Morning Gold Market Report 02/04

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February 5, 2013 4:41 AM EST

Compiled 02/04/13 6:00 AM (CT)

Statistics: London Gold Fix $1,664.25, -$0.75 LME Copper Stocks 374,200 tons -1,800tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) The gold market starts the new trading week tracking back toward the lows forged at the end of last week. Apparently gold came away from the US economic news and strength in equities at the end of last week off balance, as safe haven liquidation continues to undermine gold prices. Gold might have been undermined by news from Randgold that the company expects to produce more gold than was initially targeted. However, Harmony mines indicated overnight that they might have lost up to 25,000 ounces of gold production due to labor problems at the end of last year and that news might mitigate the potential negative tilt from the Randgold production news flow. However, news from the supply front wasn't all bearish overnight, as Harmony mines warned of job cuts ahead, if workers fail to return to work at a South African mine. The news from India was mostly negative overnight, as middle men in India are reportedly flushed expensive supply and that could cool near term buying from that region. Comex Gold Stocks were 10.940 million ounces down 69,351 ounces. Gold stocks have increased in 12 of the last 20 days. The Commitments of Traders Futures and Options report as of January 29th for Gold showed Non-Commercial traders were net long 131,069 contracts, a decrease of 28,113 contracts. The Commercial traders were net short 172,449 contracts, a decrease of 32,036 contracts. The Non-reportable traders were net long 41,380 contracts, a decrease of 3,922 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 172,449 contracts. This represents a decrease of 32,035 contracts in the net long position held by these traders.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Shares in Hong Kong were off slightly overnight, while mainland Chinese shares clawed out minor gains. European shares were higher overnight reportedly off catch up to Wall Street gains at the end of last week. The US markets were mostly mixed in the early going today as some investors catch their breath after last week's stellar pattern of gains. The markets will be presented with a US Factory Orders report today and a regional ISM business index reading, but after last week's US Non farm payroll results, data from the US might be given less attention. Weakness in some Euro zone Producer Prices overnight might serve to pressure the Euro in the early going today, but the metals markets in general might be looking for fresh direction from the Factory Orders report.

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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

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