TOCOM Gold

Prices of TOCOM gold futures climbed back over the 5,000 yen mark last week and came within 3 yen from the all-time high of 5,081 which was reached on February 7^th this year. Commodity and equity prices made strong gains last Monday as the yen weakened against all major currencies due to aggressive bond buying by the Bank of Japan (BOJ). The most actively traded forward contract gained 217 yen last Monday and finished the week up 202 yen or 4.2%. The forward contract closed last Friday’s day trading session at an even 5,000 yen per gram after hitting 5,078 on Thursday. The U.S. dollar based gold spot price has been weakening in recent weeks due to a stronger U.S. dollar and large outflows of capital by institutional investors as they seek higher yielding investments in equity and real estate markets and the chance for capital gains as equity markets continue to rally. Holdings of the largest gold backed exchange traded fund (ETF) reported holdings at 2 year lows as of last Friday. There was also worries in the market that Cyprus would have to sell gold to raise funds to help pay for the bailout of its banking system and some analysts worried that other central banks in Europe would also be forced to sell gold to raise funds. Adding to the pressure on global gold prices was the lowering of gold price forecasts for this year by UBS, Deutsche Bank and Goldman Sachs with the latter recommending clients to go short COMEX gold contracts and reportedly lowered their price forecast for 2013 from $1,610 to $1,545 and from $1,490 to $1,350 for 2014. Late in the week the USD spot price started to break through technical support levels and slid below the $1,500 mark on Friday and this marked an entry into bear market territory as the U.S. spot price has now fallen more than 20% from its all-time high of $1,920 which was reached in September 2011. In Tokyo, after gold prices rose back over the 5,000 yen per gram mark last week there were reports of heavy traffic in gold and jewelry shops with individuals waiting in line to sell gold and gold jewelry. A weaker yen should continue to support commodity prices in Japan but with U.S. dollar spot prices coming under pressure many analysts and traders expect TOCOM gold prices to be under pressure next week. Trading volume for TOCOM gold futures was moderate except for last Monday as volume was over 100,000 due to the large gains and open interest fell by a whopping 20,000 contracts last week as some long position holders sold to lock in profits as prices failed to reach a new all-time high. As of last Friday open interest stood at 110,674.

TOCOM Gold Daily Chart – Forward Contract (as of April 15)

TOCOM Gold Forward Contract Weekly Trading Data

TOCOM Platinum

TOCOM platinum futures prices strongly rallied last Monday as did most commodity and equity prices in Japan due to the sharply weaker yen against most major currencies with the yen getting close to the 100 yen mark against the U.S. dollar. The most actively traded forward contract gained 4% or 189 yen for the week and closed Friday’s day trading session at 4931 yen per gram after hitting 5,000 yen on Wednesday. Weak vehicle sales in Europe continue to keep platinum demand soft as diesel engines are popular in Europe and diesel engines mainly use platinum in their exhaust systems where gasoline engines use palladium more so than platinum. Last week China reported that vehicle sales increased by 13.2% for the first three months of this year and due to the recent air pollution problems some analysts expect stricter exhaust system standards to be implemented which would raise demand for both platinum and palladium there. South Africa reported that its output of platinum group metals (PGM) surged by 66% in February year-on-year mainly due to labor problems quieting down compared to last year at this time. Like gold, platinum prices plunged late Friday night in Japan during European and U.S. market times as the U.S. dollar platinum spot price hit an 8 month low and TOCOM platinum prices followed and sold off during the night trading session in Tokyo and this weakness is expected to carry over to next Monday’s trading. Traders will of course be carefully watching currency markets to see if the yen will further weaken or rebound some after nearing 100 yen to the dollar last week but not breaking through. Trading volume for TOCOM platinum futures was moderate last week with only Monday’s trading volume reaching 20,000. Open interest was little changed last week and stood at 63,380 open contracts as of last Friday.

TOCOM Platinum Daily Chart – Forward Contract (as of April 15)

TOCOM Platinum Forward Contract Weekly Trading Data

TOCOM Rubber

TOCOM rubber futures price gains last week made increases by gold and platinum futures seem pedestrian. The benchmark forward contract surged by 8.8% or 22.4 yen last week and closed Friday’s day trading session at 276.2 yen per kilogram. Market fundamentals remain fairly bleak as stock levels remain at very high levels in China, Japan and SE Asian rubber producing countries. The main market mover last week was the weaker yen which pushed the price of the forward contract higher by a whopping 17.1 yen last Monday and then a further 4.6 yen on Tuesday. Both equity and commodity prices rallied in Japan early last week on the weaker yen and there was a lot of short-covering in the rubber market as market sentiment had been very bearish over the past few weeks. The main reason for the bearishness has been the continuation of rubber stock levels in Asia with levels reportedly reaching a six-year high at ports in Japan and stock levels at TOCOM designated warehouses increased by another 1,163 tons from March 20^th to March 31^st and stood at 13,648 tons as of the 31^st. The 13.2% increase of vehicle sales in China for the first quarter of this year did not do much to move the market as depressed sales in Europe and the high level of rubber stocks has prevented much fresh buying from coming in at SE Asian physical rubber markets according to reports. Adding to market worries is that Thailand will shortly be exiting the dry season and latex output of rubber trees should increase which could increase the supply glut in the market. It was also reported last week that Indonesia, the world’s second largest rubber producer, would like Thailand and Malaysia to join them in halting the agreement that they agreed upon last year to reduce exports in an effort to prop up market prices. Indonesia reportedly does not see efforts to cut exports as helping to support market prices. Trading volume for TOCOM rubber futures was moderately strong early in the week before tapering off in the latter half. Open interest was little changed last week.

TOCOM Rubber Daily Chart – Forward Contract (as of April 15)

TOCOM Rubber Forward Contract Weekly Trading Data

Exchange and Industry News

No news this week.

Disclaimer:

This market review and news report contains information and data from sources believed to be reliable and accurate as of the date of publication but has not been independently verified. This report is for informational purposes only and no employee, director or connected person to Dot Commodity, Inc. takes any responsibility for the information or correctness of the content contained in the report. Dot Commodity, Inc. is strictly an online commodity futures broker and does not give any trading recommendations or financial advice to any of its clients, perspective clients or readers of this report. No part of this market review & news report is to be construed as an offer or solicitation to buy or sell any commodity futures or financial contract or product of any kind.