Dumping $1.5 Billion In Gold Futures At 00.30 ET

For the 5th day in a row, "someone" has decided that 00.30ET (11 am IST) would be an appropriate time (assuming the 'seller' is an investor who prefers best execution rather than the standard non-economically-rational share-repurchaser in America) to be dumping large amounts of precious metals positions via the futures market. Tonight, with over 13,000 contracts being flushed through Gold - amounting to over $1.5 billion notional, gold prices tumbled $20 to $1151 (its lowest level since April 2010). Silver is well through $16 and back at Feb 2010 lows. The USDollar is also surging.

The timing of the dump is right as Japanese trading breaks for lunch

Gold dumped...

and silver too..

One more random thing... the oddly spurious correlation between gold prices and Japanese bank VaR proxies is back again

MCX-lead (₹123.3/kg):Buy

The lead futures contract traded on the Multi Commodity Exchange (MCX) advanced one per cent on Monday to ₹125/kg. Since bottoming out from the December 2008 low of ₹40, the metal has been on a long-term uptrend.

However, the contract encountered a key long-term resistance (October 2007 peak) at ₹155 in August 2014 and started to decline. With this up move one-leg of the contract's uptrend appears to have come to an end. The contract has been on broad sideways consolidation phase in the range between ₹121 and ₹140.

Short-term view: In early August, the contract encountered resistance at ₹140 which the upper boundary of the sideways consolidation phase and began to decline. The short-term trend has been down since then.

Nevertheless, the significant long-term support in the band between ₹120 and ₹121 halted the metal's decline in mid-October. Subsequently, the contract started to change direction triggered by positive divergence in the daily relative strength index as well as moving average convergence divergence indicator.

The daily RSI is moving higher in the neutral region towards the bullish zone. Further the daily MACD has signalled a buy.

As the contract is reversing higher from a significant support band with positive bias, we take a contrarian bullish stance on the contract in the short-term. The contract can extend its progressing up move in the coming week and reach the price target of ₹130 initially and then to ₹133. Traders with a short-term perspective can buy the contract and also accumulate in declines with a stop-loss at ₹120 levels.

Medium-term view: The medium-term outlook is sideways in the broad band between ₹121 and ₹140 for the MCX-lead futures contract. It is reversing from the lower boundary. A decisive rally above ₹130 can take the contract northwards to the upper boundary of ₹140 in the medium-term.

However, decisive close below the ₹120 will alter the sideways trend into bearish and pull the contract down to ₹115. In that scenario, investors should exit the long positions and stay on sidelines.

Peru trims its view of copper output in 2014, 2015

Peru will likely produce less copper this year and next than the government had forecast as big new projects face delays and output from the country's top producer has slid on lower ore grades.

Deputy Mines Minister Guillermo Shinno said on Tuesday that Peru's copper production in 2014 is now on track to rise just slightly from last year's 1.375 million tonnes.

"This year we'll reach 1.4 million tonnes of copper, almost the same as last year," Shinno told a news conference.

Next year the Andean country's copper output will rise to between 1.7 million and 1.8 million tonnes, Shinno said.

In September, Shinno said copper production in Peru would likely rise to 1.95 million tonnes in 2015 after coming in at about 1.5 million tonnes this year.

Shinno also said on Tuesday that Peru's gold production is set to fall by about 18 percent this year to around 4 million ounces, largely in line with his previous forecast.

So far this year, Peru's copper production has increased by 2.6 percent, while gold output has dropped 14.8 percent. 

A slower-than-expected ramp-up at Chinalco Mining Corp's large Toromocho mine has clouded the outlook for increases in copper production.

And a planned strike at the country's biggest copper producer, Antamina, now threatens to halt the mine's output of around 30,000 tonnes per month.

Antamina has already been struggling through a phase of lower ore grades. Production at the mine fell by 34 percent in September and 14 percent in the first eight months of 2014 from the same periods a year earlier.

Antamina is owned by BHP Billiton , Glencore Xstrata , Teck and Mitsubishi Corp .

"Next year we will again have Antamina with its usual production level," Shinno said. "They are going to produce 30 percent more compared to this year."

