Gold’s 14-day relative strength index climbed to 70.5, signaling to those who study charts that prices may be set to reverse. Assets in the SPDR Gold Trust declined yesterday from the highest level this year, contracting for the first time since Feb. 19.

The confrontation in Ukraine has become the biggest between Russia and the West since the end of the Cold War, with U.S. President Obama and allies ratcheting up the threat of sanctions. Government officials and businessmen in Russia are readying for trade curbs resembling those applied to Iran, according to four people with knowledge of the preparations.

Massing Troops

Gold jumped 1.3 percent yesterday, the most in a week, after Ukraine warned that Russia is massing troops near its border. Crimea can be integrated into Russia within two months if its voters decide the territory should cease to be a part of Ukraine, said the region’s Premier Sergei Aksenov.

Diplomatic efforts to defuse the crisis continue today. U.S. Secretary of State John Kerry is due to meet with his Russian counterpart, Sergei Lavrov, in London, while Yatsenyuk is scheduled to speak to the United Nations Security Council.

Bullion rebounded this year even as the Federal Reserve, which next meets March 18-19, announced reductions to its bond-buying program at each of its past two meetings. Data today may show retail spending, which accounts for 70 percent of the U.S. economy, rose 0.2 percent in February from a month earlier.

Futures Advance

Gold for April delivery climbed as much as 0.3 percent to $1,374.90 an ounce on the Comex in New York, the highest price since Sept. 19, and was at $1,373.10.

Silver for immediate delivery rose as much as 0.8 percent to $21.469 an ounce and was at $21.3885. Platinum was at $1,474.88 an ounce from $1,475.50 yesterday, while palladium was at $775.85 from $776.08.

China's Spot Aluminium Stockpiles top 1 million tons

Spot aluminium stockpiles topped 1 million tonnes in China as downstream consumption showed no signs of recovery, according to a survey by Shanghai Metals Market.

Stockpiles of the lightweight metal on a spot basis in China’s four major trading regions – Shanghai, Wuxi, Nanhai and Hangzhou – rose by 79,000 tons last week to 1.07 million tons, according to the survey.

Spot stocks were 353,000 tonnes in Shanghai, 296,000 tons in Wuxi, 370,000 tonnes in Nanhai and 52,000 tons in Hangzhou, the survey showed.

Freeport Indonesia cuts output by about 60 pct -union official

U.S. mining giant Freeport-McMoRan Copper and Gold Inc has cut production at its Indonesian copper and gold mine by around 60 percent, a union official told Reuters on Tuesday, two months after halting exports over a dispute with the government on a new export tax.

Freeport and fellow U.S. miner Newmont Mining Corp have refused to pay an escalating export tax introduced on Jan. 12 as part of package of new mining rules aimed at forcing miners to build smelters and process raw materials in Indonesia.

"Although Freeport Indonesia has cut their production by around 60 percent, Freeport management has not yet announced any layoffs so far," Papua-based Freeport union official Virgo Solossa said by telephone.

"They are still waiting for a government decision on an export tax relaxation."

Freeport, who late last month said it may need to declare force majeure on copper concentrate sales at the world's fifth largest copper mine, could not be immediately reached for comment on Tuesday. 

USD INR at Support Level.

Long Crude Oil Speculative Bets Rise To All Time High

Whether or not institutional investors, large speculators, decided to invest alongside Putin in the one trade that is most critical to the future prosperity and positive cash flow balance of Russia, namely keeping the price of Crude high, and rising, is unknown, however, as the following chart the net position in crude oil futures as of the week of March 4, just hit an all time high of $44.0 billion up from $42.4 billion the week prior, surpassing all prior peaks, and certainly any set during the summer of 2008 when oil was threatening to make a run on $150, and was set to hit $200 if one believes Goldman (which nobody does).

