“Copper supply shortages will extend into the first half of next year as an accelerating Chinese economy more than doubles the pace of growth in global consumption even as mines extract a record amount of metal.

Demand will outpace supply by 316,000 metric tons in the first six months, more than all copper in London Metal Exchange warehouses, before a surplus emerges in the second half, Barclays Plc estimates. Production has lagged behind consumption since 2010, according to the International Copper Study Group. The metal may average $8,300 a ton in the second quarter, 6 percent more than now and the most in a year, according to the median of 21 analyst and trader estimates compiled by Bloomberg.

China, which uses 41 percent of the world’s copper, is rebounding from seven quarters of slowing growth after the government approved a $161 billion subways-to-roads construction plan in September. It’s being joined by central banks from the U.S. to Europe to Japan, who also pledged more stimulus. Housing starts in the U.S., the second-largest consumer, reached a four- year high last month and business confidence unexpectedly strengthened in Germany, Europe’s biggest economy.”

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“SAN FRANCISCO (MarketWatch) — Gold futures fell Wednesday, hit by a selloff that sank prices by as much as $36 an ounce, with the market blaming the move on a combination of technical selling, the expiration of options and futures contracts, deflationary concerns and a stronger U.S. dollar.

“Gold’s volatility is never to be underestimated,” said Jason Rotman, president of Lido Isle Advisors, a Newport Beach, Calif.-based alternative-investment firm. “Markets are emotional as well as rational … and we think an initial selling blast this morning simply caused more liquidation selling to occur.”

Gold for December delivery GCZ2 -1.37%  dropped $25.80, or 1.5%, to settle at $1,716.50 an ounce on the Comex division of the New York Mercantile Exchange. It fell by as much as $36.80 to touch a low of $1,705.50 during the session.”

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Currently there is a glut of steel in the world and steel companies are still building out for more capacity.

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“Oil traded near the lowest price in a week in New York amid signs of rising supplies in the U.S. and concern that lawmakers are struggling to reach agreement on how to address the nation’s deficit.

West Texas Intermediate futures were little changed after sliding 0.6 percent yesterday. An Energy Department report today may show crude supplies rose by 350,000 barrels to 374.8 million, according to a Bloomberg News survey. U.S. Senate Majority Leader Harry Reid said yesterday he was disappointed with progress made during congressional budget talks over $607 billion in tax increases and spending cuts set to begin in January.

“The market has been kept well-supplied,” said Guy Wolf, a strategist at London-based commodities broker Marex Spectron Group Ltd. who predicts Brent crude will recover to $125 a barrel early next year. “Funds are not engaged with the market right now, partly due to potential events such as the U.S. fiscal cliff. Even though everyone assumes it will resolve itself, the question is how close to the edge do we go first?”

Crude for January delivery was at $86.90 a barrel, down 28 cents, in electronic trading on theNew York Mercantile Exchange at 10:19 a.m. London time. The contract decreased 56 cents yesterday to $87.18, the lowest since Nov. 20. Prices are down 12 percent this year.

Brent for January settlement slid 26 cents to $109.59 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.69 to WTI, compared with $22.69 yesterday.”

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“Oil traded near its lowest level in almost a week in New York as a forecast that U.S. crude supplies increased balanced optimism that a new agreement on aid for Greece will help resolve Europe’s debt turmoil.

Futures were little changed, paring an earlier advance of as much as 0.6 percent. U.S. crude inventories probably rose 500,000 barrels last week, a Bloomberg News survey of analysts before an Energy Department report tomorrow showed. European Union ministers agreed to help Greece manage its debt burden in talks in Brussels that lasted 13 hours, an EU official said early today. The OECD cut growth forecasts and warned of the risk of a “major” global recession.

“The positive outcome on Greece has already been priced in,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts Brent crude may slide to $110 a barrel this month. “Now attention is turning to fundamentals and they are far from ideal.”

Crude for January delivery was at $87.91 a barrel in electronic trading on the New York Mercantile Exchange at 12:13 p.m. London time, having gained as much as 51 cents to $88.25 a barrel. The contract decreased 54 cents yesterday to $87.74, the lowest since Nov. 21. Prices are down 11 percent this year.

Brent for January settlement rose 16 cents to $111.08 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.17 to West Texas Intermediate, compared with $23.18 yesterday.”

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“Speculators raised bullish commodity wagers for the first time since early October as signs of improving economic growth in the U.S. and China pushed prices higher for three straight weeks.

Hedge funds and other money managers increased combined net-long positions across 18 U.S. futures and options by 9.6 percent to 846,321 contracts in the week ended Nov. 20, Commodity Futures Trading Commission data show. That was the biggest gain since mid-August. Corn holdings rose the most since July, and those on silver reached a five-week high.”

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“ETF Securities has released its weekly metals outlook. With big gains in silver and gold in recent days, we have been tracking the moves in ETFS Physical Silver Shares (NYSEMKT: SIVR) and iShares Silver Trust (NYSEMKT: SLV).

