hin trading volumes throughout Asian electronic trading and the London session kept precious metals under pressure as the greenback bounced erratically between $1.3847 and $1.3975on Friday. However, a rally in US equity markets, possibly due to continued credit market thawing, eased investors' uncertainty. The resultant increase in investment fund flows filtered into precious metals, taking the metals higher during the New York session before a sudden reversal overnight as the greenback strengthened to $1.3850 again.
The rally during the New York session was also supported by higher crude oil prices (which we still believe reflects an inflated geopolitical risk premium). We note that WTI crudeoil gained from just above $42/bbl in early NY activity to just below $49/bbl in aftermarket electronic activity. Further oil price appreciation should anchor precious metal pricesin an environment of increased currency volatility.
On the economic data front, we note that both US and Eurozone December PMI manufacturing indices registered a contraction. US PMI manufacturing came in at 32.4 (forecast: 35), while the statistic for the Eurozone registered 33.9 (forecast: 34.5). Given that a PMI reading of less than 50 reflects a contraction, US and Eurozone industrial demand remains understrain - this should weigh on PGM in the short to medium term. The sentix Eurozone investor confidence index is due to be released later today - a worse-than-expected statistic could see the greenback claw even higher today. Important for PGM, lookout for US total vehicle sales tomorrow.
Gold slipped from $887 to $872 during Asian electronic activity, before shedding a further $7 in London. However, with oil prices picking up and the greenback losing some ground, gold then garnered fund-buying support - settling at $874 at the London PM fix. This continued in New York, with the metal gaining to $879 before consolidating at $878 at the close.Overnight, the metal plunged to $868. Primary support is at $863, with secondary support at $857 and $840. Resistance is at $880, $891 and $908.
Silver tracked gold throughout the day, finding major support in NY - managing to climb from $11.13 to $11.50, before consolidating at $11.48 at the close. Support and resistance are at $11.26 and $11.64, respectively, today.
Platinum bounced between $938 and $928 throughout London and Asia trading, before pushing higher in NY to $943 - settling at $938 at the NY close before plummeting to $930 overnight. Palladium traced platinum, dipping to $184 in London before $191 in NY - settling at $190 at the close. Compared to platinum, the metal endured a less rapid decline back to $190overnight after rising to $196 in the aftermarket activity. Rhodium fixed at $1,245.
Monday, January 5, 2009
Monday, December 22, 2008
Bullion prices likely to trade sideways today: Karvy Commodities
Gold prices traded in the range of $821-$883.6 a troy ounce with prices rallying strongly in the initial three sessions, as the depreciating dollar enhanced the appeal of metal as an alternate asset class.
The dollar fell significantly against the euro and fell to $1.4719 levels as US Federal Reserve Bank slashed the target lending rate by 75 basis points to 0.25%, the lowest ever. The consensus was of a 50 basis points cut. With policy makers emphasizing that Fed will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability;the metal gold was seen to be strongly buoyant.
Nevertheless, gold prices pared gains as oil fell below $33 a barrel and dollar recovered on speculation that decline in dollar was too steep. Reports showing lesser than expected decline in initial jobless claims and Philadelphia Fed Index, followed by European Commission comments that the euro region may suffer a “substantial” effect from the financial crisis next year supportedthe gains in dollar.
Today on the electronic session, gold prices are currently trading higher by around six dollars,backed by weak dollar and firmer opening in crude oil prices. Silver also gained. On the economic front, we have euro-zone industrial new orders to watch for. The data is expected to side down further in the month of November by further 4%.
On the whole, we expect a higher opening ondomestic MCX market and prices are expected to be trading sideways for the day.
The dollar fell significantly against the euro and fell to $1.4719 levels as US Federal Reserve Bank slashed the target lending rate by 75 basis points to 0.25%, the lowest ever. The consensus was of a 50 basis points cut. With policy makers emphasizing that Fed will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability;the metal gold was seen to be strongly buoyant.
Nevertheless, gold prices pared gains as oil fell below $33 a barrel and dollar recovered on speculation that decline in dollar was too steep. Reports showing lesser than expected decline in initial jobless claims and Philadelphia Fed Index, followed by European Commission comments that the euro region may suffer a “substantial” effect from the financial crisis next year supportedthe gains in dollar.
Today on the electronic session, gold prices are currently trading higher by around six dollars,backed by weak dollar and firmer opening in crude oil prices. Silver also gained. On the economic front, we have euro-zone industrial new orders to watch for. The data is expected to side down further in the month of November by further 4%.
On the whole, we expect a higher opening ondomestic MCX market and prices are expected to be trading sideways for the day.
IsDMA President Ganz Calls on Bank of Israel to Establish $2.25 Billion Credit Fund for Israeli Diamond Industry
Ramat Gan, Israel, December 17, 2008: Israel Diamond Manufacturers Association (IsDMA) President Moti Ganz has called on the Bank of Israel to intervene in the terms of credit made available to the Israeli Diamond Industry.
In a letter sent this week to Prof. Stanley Fischer, Governor of the Bank of Israel, Ganz proposed that the Bank establish a $2.25 billion credit fund for the diamond industry out of the central bank’s foreign exchange surplus. This credit would be made available to diamantaires through the banks financing the industry – Union Bank, Israel Discount Bank, Bank Leumi, First International Bank and Mizrahi Tefahot Bank. Diamantaires would continue to pay individualized margins according to the company’s level of risk, but would save the cost of raising the funds (LIBOR).