Needless to say, any de-escalation in the Crimea - which has certainly been the key catalyst for the full court press to bet on rising crude prices in recent weeks - will have a substantial knock on effect of forcing open call positions to close, and in the process lower the price of crude further beyond just fundamentals, assuming those still exist.

Weekly Economic Data for the week 08-Mar-14 to 14-Mar-14

Data for the week 08-Mar-14 to 14-Mar-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
08-Mar-2014	--	China	Exports (YoY)	7.5%	10.6%	-3.10%	5.65	Neutral
08-Mar-2014	--	China	Imports (YoY)	7.6%	10%	-2.40%	6.92	Neutral
08-Mar-2014	--	China	Trade Balance	14.5B	31.86B	-17.36	13.34	Bad
09-Mar-2014	07-00 AM	China	Consumer Price Index (YoY)	2.1%	2.5%	-0.40%	0.43	Neutral
09-Mar-2014	07-00 AM	China	Producer Price Index (YoY)	-1.9%	-1.6%	-0.30%	0.61	Neutral
10-15 Mar-2014	--	China	Money Supply M2 YoY	13.2%	13.2%	0.00	0.71	Neutral
10-17 Mar-2014	--	India	Exports YoY		3.8%		4.06
10-17 Mar-2014	--	India	Imports YoY		-18%		7.12
10-14 Mar-2014	--	European Monetary Union	EU, U.S. Hold Trade Talks in Brussels
10-Mar-2014	06-30 PM	European Monetary Union	EU Finance Ministers Meet in Brussels
11-Mar-2014	-	Japan	BOJ 2014 Monetary Base Target		¥270T		0.00
11-15 Mar-2014	--	United States	U.S. House Appropriations Committee Budget Hearings
11-Mar-2014	12-00 PM	Japan	BoJ Governor Kuroda Press Conference After Rate Decision
11-Mar-2014	01-30 PM	European Monetary Union	EU Finance Ministers Meet in Brussels
11-Mar-2014	03-00 PM	United Kingdom	Industrial Production (MoM)	0.2%	0.4%	-0.20%	1.75	Neutral
11-Mar-2014	03-40 PM	European Monetary Union	ECB Main Refinancing Operation Result
12-Mar-2014	03-30 PM	European Monetary Union	Industrial Production w.d.a. (YoY)	1.9%	0.5%	1.40%	0.59	Very Good
12-Mar-2014	05-30 PM	India	Industrial Production YoY	-1.0%	-0.6%	-0.40%	2.08	Neutral
12-Mar-2014	08-00 PM	United States	EIA Crude Oil Stocks change		1.429		3.45
13-Mar-2014	06-00 PM	United States	Retail Sales (MoM)	0.2%	-0.4%	0.60%	0.63	Neutral
13-Mar-2014	10-30 PM	European Monetary Union	ECB President Draghi Speaks in Vienna
14-Mar-2014	12-00 PM	India	Wholesale Prices YoY	4.9%	5.05%	-0.15	0.46	Neutral
14-Mar-2014	07-25 PM	United States	Reuters/Michigan Consumer Sentiment Index	82	81.6	0.40	2.48	Neutral

China's First Bond Default: Copper Limit Down, Yuan Crashes Most In Six Years

Worrying headlines are beginning to mount on the back of real economic events (an actual default and a collapse in exports):

• *COPPER IN SHANGHAI FALLS BY 5% DAILY LIMIT TO 46,670 YUAN A TON
• *CHINA YUAN WEAKENS 0.46% TO 6.1564 VS U.S. DOLLAR
• *YUAN DROPS MOST SINCE 2008

Aside from that Iron ore prices are crumbling, Asian stocks are dropping, Chinese corporate bond prices aee falling at their fastest pace in almost 4 months, and all this as 7-day repo drops to one-year lows (as banks hoard liquidity).

Pushing Shanghai copper limit down...

USDCNY is tumbling as PBOC efforts to unwind the massvley one-sided carry trade appear to be getting out of control...