Commodity Weekly Report – RR Equity & Commodity Brokers

Gold traders turned bearish for the first time in a month as investors reduced holdings in exchange-traded products for an unprecedented 17th consecutive week and India, the biggest buyer, announced curbs on imports. India raised the import duty to 8 percent from 6 percent on June 5 and the central bank also further restricted shipments.

Overseas purchases slid to an average of $36 million a day in the 14 business days through June 7, compared with an average $135 million a day in the 13 days through May 20. West Texas Intermediate crude rose to a four-month high after President Barack Obama was said to authorize arming Syrian rebels groups, ratcheting up tensions in a region home to about a third of the world’s oil supply.

WTI for July delivery climbed $1.16, or 1.2 percent, to $97.85 a barrel on the New York Mercantile Exchange, the highest settlement since Jan. 30. The volume of all futures traded was 28 percent above the 100-day average. Prices increased 1.9 percent this week. India’s monsoon, which accounts for more than 70 percent of the annual rainfall, may be the highest in two years, potentially boosting harvests of everything from rice to corn, sugar cane and cotton. Rainfall will be 98 percent of the 50-year average of 89 centimeters (35 inches) in the four months through September.

Economic Round-Up

  • Indian inflation slowed to a 43-month low in May, a moderation that may fail to spur another interest-rate cut by the central bank as a plunge in the rupee threatens to fan price pressures. The wholesale-price index rose 4.7 percent from a year earlier, after climbing 4.89 percent in April, the Commerce Ministry said in a statement in New Delhi today. The median of 35 estimates in a Bloomberg News survey was 4.88 percent. The rupee’s drop to a record low this week may stoke import costs in a nation that buys about 80 percent of its crude oil from overseas.  India’s finance minister said steps are being taken to steady the currency, whose decline has led forecasters from Goldman Sachs Group Inc. to DBS Bank Ltd. to predict the central bank will refrain from a fourth-straight rate cut at the review due June 17.Fitch Ratings revised India’s credit-outlook to stable from negative on June 12, citing the government’s efforts. That provided some succor for Singh, whose coalition has been hurt by graft scandals and depressed economic expansion. Domestic sales in India’s passenger-car industry, which includes manufacturers such as Maruti Suzuki India Ltd., fell 12.3 percent in May from a year earlier; in a sign consumer spending is still faltering. Food prices climbed 8.25 percent in May from a year earlier, today’s report showed. Fuel and power rose 7.32 percent. March inflation was revised to 5.65 percent from5.96 percent.
  • Foreign sales of U.S. long-term securities outpaced U.S. purchases of such assets abroad in April as private investors overseas sold a record amount of Treasury bonds and notes, a government report showed. The net long-term portfolio investment outflow forth month was $37.3 billion after a revised decline of $13.4 billion the prior month, the Treasury Department said in a statement today in Washington. U.S. Residents bought a net $12.6 billion in foreign long-term securities, while investors abroad were net sellers of $24.8 billion of U.S. long-term securities, the report showed.
  • Consumer confidence in June eased from a six-year high as progress in the labor market supported Americans’ views of the economic outlook.

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