Non-ferrous metals market ends on mixed note

THE non-ferrous metals market ended on a mixed note last week amid thin trading owing to poor availability of funds. Lead desi inched up by 50 paise a kg as HZL increased lead sale price by Rs4.30 per kg amid tight supply of raw material and firm advices from LME. Lead on LME edged up by $20 to $2,960 per tonne past week. Nickel Russian Plate surged by Rs15 to Rs1,375/1,385 per kg as its prices on LME scaled up from $28,832 to $29,412 per tonne on speculative buying. Inco Nickel, however, moved down on stockists' selling. Tin was up Rs13 at Rs925 following firm LME tin at $20,650 per tonne end week. Aluminium CG ingot and rod moved up by Rs2 per kg to Rs140 and Rs146/147 per kg as aluminium prices on LME shot up from $2,864 to $3,056 per tonne. Copper held steady amid lack of buying support.
BULLION
DELHIbullion market remained highly volatile past week owing to speculative trade and mixed signals from global markets. Gold managed to surpass its previous week level, while silver, though witnessing a mid-week high, ended lower by Rs100 against its previous week level. Spot silver (.999) which went up to Rs23,700 per kg and then touched a new low of Rs23,200, closed at Rs23,600 end week after reaching a high of Rs24,100 per kg mid week. In London silver during the period rose from 1,774 cent to 1,838 cent per ounce and then ended at 1,790 cent after easing to 1,760 cent. Silver coin closed at Rs266 per coin amid uneven support from upcountry buyers. Gold Standard (.999) also mirrored the international trend. Closely following London gold, which rose from $912 to $924 per ounce, Gold standard here stepped up from Rs12,010 to Rs12,140 per 10 gm.
CHEMICALS
MIXED trends were noticed in the Delhi chemicals market past week. Caustic Soda Flake shot up by Rs75 to Rs1,375 per 50 kg bag end week amid tight supply and manufacturers upping the sale price. Ammonia Bicarb surged from Rs420 to Rs600 per 25 kg touching a new high amid higher offtake by bakery units. Chinese Sodium Hydrosulfite edged up by Re1 and settled firm at Rs65 per kg on appreciation in import booking rate. Sodium Bichromate spurted to Rs4,600, gaining Rs200 per 50 kg on tight stocks. Resin flared up by Rs40 and reached a high of Rs650/680 per tonne on weak supplies coupled with heavy demand from consuming industries. Chemicals such as Turpentine and Varnish also ruled firm amid local buying. Paraffin Wax was up Rs1/4 a kg to Rs68/80 amid soaring crude oil prices. Wax Residue also closed firm at Rs36,000 per tonne. Stable Bleaching Powder and Alum also witnessed an uptrend. Liquid Hypo rose Rs50 to Rs250 per 40 kg .
GUR & SUGAR
THE Delhi gur and sugar market remained divergent past week with sugar ending lower, while gur registered good gains amid stockists' support and firm advices from producing centres. In the futures market S grade April sugar slipped from Rs1,397 to Rs1,372 per quintal on speculative selling, pulling down coopperative, corporation and private mill sugar by Rs20/25 per quintal.
OIL & OILSEEDS
CLOSELYfollowing the international trend, the Delhi oil and oilseeds market ended positive past week after witnessing a brief phase of weakness in the early week. Rising rate of inflation at 7.41% and crude palm oil (CPO) in Malaysia spurting to $1,150 per tonne amid hectic buying by Asian countries, all major edible oils sprang up shedding their initial weakness. Mustard oil expeller surged by Rs150 to Rs5,700 per quintal on fresh support from stockists. Mustard seed 42 percent condition edged up by Rs75 to Rs2,650 per quintal. Soya refined oil on the spot market held firm as soya oil April futures in Indore appreciated from Rs568 to Rs574 per 10 kg amid speculative buying. Cottonseed oil, which was seen quoting lower at Rs5,250, escalated to Rs5,380 per quintal end week.
GRAINS & PULSES
THE wholesale grains and pulses market witnessed opposing trends past week, while grains traded negative, pulses spurted again and ended firm on pick up in demand. Among cereals, mill-quality wheat dropped to Rs1,090/1,110, losing Rs40/45 a quintal amid weak demand. Suji eased by Rs20 a bag on lack of buying support. Atta and Maida also ended weak on poor demand. Rice sharbati was down by Rs800/1,000 per quintal amid restriction on exports.

