![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== Weekly Logo](http://66.33.29.196/Images/FileManager/963.jpg)
Provided by CPM Group, Vol. 2, No.
11, 14 March 2010
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Welcome to the Weekly Market Views report from DGCX, providing
you with a snapshot of what׳s happening in the energy,
precious metal and currency futures markets.
Please note that the observations and views expressed in
this newsletter do not reflect the views of DGCX and are
solely the view of the writer (CPM Group).
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Commodities Overview |
Currencies Overview |
Commodity prices may see a mixed bag this week. Gold and
silver have some upward momentum, and could move higher after
some rocky price experiences last week. Petroleum prices
meanwhile may well decline over the coming week, as
fundamentals take some of the recent pressures off of prices.
Overall investors remain committed to commodities. In the past
few weeks there have been several news stories involving
respected and prominent investors adding to their gold assets.
The flow of funds into gold and other commodities markets from
investors meanwhile continues. With prices showing support
some of the shorter term speculative traders that were selling
gold, silver, petroleum, and other commodities short over the
past three months may be repositioning themselves to take
advantage of higher prices: Liquidating any short positions
they have and possibly preparing to establish fresh long
positions. This shift in shorter term investor market
positions could be sufficient to push precious metals prices
higher in the next week or two. Any such increase in prices
then would be expected to stimulate follow-on buying by other
short-term investors and by proprietary traders at banks and
brokerage companies.
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Currency markets may reflect more of a rugby field than a
football game this week. The dollar may move lower against the
euro and rupee, while showing strength against the pound and
yen. Markets are focusing on the diverse range of economic and
political conditions in individual markets. While many
investors and bank trading desks like simple, clean stories
against which they can trade, sometimes the details of how
individual countries’ economic and financial markets are
performing demand attention. This could be more forcefully
demonstrated in the market this week, as individual currencies
may trade based on key developments within their countries.
Overall economic conditions continue to improve. Investors
remain wary, and are on guard for anything that might derail
recovery, either in individual countries or globally. Even as
this caution continues, investors are moving toward more
optimistic views of the economic prospects for the world. Some
of the political problems that had threatened to potentially
derail economic recovery appear to be receding, at least for
now. That can reverse quickly, but if it does not, it bodes
well for the dollar against some currencies. The reduction in
concerns over the recent Greek tragedy may be a key issue this
week.
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DGCX Prices & Daily Volumes
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Market
(as at Mar 12, 2010)
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Current Week close
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% Change
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Change
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Weekly High
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Weekly Low
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Gold ($/ounce)
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$1102.90
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-2.73%
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▼
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Silver ($/ounce)
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$17.075
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-1.01%
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▼
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Euro ($/Euro)
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$1.376
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1.11%
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▲
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GBP ($/GBP)
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$1.519
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0.41%
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▲
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INR ($/100 INR)
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$2.192
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-0.05%
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▼
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JPY ($/100 Yen)
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$1.105
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-0.16%
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▼
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WTI ($/b)
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$81.240
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-0.32%
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▼
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ADV (4,602)
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== Volume](http://www.dgcx.ae/Images/FileManager/1308.jpg)
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Economic
Indicators
Indicator
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Change
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Value
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Change
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% Change
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CRB Index
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-1.6%
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U.S. Dollar Index
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▼
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79.83
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-0.59
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-0.7%
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T-Bills
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▲
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0.15%
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0.01%
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0.0%
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DJIA
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▲
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10.625
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58.49
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0.6%
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FTSE Global All-Cap
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▲
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200.20
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2.94
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1.5%
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Source: Bloomberg Data
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COMMODITIES |
Crude Oil |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== WTI](http://66.33.29.196/Images/FileManager/1300.jpg) |
WTI oil prices held firm last week, settling closer to $81
on Friday 12 March. Prices could move sideways with a slight
downward bias this week. The WTI – Dubai spread has edged
higher recently as both physical and investment fundamentals
in these two markets diverged. WTI traded at a $3.78 average
daily premium over Dubai from 1 March though 12 March compared
to $2.85 in February. WTI oil, the North American light, sweet
benchmark, has been buoyed by strengthening investment demand
and a modest tightening in the supply – demand balance.