In addition, Ganz asked Fischer to instruct the banks to reduce the margins charged to diamantaires to the level of January 2008 – between 1 and 3 percent. He wrote that since the beginning of the financial crisis the banks have raised margins unilaterally by 0.25 to 1 percent. “This increase is a major burden to the industry,” Ganz wrote.
Ganz cited stiff competition which has caused the industry to grant buyers credit of 120 to 160 days. Since the start of the financial crisis, Ganz wrote, the Israeli banks have seriously reduced the credit available to the industry.
“The Israeli diamond industry’s total debt to the banks is about $2.3 billion, a level it has maintained for several years despite an impressive growth in exports,” wrote Ganz. He added that the number of bankruptcies in the industry is minimal, not exceeding more than one or two a year. This, he stated, attests to the financial strength of the industry and its stability.
Ganz added that the diamond industry is the largest export industry in Israel, with polished exports in 2007 reaching over $7 billion (about 20% of the country’s total industrial exports), and with a net turnover of $20 billion.
Ganz concluded that the diamond industry was not a cause of the current economic crisis, yet is being forced to deal with its serious consequences daily. “We are the only industry in Israel that has not leveraged itself, has not issued bonds to the detriment of the economy,” he wrote. Ganz added that the Israeli diamond industry, which supports tens of thousands of families in Israel, should not be made to pay the price of errors caused by others.
In a letter sent this week to Prof. Stanley Fischer, Governor of the Bank of Israel, Ganz proposed that the Bank establish a $2.25 billion credit fund for the diamond industry out of the central bank’s foreign exchange surplus. This credit would be made available to diamantaires through the banks financing the industry – Union Bank, Israel Discount Bank, Bank Leumi, First International Bank and Mizrahi Tefahot Bank. Diamantaires would continue to pay individualized margins according to the company’s level of risk, but would save the cost of raising the funds (LIBOR).
In addition, Ganz asked Fischer to instruct the banks to reduce the margins charged to diamantaires to the level of January 2008 – between 1 and 3 percent. He wrote that since the beginning of the financial crisis the banks have raised margins unilaterally by 0.25 to 1 percent. “This increase is a major burden to the industry,” Ganz wrote.
Ganz cited stiff competition which has caused the industry to grant buyers credit of 120 to 160 days. Since the start of the financial crisis, Ganz wrote, the Israeli banks have seriously reduced the credit available to the industry.
“The Israeli diamond industry’s total debt to the banks is about $2.3 billion, a level it has maintained for several years despite an impressive growth in exports,” wrote Ganz. He added that the number of bankruptcies in the industry is minimal, not exceeding more than one or two a year. This, he stated, attests to the financial strength of the industry and its stability.
Ganz added that the diamond industry is the largest export industry in Israel, with polished exports in 2007 reaching over $7 billion (about 20% of the country’s total industrial exports), and with a net turnover of $20 billion.
Ganz concluded that the diamond industry was not a cause of the current economic crisis, yet is being forced to deal with its serious consequences daily. “We are the only industry in Israel that has not leveraged itself, has not issued bonds to the detriment of the economy,” he wrote. Ganz added that the Israeli diamond industry, which supports tens of thousands of families in Israel, should not be made to pay the price of errors caused by others.
Tuesday, November 25, 2008
Global meltdown rubs off the sheen from Indian diamond industry
India's diamond industry seems to be losing its sheen with global recession hitting its exports.
Those associated closely with the industry at Surat in Gujarat are struggling to survive the current recessionary trends.
The traders say that the diamonds processed in Surat are sent to various parts of the world including the Middle East from where manufactured jewellery is then sold across the globe.
The US, one of the largest markets for diamonds and other gemstones, would import 60% of diamonds manufactured in Surat. But these imports have come down by half due to deep economic crisis that America is currently reeling under.
With the financial turmoil spilling over to the rest of the world, the demand for diamond jewellery is declining in the international markets. Diamond traders said that domestic markets too are no better and don't see any respite in the near future.
"Due to the global recessionary trends the diamond industry world over is facing problems and so is our fraternity in Surat. The effect is being feltmore than ever before and we are trying to fight it. But how long would the industry be able to fight it and survive, it is a matter of concern. I don'tsee any respite in the near future," said CP Wananai, President, Diamond Association, Surat.
The Surat diamond industry is worth Rs800,000mn and accounts for more than half of the total diamond exports from India. It employs more than 700,000 workers from across the country. Over 2.5mn people are indirectly associated with the trade. These workers are uncertain about their jobs. The one-month annual vacation that these workers get during Diwali, the Hindu festival of lights, is being extended, sparking off fears that many companies might have to close down.
"I have been in this industry for around 10 years now. We have already had a vacation of 40 days now. My salary is just Rs7000 per month and I had spent almost all of it during the festive season. I don't have anything now. I am somehow trying to survive. The situation is really bad. I don't even want to think about what can be done if the situation doesn't improve," said Manish Bhai, a diamond worker.
With the 40-day vacation ending on Monday (November 17), the diamond unions are scheduled to meet to discuss the situation and likely possibilities to save the livelihood of the millions of workers associated with diamond trade. Reducing the number of working hours and decreasing the salary proportionately are among various options being thought of as against laying off of workers.
Meanwhile, the diamond industry is lobbying hard to get a bailout package from the government. India's diamond industry has been reeling under a spate of problems. Around 2,000 factories out of 10,000 have already shut down.
The worst-hit diamond cutters and polishers have not yet lost hope about the markets regaining their lost glitter but feel that would take a couple of months.
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