Gold slips in cautious trade

GOLD drifted lower on Friday in a cautious trading tone in spite of a decline in the dollar, and analysts said the market was likely to continue moving in a range in the near term.
    The catalyst could come from sharp changes in the currency and the energy markets or heavy buying from investment funds, betting on strong returns in the long term, they said.
    Gold was at $924.60/925.40 an ounce by New York's last quote at 2:15 pm EDT (1815 GMT), against $925.90/926.70 in New York late on Thursday and a record high of $1,030.80 on March 17.
    Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California said that investors have been averse to taking additional risk under the current market conditions. "There is a general tone of lower willingness to take risk at this point. I think you are probably seeing people being hesitant or not allowed to take as much risk as they normally would," Oxman said. The yen rose broadly against the dollar after a fall in earnings of US bellwether GE stoked fears about the economy, causing investors to dump risky trades.
    A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation. US crude ended up 3 cents at $110.14 a barrel, reversing initial losses, lifting gold from session lows. But some analysts said the market might gather upward momentum next week.
    "The $930-mark has proved a hard nut to convincingly crack in the past few days, but I think gold is in for a fresh push higher," said David Thurtell, metals analyst at BNP Paribas. "US consumer sentiment data was extremely weak, and the possibility is that the euro can touch $1.60 next week, dragging gold higher," he added.
    Gold struck a record high above $1,000 an ounce last month but has since struggled to sustain the uptrend, with a broad commodities pullback dragging the price down. In the US futures market, the active contract for June delivery settled down $4.80 at $927 an ounce. Spot platinum fell to $2,002/2,007 an ounce from $2,024/2,032 late in New York on Thursday. "The nature and extent of the South African power shortages that brought (platinum) production to a halt for five days in January are unlikely to be resolved in the near term given the operational and capacity constraints," Barclays Capital said.

IMF Approves Huge Eventual Gold Sale

WASHINGTON (AP) — The International Monetary Fund's executive board has approved a broad financial overhaul plan that could lead to the eventual sale of a little over 400 tons of its substantial gold supplies.

The sale cannot occur without congressional approval as well as legislative action in many of the 184 other nations that are members of the Washington-based lending institution.

IMF Managing Director Dominique Strauss-Kahn welcomed the board's decision Monday to propose a new framework for the fund, designed to close a projected $400 million budget deficit over the next few years.

It is "a landmark agreement that will put the institution on a solid financial footing and modernize the IMF's structure and operations," he said in a statement.

The budget proposal includes sharp spending cuts of $100 million over the next three years that will include up to 100 staff dismissals.

"We have made difficult but necessary choices to close the projected income shortfall and put the fund's finances on a sustainable basis, but in the end it will make the fund more focused, efficient and cost-effective in serving our members," said Strauss-Kahn, a former French finance minister.

The IMF said the board agreed to revamp the fund's income model from one that primarily relies on lending to one that generates money from various sources.

During the 1990s, the IMF lent billions to countries in Asia and Latin America that were facing financial crises and financed its operations on interest from those loans. In recent years, IMF lending has dried up as many of those countries have built up reserves to prevent them from having to borrow again from the IMF, which often puts severe restrictions and conditions on its loans. The declining interest payments led to the IMF's budget gap.

Actual sale of the gold cannot start immediately because the U.S. member on the IMF board cannot vote for it until Congress approves. Congress has made approval conditional on a broad range of operational changes that Strauss-Khan has pledged to carry out to preserve the relevancy of the 64-year-old organization, whose mission is to promote global financial stability.

Under the plan, the IMF would sell the 403 tons, or nearly 13 million ounces, of gold for about $11 billion over several years. The IMF would keep $4.4 billion on its books, and the remaining $6.6 billion would go into an investment account.

The IMF, which has sold gold before, said it would coordinate the sales with central banks in an effort to prevent market disruptions.

"Gold sales would be conducted in a transparent manner with strong safeguards to ensure that they do not add to official sales and avoid any risk of market disruption," the IMF said in a statement.

The Bush administration said in February it could support selling a limited amount of IMF gold as away to ensure the agency's long-term financial stability, but Treasury officials realized this would be a hard sell. In 1999 Congress rejected a previous proposal to sell IMF gold, and the current majority leader of the Senate, Democrat Harry Reid, comes from the gold-mining state of Nevada.

