Gold and Other Metals
Today, base metals are trading down by 0.3 to 0.7 percent at LME electronic platform. Equities are slightly up after remaining mostly weak during the week; however, the economic developments remained weak with lower Chinese business confidence coupled with Japan.
From the Eurozone, the bond yields have continued to surge with the Italian 10 year yield nearing 6.5 percent. However, gains in riskier assets and commodities was witnessed on the back of stronger Euro and may hold up in today’s session as the currency is trading down by 0.16 percent against the greenback.
German Chancellor Angela Merkel commented that no debt sharing in the Eurozone might be possible and that may further weaken base metals in today’s session due to increased pessimism.
From the economic data front, the Eurozone money supply might increase slightly after lowing of interest rate by the ECB last month while the fragile US durable goods orders might grow at a much slower pace and may continue to weaken base metals.
The weekly unemployment claims data may mostly remain at a blend while the pending home sales may further weaken and may continue to support downside. Fall in home sales is albeit due to rising home prices, weak demand for mortgage and lower employment to name a few factors of the many, may further reveal the might US with feeble economic developments, and may weaken base metals.
A bunch of odd and end news items are presently hovering in the markets and may provide slight wayward direction, however as far as fundamentals are concerned base metals may continue to remain weak ahead of the US GDP expectation.
Gold edged lower on profit taking after hitting a three week high during yesterday’s session as the euro spiked up on expectation of licensing European Stability Fund for leveraging 500 billion cash via loan through ECB. Short covering sparked off which let the euro shrugged off from its two years low to cross the resistance level and thereby supporting the metal.
Conformation of the news is still pending which may again spark off selling spree today after Germany Chancellor Merkel strongly opposing sharing debt burden of the peripheral nations. Developments from the EU are being quite odd; market movement is likely to seesaw owing to the news flow.
However, from the economic data front, the US pending home sales are likely to fall after the stricter rules of mortgage forced new buyers to remain mum and hence newly build apartments sale declined from a two year high. Jobless claims numbers are also likely to stay mixed while durable goods orders may fall. In evening, dollar therefore might get weaken, supporting the metal to a further extent. Market will now be headlined by the release of US GDP data tomorrow. The growth is likely to be contaminated in the range of 1.5-1.8% after slew of US economic releases indicated languishing economic condition and Bernanke refrained from accommodation. A weak print down from the initial projection of 1.9%-2.4%, likelihood of dollar sell-off rises which in turn should augment the anticipation of QE-3 in the subsequent Fed meet on July 31 and August 1st. The Fed is now in a news blackout period
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