Notably, reformulated gasoline prices in the United States
have rallied as market participants prematurely priced-in a
strong demand rebound during the summer driving season.
Meanwhile, the bounce higher for Dubai prices, the light, sour
Persian Gulf benchmark, has been less pronounced as there are
concerns about Asia’s ability to absorb rising sour crude
oil shipments. OPEC is expected to keep quotas unchanged
during its 17 March meeting, although noncompliance with these
quotas is likewise expected to remain unchanged.
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Gold |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== Gold](http://66.33.29.196/Images/FileManager/1301.jpg) |
Gold prices may head toward $1,140 later this
week as investors are expected to show continued interest in
gold. Prices appear to have found a base around $1,100. Prices
could drop to around $1,080 in further selling, but right now
investors appear likely to support prices around $1,100. Any
drop below that would likely trigger fresh buying. Investment
demand has been stable over the past week. Combined exchange
traded fund gold holdings were 56.36 million ounces as of 11
March, up 338,448 ounces from the end of February. Economic data
continues to show an emerging recovery. Investor concerns that
the recovery could be derailed have and should be expected to
keep providing support to gold prices. Many investors continue
to be long gold. The support for gold around $1,100 last week
has encouraged short-term investors to put on fresh long
positions. Prices around current levels may attract increased
buying this week from both short-term and longer term investors.
The roll of gold futures contracts in the New York market also
may begin to lend support to prices next week, although the
contract remains more than two weeks away. This week the Federal
Reserve will likely maintain its posture toward the economy and
short-term interest rates.
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Silver |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== Silver](http://66.33.29.196/Images/FileManager/1302.jpg) |
Silver prices are expected to move sideways to slightly
higher this week. Prices could rise as high as $18.00, a level
not seen since 21 January. Jewelry demand for silver in India
and the Middle East has tapered off slightly over the last
couple of months due to relatively higher prices. Secondary
recovery of silver from Indian scrap, on the other hand,
remains firm. Recent estimates from India indicate that silver
recovery from scrap almost doubled last year from 2008 levels.
High silver prices have encouraged many individuals in India
to sell their old jewelry and silverware to scrap refiners.
Industrial demand for silver has been holding up well on
improvements in the global economic conditions. Consumer
spending on several silver-bearing items such as flat panel
televisions, batteries, and cell phones has been reviving.
Investors have become more optimistic or perhaps less
pessimistic about financial, economic, and political
conditions. That said, there still is a fair amount of
investor concern regarding the pace and strength of the
current recovery. Combined ETF silver holding were 469.2
million ounces at the end of last week, down from 472.9
million ounces on 5 March.
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CURRENCIES
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Euro /
Dollar DEUR (US $ quoted in cents
per Euro) |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== Euro](http://66.33.29.196/Images/FileManager/1303.jpg) |
The euro could break above $1.38 this week
and possibly make a move toward $1.40. Investor anxieties over
Greece’s fiscal debt problems have eased as Greece is
seemingly taking concrete steps toward structural reform with an
aim to substantially reduce its debt burden. That said,
Greece’s financial troubles will not be resolved overnight and
are likely to take years to be brought to manageable levels.
Sentiment toward Greece and the broader region has improved,
however, and the euro could appreciate as a result. As the euro
heads higher there could be short covering by banks and
investors that had bet against Europe, which may push the euro
toward $1.40 very quickly.
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Indian
Rupee / Dollar DINR (US $ quoted in
cents per 100 Indian Rupees) |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== INR](http://66.33.29.196/Images/FileManager/1304.jpg) |
This week the Indian rupee could hold around 218 cents —
219 cents per 100 rupee. There may be bouts of short-term
selling or profit-taking, but they would be expected to be
short-lived. Last week the rupee hovered around 219 cents. The
rupee has strengthened against the U.S. dollar in recent
weeks, reflecting ongoing inflows of foreign funds into
domestic equity markets. Also, many corporations have been
selling U.S. dollars in anticipation that the rupee might
further appreciate against the dollar. Industrial production
in India has been recovering over the last two months. If the
recent economic recovery in India is sustained, the Reserve
Bank of India could raise interest rates sooner rather than
later. This may help tame high inflation in India.