Strauss-Khan, who took over last November as head of the IMF, said the financial overhaul was another major step in the organization's reform process. It followed a decision last month to slightly increase the voting power of rapidly developing countries such as China, India and Brazil, who are playing a growing role in the world economy. Since its founding, the United States and European nations have dominated IMF decision-making.

Besides using the gold sales to produce an income stream, the fund's narrow investment authority will be broadened.

Gold Market Wrong-Footed in Thin Trade by Shock Fall in US Payrolls

Gold Prices dipped, bounced and then fell back again from a four-day high early Friday on news that US job losses exceeded expectations last month.

Non-Farm Payrolls for March showed a loss of 80,000 jobs vs. Wall Street forecasts of 50,000 cuts. Even the ever-bearish Briefing.com had penciled in only a 70,000 fall.

But within 15 minutes of the Bureau of Labor Statistics adding that US unemployment rose for the third month running to a new three-year high of 5.1%, the Gold Price had dropped back to the bottom end of the day's trading range.

The Euro, Yen and Sterling also spiked and then dropped. European equities cut their gains for the day.

"US non-farm payrolls data are important for the Gold Market, especially after yesterday's [worse than expected] jobless numbers," noted Simon Weeks, head of precious metals dealing at Bank of Nova Scotia, before the payrolls report was released.

"Gold still has room for more correction, but may stabilize if the Dollar remains weak."

But Gold Prices already looked vulnerable in thin London trade. The better-than-expected ADP Employment Report – often a good indicator of the official non-farm jobs data – said on Tuesday that private US payrolls added 8,000 jobs last month.

It had been slated to show a 45,000 loss. Gold Prices sank to a two-month low of $875 per ounce on Tuesday's news.

"Following the surprise 8,000 unit increase in employment reported on Tuesday," says today's Gold Market note from Standard Bank, "US initial jobless claims rose by 38,000 [in Thursday's data release] to 407,000, 11.2% higher than expected."

Meantime in Asia today stock markets fell for the first time in three days while US crude oil gained 90¢ to $104.73 per barrel.

Base metals were mixed, and soft commodities rose across the board, as Tokyo Gold Prices for Feb. '09 delivery ticked above ¥3,000 per gram, recovering Monday's opening level as the week ended.

Gold priced in Yen still stands 10% below the 25-year peak of early March, however.

The British Pound briefly touched a one-week high to the Dollar above $2.00 this morning, capping the Gold Price in Sterling at £453 per ounce in London before surging to $2.050 and then falling one cent lower inside 10 minutes.

French and German investors looking to Buy Gold today also found price little moved by the jobs data, holding just above €576 per ounce the Euro first spiked and then swiftly retreated from a new four-day high of $1.5770.

The European single currency had already recovered most of the week's early plunge on news that German factory orders in Feb. – while lower from Jan. – rose 9% from the same month in 2007.

Added to this week's new 16-year high in Eurozone inflation, that looks likely to keep interest rates on hold at the European Central Bank.

Whereas the likelihood of the US Federal Reserve following up its 300-basis-point cuts to Dollar interest rates with further cheap money only grew on the weak jobs data.

"The US labor market data leads often to the widest swings in financial markets, which would also have a strong impact on gold and other precious metals," said a report from analysts at Dresdner Kleinwort early Friday.

"Gold [was] expected to profit from a higher-than-predicted fall of payrolls."

But in the end only Treasury bond prices rose, pushing yields lower after interest-rate traders had cut the odds of a sharp fall in the Fed's key lending rate on Thursday.

"Monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year," said Bernanke in testimony yesterday to the US Senate Banking Committee.

Fixed-income traders took this to mean a promise of better growth and so "the market priced out some of the rate cuts that were there a few weeks ago," according to Piet Lammens at KBC Bank in the Netherlands.

The Fed shows little concern for inflation, however, and this week's growing consensus that Ben Bernanke's team are done cutting rate ignores the 1% "emergency low" reached during the much milder deflation panic of 2001-2004.

At its current lending rate of 2.25%, the Fed is offering cash savings sharply way less than the latest rate of consumer price inflation, reported at 4.3% in Feb.

Gold Sinks Below $900 on "Panic Selling" in Commodities

Gold Sinks Below $900 on "Panic Selling" in Commodities, But Indian Gold Buying Surges on This "Dip"

Gold Prices sank to a two-month low of $889 at the start of London trade on Tuesday, taking the last fortnight's losses to more than 14% before recovering to $897 per ounce.