This morning’s refers back to last week’s report from the Silver Institute that industrial demand for silver, aka The Devil’s Metal, is now expected to rise by 7% in 2013 to a new record. The report also highlights that investment demand will remain a key issue in 2013. Effectively, the report is calling for a rebound in 2013 after silver lost ground in 2012.

ETF Securities said:”

WTI and Brent are off by a scant amount as they come off a nice rally….

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Israel – Hamas ceasefire holds

“Europe’s answer to the U.S. shale boom may lie beneath the Sahara desert.

While environmental regulation and disappointing drilling tests have held back the development of shale gas reserves in Europe, Algeria is using tax breaks to encourage exploration. Pipelines under the Mediterranean to Spain and Italy already link Africa’s largest gas exporter into Europe’s grid.

The North African nation is holding talks with Exxon Mobil Corp. (XOM) over shale, Ali Hached, an adviser to Energy and Mines Minister Youcef Yousfi, said in an interview. Eni SpA (ENI),Royal Dutch Shell Plc (RDSA) and Talisman Energy Inc. (TLM) have already signed shale exploration accords with Algeria, which expects tax breaks for gas exploitation and drilling shale to get parliamentary approval within weeks.”

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“The US Energy Information Administration (EIA) released its weekly petroleum status report this morning. US commercial crude inventories declined by 1.5 million barrels last week, bringing the total US commercial crude inventory to 374.5 million barrels, well above the upper limit of the five-year range for this time of the year.”

Full Report 

“Oil rose amid concern a blast on a bus in Israel will worsen conflict in the Middle East. The euro pared losses against the dollar after the region’s finance ministers failed to agree on a Greek debt-reduction package.

West Texas Intermediate crude futures climbed as much as 1 percent to $87.57 a barrel. The euro declined 0.1 percent to $1.2809 at 11:55 a.m. in London, after earlier weakening as much as 0.6 percent. The Stoxx Europe 600 Index (SXXP) and futures on the Standard & Poor’s 500 Index were little changed. The dollar appreciated to more than 82 yen for the first time since April after Japan’s exports fell more than forecast.

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“Gold is flat today and appears to be consolidating on yesterday’s gains. Conflict in the Middle East and Moody’s downgrade of France’s AAA rating will support gold. Indeed, the Moody’s downgrade of France shows how the global debt crisis is spreading to Europe’s core with obvious ramifications for the euro.

Oil prices surged yesterday as violence intensified in the Israel-Gaza conflict, sparking fresh concern about supplies from the crude oil rich Middle East should the conflict escalate and engulf other Middle Eastern nations such as Syria and Iran.

New York’s main contract, West Texas Intermediate (WTI) for delivery in January, soared 2.6% or $2.36 from Friday to settle at $89.28 a barrel.

This is strengthening safe haven demand for gold bullion.”

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“Canada’s top mining official believes the global commodity supercycle is not over, but rather it’s just on pause before it comes roaring back to life.

Pierre Gratton, president of the Mining Association of Canada (MAC), insisted in The Globe and Mail that renewed record demand for commodities from Asia is on the horizon.

“Having been in this business now for 13 years, there is a very significant difference between the mood in this downturn and the kind of attitude and the kind of mood that I used to see in 2000 and 2001,” Gratton said, adding that he expects continued favorable sentiment among industry players to be a positive.”

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“Gold’s 12-year rally, the longest in at least nine decades, is poised to continue in 2013 as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever.

The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.67 billion bet through the SPDR Gold Trust (GLD), the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show.

Central banks from Europe to China are pledging more steps to boost growth, raising concern about inflation and currency devaluation. Investors bought 247.5 metric tons through ETPs this year, exceeding annual U.S. mine output. While both sides said talks Nov. 16 between President Barack Obama and Congress over the so-called fiscal cliff were “constructive,” the Congressional Budget Office has warned the U.S. risks a recession if spending cuts and tax rises aren’t resolved.”

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“Oil slid from the highest level in a month in New York on signs that yesterday’s gains were excessive, given speculation stockpiles rose for a third week in the U.S., the world’s largest consumer of crude.

West Texas Intermediate dropped as much as 0.8 percent after climbing 2.7 percent. Crude inventories in the U.S. probably increased by 1 million barrels last week, a Bloomberg Newssurvey showed before an Energy Department report tomorrow. Prices surged yesterday as Israeli ground forces prepared to enter the Gaza Strip for the first time in almost four years.

“The market remains well-supplied,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt who forecasts WTI futures will rise above $90 a barrel before the end of the year, said by phone. “The bias is upwards due to supply risks and geopolitical tensions. The risk of an Israeli invasion into the Gaza strip is still there.”

Crude for January delivery fell as much as 75 cents to $88.53 a barrel in electronic trading on the New York Mercantile Exchange. It was at $89.07 at 11:46 a.m. London time. The contract surged to $89.28 yesterday, the highest close since Oct. 19. Prices have declined 10 percent this year.