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Sterling
Pound / Dollar DGBP (US $ quoted in
cents per Pound) |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== GBP](http://66.33.29.196/Images/FileManager/1305.jpg) |
The selling pressure on the pound is easing, but sterling
is unlikely to move above $1.53 this week. Investor confidence
in the pound remains low. Similar to other parts of Europe,
high government debt levels and weak economic growth are
weighing on the pound. The economy in the United Kingdom
requires both fiscal tightening and stronger economic
activity, both of which should not be expected in the near
term. Adding further weight on the already weak pound are
rising political stresses as parliament elections approach in
the United Kingdom. Uncertainty over what stance the elected
officials will take toward the economy and the government debt
situation may help keep the pound weak.
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Japanese
Yen / Dollar DJPY (US $ quoted in
cents per 100 Yen) |
![http://r20.rs6.net/tn.jsp?et=1103195718990&s=117&e=001TXajYECsYoJggEbs5DYLE4D5z2Mo7QDe9tF4s9tnP-BBcS941bCliBSvEdfDL9t8aTQuFe395VSqpSfnDzu0SO7jOXrRrW_kRezlj72dOGSHsVgtJ8_olqQzjYVSwptbzFsa6IxG-NbrRlOPbjGUqg== JPY](http://66.33.29.196/Images/FileManager/1306.jpg) |
The yen may trade slightly lower this week, with support
around 108 cents. Year-to-date demand in Japan for the yen has
been strong as the economy lifts itself out of the recession.
With economic activity gaining momentum, the Japanese
government is expected to lift its economic outlook. The
Japanese equity market also has performed well thus far in
2010. A weaker yen is needed to boost exports and reduce
deflationary pressures, however. The cyclical turn could be
derailed by a persistently strong currency. Meanwhile, the yen
recently strengthened as money flowed into defensive
currencies when European fiscal concerns surfaced. This trend
could push and pull at the value of the yen over the short
term. Domestic economic conditions, which favor a weaker yen,
could provide a more enduring downward bias.
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Further
Information
Full details on all of our products and DGCX news can be found
at www.dgcx.ae. Alternatively, if you would like to speak with a
Relationship Manager, please contact us.
Tel: +971 (0)4 361 1616 Email: info@dgcx.ae
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CPM Group is a leading independent commodities market research
and consulting firm. CPM focuses on various commodities
markets from precious metals to soft commodities. In its
twenty three years as an independent company, CPM has
consistently delivered unique, market-leading research and
services to clients ranging from individual investors to
leading international organizations worldwide. For more
information and additional research please contact Adam Crown
at +1 (212) 785 - 8324 or acrown@cpmgroup.com or visit
www.cpmgroup.com.
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Copyright CPM Group 2009. The views
expressed within are solely those of CPM Group. Such information
has not been verified by the DGCX, nor does DGCX make any
representations as to its accuracy or completeness. Any
statements non-factual in nature constitute only current
opinions, which are subject to change. While every effort has
been made to ensure that the accuracy of the material contained
in the reports is correct, CPM Group or DGCX cannot be held
liable for errors or omissions. CPM Group or DGCX are not
soliciting any action based on it. Information contained here
should not be relied on as specific investment or market timing
advice. At times the principals and associates of CPM Group may
have long or short positions in some of the markets mentioned
here. This report is distributed weekly by DGCX to provide
market participants with information and statistics related to
specific commodities and currencies. CPM Group, a commodities
consulting company, produces this report for DGCX. Visit
www.cpmgroup.com for additional information.
DGCX refers to “Dubai Gold
and Commodities Exchange” and any company which is an owned
subsidiary of DGCX. No part of this publication may be
redistributed or reproduced without written permission from
DGCX.DGCX shall not be liable for the use of the information
contained in this publication, connected with actual trading or
otherwise. DGCX shall not be responsible for any errors or
omissions contained in this publication. DGCX, nor its
affiliates, associates, representatives, directors or employees,
shall be responsible for any loss or damage that may arise to
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transaction. All information, descriptions, examples and
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purposes only and should not be treated as definitive. Those
wishing either to trade futures and options contracts on DGCX,
or to offer and sell them to others should establish their
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Emirates Securities and Commodities Authority (ESCA).
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