UAE. Emirates NBD, the United Arab Emirates biggest lender by assets, today released the latest weekly Precious Metals Report.
The monthly US non-farm-payroll number was released on Friday (July 6th), and 80,000 jobs have been created during the month of June 2012. This was less than
the median forecast of analysts who expected a number of approx. 100,000. The overall unemployment rate still stands at 8.2%.
The Peoples Bank of China (Central Bank) cut their lending rate by 0.31 per cent down to 6 per cent, while they also lowered the deposit rate by 0.25% to 3.00%.
The European Central Bank (ECB) cut interest rates by 0.25% to 0.75%, while also lowering their deposit rate by 0.25% to zero.
The Bank of England announced a further round of asset purchases (Quantative Easing) to the tune of GBP50 Billion.
The Spanish 10-year bond yield climbed back above 7% on Friday
The German 2-year bond yield slid again below zero per cent
Italy approved further spending cuts to the tune of 26 billion euros, spread until the end of 2014, in order to avoid raising the rate on Value Added Tax (VAT) from 21% to 23%. The rise in the VAT is therefore delayed at least until July 2013, meaning that the next Italian Government will have to deal with that issue, after next year’s election.
The Indian rupee finished the week at 55.45 to the dollar.
Gold US$1,583.50 – down US$14 from last week.
Gold traded between US$1,627 and US$1576 during the last week. The various rate cuts and also the announcement from the Bank of England about more quantitative easing should have been supportive for the gold price, but the overriding sentiment has been one of US dollar strength and on-going doubts about the Eurozone.
The ECB interest rate cut was widely expected, and the only surprise in the week was the action seen from the Chinese Central Bank. There has been an improvement in physical gold purchases from India last week, which might have been a reflection of the stabilising Indian Rupee.
Physical purchases from our region are slow and we do not anticipate that to change significantly with Ramadan approaching fast. The premium from gold over platinum fell last week to just over US$140.
Option volatilities midrates: Gold atm (at the money)
1 month 17.50% up 0.50%
3 month 18.50% unchanged
6 month 20.00% down 0.50%
1 year 22.50% unchanged
Premium 1kg Gold bars loco Dubai (DGD 995 fine) against loco London: US$0.50
EFP Spot Gold to August Comex: US$0.15
ETF: Holdings are at 2520 tons
Support: 1550 and 1523 Resistance: 1640 and 1661
Silver US$27.10 – down US$0.38 from last week. Silver closed the week just above the US$27 level. It was trading last Friday briefly under the US$27 mark. The outlook for silver still seems uncertain. There has been a noticeable reduction of silver in the ETF holdings (down 160 tons last week). The silver market needs some fresh investments but this is difficult to expect while we are near or already in the “summer hole.” The technical analysis and outlook for silver reiterates and urges caution, as the technical downside risks are still very strong.
Option volatilities midrates: Silver atm (at the money)
1 month 30.50% unchanged
3 month 32.50% down 0.50%
6 month 34.50% unchanged
1 year 35.50% up 0.50%
EFP Spot Silver to September Comex: US $ minus 3.75 cents
ETF: Holdings are at 15150 tons
Support: 26.09 and 25.20 Resistance: 28.50 and 28.80
Platinum US$1,440 – down US$4 from last week.
The discount to Gold has decreased to US$143. Platinum prices have traded most of last week above the US$1460 level, and only succumbed on Friday to end the week in a slight minus. The Chief Executive of Aquarius Platinum, Stuart Murray, has defended their commercial decision to mothball another one of their mines, bringing the number which are now on maintenance to three.
He also urged fellow competitors to follow their example in order to stop overproduction and oversupply to the markets. It remains questionable to what extent the other three bigger rivals might be able and willing to follow the example, set by Aquarius Platinum. The industry clearly does suffer with prices at the current level, and it seems difficult to change the current cost situation significantly in the short term.
Option volatilities midrates: Platinum atm (at the money)
1 month 19.00% down 1.00%
3 month 21.25% unchanged
6 month 22.50% unchanged
1 year 24.25% unchanged
EFP Spot Platinum loco Zurich to October NYMEX: US$1.25
ETF: Holdings are at 46 tons.
Support: 1430 and 1385 Resistance: 1500 and 1520
Palladium US$574 – down US$ 6 from last week.
Palladium traded last week in a sizeable range, rallying from US$580 level to US$605, only to close below last week’s close at US$574. The price action has been disappointing and prices appear to be locked in the range US$550 to US$605 for the near future. There were some very good car sale numbers from the US but this only provided inspiration and support for the very short term.
The global outlook for the world economy looks still shaky and gloomy, with the IMF expected to lower their global growth forecast by the end of July.
Option volatilities midrates: Palladium atm (at the money)
1 month 23.00% up 0.25%
3 month 24.75% up 1.00%
6 month 26.00% up 0.25%
1 year 29.00% unchanged
EFP Spot Palladium loco Zurich to September NYMEX: US $ minus 0.25
ETF: Holdings are at 63 tons
Support: 540 and 517 Resistance: 612 and 628