Brent for January settlement on the London-based ICE Futures Europe exchange slipped as much as 95 cents, or 0.9 percent, to $110.75 a barrel. The European benchmark crude was at a premium of $22.46 to WTI, from $22.42 yesterday.”

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“Oil advanced to the highest level in more than a week in New York amid concern that Middle East unrest will disrupt supply and speculation the U.S. will avert automatic spending cuts and tax rises that threaten to throw the nation into recession.

West Texas Intermediate futures climbed to more than $88 a barrel, extending two weeks of gains. Israel will continue to attack Gaza and may intensify operations, Defense Minister Ehud Barak said. U.S. President Barack Obama is “confident” of a deal on the so-called fiscal cliff, he said after Nov. 16 talks with congressional leaders.”

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” In the wake of the International Energy Association’s extremely bullish report about America’s hydrocarbon potential, the San Diego Union Tribune has published an editorial calling on California Gov. Jerry Brown to tap the state’s mammoth shale oil resources.

How big are they?

According to the EIA, the Monterrey Formation, which covers an enormous chunk of Southern California and terminates near Santa Barbara, has 15.4 billion barrels of recoverable crude — four times as much as the Bakken formation in North Dakota.”

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“Today’s AM fix was USD 1,710.00, EUR 1,342.76, and GBP 1,077.91 per ounce.
Yesterday’s AM fix was USD 1,723.50, EUR 1,351.45, and GBP 1,087.66 per ounce.

Silver is trading at $32.32/oz, €25.48/oz and £20.46/oz. Platinum is trading at $1,554.50/oz, palladium at $624.80/oz and rhodium at $1,095/oz.

Gold fell $11.00 or 0.64% in New York yesterday and closed at $1,714.00. Silver slipped to a low of $32.166 and finished with a loss of 0.15%.

Gold and silver have traded a bit lower on Friday and are both heading for a loss of 1% on the week in dollar terms. This is to be expected after the 3% and 5% returns of last week and the trading action this week has all the hallmarks of consolidation.

Interestingly, the sharp falls seen in the Japanese yen this week have created the unusual situation of gold and silver prices being nearly 1% higher in yen terms while lower in most fiat currencies.

The jobless claims numbers were higher than expected (439K vs 338K) yesterday and Superstorm Sandy’s wrath may have worsened an already weakening US economy. Unemployment benefits grew by 78K for the week ending November 10th.

Many of those who lost their jobs were unable to immediately file claims due to the dislocation caused by the storm.  Sandy led to over 100 deaths, left no power in many homes, curtailed rail or subway services and insurance losses estimated are between $20 billion and $50 billion.

US industrial output figures for October are published at 1415 GMT.

If the US fiscal cliff isn’t sorted out it will weigh on the dollar and benefit gold however the fiscal cliff is just the preliminary bout in many challenges facing the $16.15 trillion indebted US economy.

The CME Group cut margins on gold and silver futures contracts in a bid to ignite trading interest which is bullish from a contrarian perspective.

Gold demand is still strong.  The SPDR Gold Trust holdings grew to 1,339.616 tonnes by Nov. 15, just a tad off the record high of $1,340.521 tonnes hit in October.

John Paulson kept a major stake in gold in Q3 2012, a confidence boost to bullion’s appeal as a hedge against economic uncertainty, a US regulatory filing showed on Thursday.

While John Paulson kept his current stake in the SPDR Gold Trust (NYSE:GLD), Soros increased his holding in the gold trust by 49% to 1.32 million shares.

Soros and his team, unlike many “experts”, clearly believe gold is not a bubble and will protect and grow his wealth in the coming years.” ”

Full article and charts

“Oil headed for the fourth weekly decline in five in New York as signs of a slowing economy in the U.S., the world’s biggest crude user, countered concern that tension in the Middle East will disrupt supplies.

West Texas Intermediate futures were little changed after falling 1 percent yesterday as a report showed U.S. unemployment claims climbed to the highest level since April 2011. Crudestockpiles grew last week to the highest since July as output rose to an 18-year high, according to the Energy Department. Oil pared losses after Israel said it’s ready to escalate military operations against Gaza.

“Supplies are overwhelming while demand is non-existent,” said Andrey Kryuchenkov, a London-based analyst at VTB Capital who predicts WTI may slip to $84 a barrel this month. “Geopolitical risks are hopefully going to subside, and so ultimately macroeconomic and demand concerns will still dominate the agenda.”

WTI for December delivery, which expires today, slipped 15 cents to $85.30 a barrel in electronic trading on the New York Mercantile Exchange at 12:28 p.m. London time. The January contract dropped 14 cents to $85.73. The front-month future dropped 87 cents yesterday to $85.45 and is down 0.9 percent this week. Prices have retreated 14 percent this year.

Brent for January settlement on the London-based ICE Futures Europe exchange rose 28 cents to $108.27 a barrel. The front-month European benchmark grade was at premium of $22.55 to the corresponding WTI contract, from $25.53 yesterday.”

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WTI is up marginally, but Brent is up firmly in overnight trade…

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