But a major boost in copper production from MMG Ltd's  Las Bambas project in southern Peru will have to wait until 2016. Last month, the Chinese-owned miner pushed back the start date for Las Bambas to early 2016 from the second half of 2015.

Peru is the world's third biggest copper and silver producer and the fifth biggest gold miner.

Nickel and its boom

In  the month of May, this year, nickel was supercharged, at the London Metal Exchange, climbing its highest peak, at 50 percent at 21,625 dollars per tonne. At the same time in the case of stainless steel, the price hit the ground  to 14,690 dollars  per tonne.

The sudden submission of nickel in the market has reflected the complete, hyped bull narrative of the market. The unexpected decision taken by the Indonesian government to ban the export of unprocessed minerals as well as lower grade nickel, triggered the forecasts on the surge.

One part of the forecast still states to be intact, which is, the Indonesian government’s ban on the nickel exports, even after such a long period of time, the country shows no signs of moving from its former decision, but still nothing changed, as predicted by the analyst.

It hasn’t; as expected, led to the halt of Chinese Nickel Pig Iron manufacturing as expected in the forecasts made by the analysts. Neither was there any kind of shortage or decline in the supply of iron ore in the market.

The stock houses at the London Metal exchange was filled with nickel produce and hit almost all the record, as the nickel produced in  China, flowed to LME warehouses. The story of nickel supply deficit, and closure of  nickel pig iron production of Chinese producers, even though expectations lingered on the surface.

Alcoa modernizes aerospace industries

The company, has also planned on to install modern manufacturing facilities in its plants, in order to ensure the high performance of aluminum-lithium plate as well as thick aluminum which is to be used in various applications including, fuselage frames as well as wing ribs.

The company’s investment in the plant would also include the installation aluminum plate stretcher, which would be used in the production of the commodities. The main use of the stretching process in the material is that, this procedure would, make the part of the plate, to be easily processed as well as machined. This brand new technique and method would enable the production of largest as well as high strength monolithic wing ribs in the whole aluminum industry.

Large wing ribs posses lack of strength and stiffness in the product. But in the case of the products produced in Alcoa, the aluminum stretcher would make sure that such a pressure does not take place in the produce.

The President of Alcoa Aerospace, Transportation and Industrial Products, Mark Vrablec, stated that,  the project intiated by the company, would be its key to progress in the aerospace industry. 

Oil: "It's The Economy, Stupid"

The cacophony of various talking heads proclaiming this morning that oil price weakness is not due to weak demand but to over-supply (which are obviously merely different sides to the same coin) was deafening. While he hate to steal the jam from their aggregate donuts, the following chart may just provide a hint at what is really driving oil prices... "it's the economy, stupid!"

Correlation is not causation but.. well in this case, it is

But while this chart is an inconvenient truth, we are sure the meme of US growth saving the world will continue to be spewed as gospel (oh wait a minute... isn't the entire sell-side now taking a chainsaw to their Q3/Q4 GDP growth estimates after construction spending and trade deficit data?) 

Chart: Bloomberg

WTI Tumbles To 29-Month Lows After Saudi Price Cut

After initially jerking higher after Saudi Arabia released its new 'lower-prices-for-the-US' strategy, it appears the market began to realize that in fact - as we warned - Saudi Arabia may be willing to accept prices "lower for longer." WTI futures are trading below $78.50 - the lowest since June 2012 (and its dragging Trannies lower today)...

As Bloomberg reports, confirming our note over the weekend,

Saudi Arabia, the world’s biggest oil exporter, is telling the market it won’t cut output to lift crude back to $100 a barrel and that prices must fall further before it does so, according to consultant FACTS Global Energy.

Swelling supplies from non-OPEC producers drove Brent crude into a bear market on Oct. 8 amid waning demand from China, the world’s second-largest importer. The Organization of Petroleum Exporting Countries meets Nov. 27 to consider changing its production target in the face of the highest U.S. crude output in almost 30 years.

“Production of shale oil in the U.S. will not be hit as hard as the Saudis think” by the price decline, FGE Chairman Fereidun Fesharaki said at a conference today in Doha, Qatar. Producers in the U.S. “can withstand a lot of pressure” by reining in their operating costs before they curb investment in new wells and production, he said.