Crude oil recovered $1 after dropping to $100 per barrel, copper futures dropped 2.5%, and soft commodities continued to plunge in what one analyst called "panic selling".

"It looks like a fairly broad-based sell-off," says Andrew Montano, a director and floor trader in Chicago for Scotia Mocatta, "[but] gold's been following crude and that's basically been tanking.

"There is not a lot of support for commodities in general, but oil is the really big story."

Tokyo and Hong Kong stocks closed Tuesday more than 1% to the good – despite a surprisingly weak reading of Japanese confidence from the Tankan survey for March – as the US Dollar rose sharply on the forex market.

German retail sales fell year-on-year last month, the official data agency said in Berlin, while employment growth and manufacturing activity both beat forecast.

Switzerland today reported industrial growth slowing to a 32-month low.

"The weakness emanating from the United States is starting to spread into Europe and Japan," said Edward Meir of MF Global to Bloomberg today.

"Even Asian countries are starting to slow down [and] you can't just keep buying commodities when growth is collapsing all around you."

"As the Dollar weakens, in theory, commodities should be given a boost. But you reach a point where economic growth has to come back into the equation." (But Will Recession Kill Inflation? Read on here...)

Dropping more than 16% inside four sessions, soybean prices were hammered on Monday after a US government report forecasting a near-18% increase in planting this year.

The Reuters-Jeffries CRB index of 19 heavily traded commodities has now lost 11% of its value since the end of Feb.

Japanese gold futures traded in Tokyo lost 4.1% today, while platinum futures were suspended after going "limit down" with a loss of 4.4%. The Feb. '09 contract rose by almost one-fifth during the first quarter of 2008, according to Bloomberg data – the strongest quarter for the most-active Japanese platinum future since the end of 2001.

But a global slowdown threatens car production, the key platinum market, and following the metal's near-doubling over the last year, automakers will switch to using palladium in their catalysts, believes Stephen Briggs at Societe Generale, cutting their platinum consumption by 3.9% in 2008.

Today in India's gold jewelry shops, in contrast, "there is very good demand we are seeing after two to three months," said Amit Mittal, head trader at M.D. Overseas in New Delhi to Reuters this morning.

"The first day of the [financial] year could also be encouraging jewelers to Buy Gold as many had exhausted their inventories but had not bought ahead of their book closing."

Local Gold Prices dipped below 12,000 Rupees per ten grams, but "we are missing the dip" as one dealer put it, because India's bond and forex markets were closed Tuesday for book-keeping.

"April and May are the busy months for weddings, so people are expected to keep buying," reckons Ajay Singh at Kiran Jewellers in Jaipur.

"Demand has been good in the last 15 days."

Losing nearly 6% from Monday morning's high, the Gold Price finally bounced off $889 per ounce this morning, a level last seen at the start of Feb.

For French and German investors looking to Buy Gold today, the price sank to €570 per ounce – more than erasing this year's gains to date.

The Gold Price in Sterling dipped below £455 per ounce – more than 11% off the all-time record of March 17th – as the Pound slid to a three-week low beneath $1.9740.

"The Euro's upward trend lost some momentum [Monday] but that doesn't change the underlying bearish Dollar sentiment," says Matthew Strauss at RBC Capital Markets in Toronto.

"Although some came into the year thinking the worst was behind us, the first quarter was clearly one in which markets struggled to get a handle on just how deep the problems in the US economy really were. To call a bottom now is still a very risky call. It's too early to say the worst is behind us and the Dollar's in for a sharp rebound."

The first-quarter certainly proved disastrous for UBS, the former No.1 Swiss investment bank. Today announced a further $19 billion of credit-linked writedowns.

Marcel Ospel, the UBS chairman, finally announced he is stepping down. The bank is now seeking to raise $15bn via a new rights issue.

Last night on Wall Street, Lehman Brothers – the fourth largest securities firm in the US – said it is looking to raise $3 billion in a new sale of equity after repeatedly denying that it is the "next Bear Stearns".

Lehman's stock lost 26% of its value last month.

Today Deutsche Bank, the largest bank in Germany, admitted to a further €2.5 billion ($3.9bn) in credit-related writedowns – "equivalent to more than a third of its 2007 net profit," as the FT notes.

Chief executive Josef Ackermann – whose contract until 2010 was yesterday confirmed by the supervisory board – said in a statement that "conditions have become significantly more challenging during the last few weeks."