SILVER

For a change, silver has managed an upside breakout on the charts and the market seems to be trading in lockstep with the gold market again. With the rise overnight, March silver reached the highest level since November 17th, with most of that upside action seemingly the result of residual calm from the Euro zone. Certainly silver is benefiting from a gradual improvement in US economic data and that might be expected again today, but the silver market is probably being held back by residual fears that the Euro zone debacle could regain the spot light without notice. Like gold, silver did see some supportive private silver price forecasts for next year, with those bullish targets expected to come on the back of strong investor demand. Silver looks to trade like a classic physical commodity market today and the trade is expecting US data to at least underpin the initial gains in silver prices this morning. Comex Silver Stocks were 108.146 million ounces down 45,716 ounces. Silver stocks have declined 11 of the last 20 days. Support in March silver moves up to $33.12 today and there might be little in the way of resistance until the $33.65 level on the charts. It would appear that silver is poised to return to levels above the $34.00 mark off a series of favorable US data points this morning. In fact, March silver might be destined to settle into a new consolidation zone on the charts bound by $33.83 and $35.27.

OUTSIDE MARKET DEVELOPMENTS:

While equity markets in Asia were generally higher during overnight trading, stock indices in Europe are mixed this morning. Early indications are that US equity markets will open with moderate losses later on today. The US Dollar is weaker against most of the major currencies this morning. The official Chinese Purchasing Managers index during November was 49.0, for a 1.4 decline from October's levels. French Unemployment during the third quarter was 9.7%, in-line with forecasts. A private survey of Euro zone manufacturing during November was at 46.4, in-line with expectations. Major US economic numbers to be released this morning include Weekly Jobless Claims at 7:30 AM, a private survey of Consumer Confidence at during November at 9:00 AM, a private survey of US manufacturing and October Construction Spending at 9:00 AM, as well as some private surveys of auto sales that will be released during the session. In addition, Fed Regional Presidents Lockhart and Bullard will speak during the session.
While there doesn't appear to be a full risk on vibe in place today, the gold trade looks to start the Thursday US session out with a favorable track. For the time being, the markets are generally confident that the EU/IMF scheme could keep Euro uncertainty contained. It also seems as if the concerted liquidity move by the central banks remains a supportive issue for gold and other physical commodity markets. Gold was probably given a slight boost this morning by news that French and Spanish bond auctions were decently received, as that increases the odds that the markets will get to the European closes today without a fresh anxiety event. With the markets also expecting generally positive US scheduled data flow from initial claims, ISM manufacturing and domestic auto sales, that might leave the gold bulls confident deep into the Thursday morning US trade. Traders should be on the look out for bigger than expected declines in either initial or ongoing claims today, as that news could take on added importance ahead of the monthly US payroll figures on Friday morning. While gold hasn't paid that much attention lately to classic physical demand side news, the trade might be lifted slightly by World Gold Council predictions of a 10% increase in Chinese gold demand this year. Part of the rise in Chinese gold demand however is offset by ideas that Chinese gold production is also expected to climb. A major brokerage firm might have given gold prices some additional support overnight from a report that suggested gold could continue to reap fresh demand from investors that are unhappy with low yielding inflation adjusted instruments. Comex Gold Stocks were 11.299 million ounces up 64,574 ounces. Gold stocks have declined in 12 of the last 20 days. Comex Gold stocks are now at their highest levels in the past 10. With February gold managing another upside breakout and the market seemingly attempting to entrench above the $1,750 level, it would seem as if the bull camp has partially solidified the upward track in gold prices. In retrospect, the rally in gold seems to be largely the result of declining Euro zone fears and to a lesser degree, a result of the pattern of better than expected US scheduled data. Therefore the gold market might be lifted by the scheduled data today but perhaps not as much as many would expect. In other words, good US data is helpful, but there will continue to be over hanging concerns off the Euro zone situation into that December 9th meeting date. Solid support in February gold is seen at $1,744 and initial resistance might not be seen today until the $1,762 level.

MARKET TALK:

 Gold Capped As Few Investors "Want To Be Heroes"-UBS


Not only is gold's behaviour, as a hybrid between a safe
haven and risk asset, making it a difficult short-term trade, capping gains,
but the market is likely to struggle to push significantly higher as investors
choose the relative safety of the sidelines heading into year-end, says UBS.
"Year-end is approaching and few investors want to be heroes; they are either
trying to protect whatever profits have been made this year or limit their
losses," says analyst Edel Tully. Deleveraging and funding pressures are also
keeping investors "fearful of a replay of 2008... [which] is not a conducive
environment for significantly--and sustainably--higher gold prices in the short
term," she adds. Spot gold flat at $1,746/oz.

HSBC: Lifts 2012-13 Silver Forecasts; Expects Strong Investor Demand

HSBC has lifted its silver price forecasts for 2012 and
2013 amid expectations that strong bar and coin investment demand, together
with growing interest in silver exchange-traded funds, will push the market
higher, the bank said late Wednesday.
It now expects the silver market to average $34 a troy ounce next year, and
$32/oz the year after--both of which are a $2 an ounce increase on HSBC's
earlier forecasts. "Silver prices will reflect the interplay of many factors.
The single biggest bullish factor, in our view, will be renewed investor
demand," analyst James Steel said.
HSBC has also introduced a 2014 forecast, at $28/oz. "We are raising our
silver price forecasts for 2012 and 2013, but we are not unreservedly bullish,"
Steel said.
At 0924 GMT, spot silver traded at $32.570/oz.

MARKET TALK:

 Low TIPS Yield May Support Gold Near $1900 -Goldman


A gold price around $1,800-$1,900/oz could be well
supported should 10-year U.S. TIPS yields remain close to their current levels
of 0bp, says Goldman Sachs as it reiterates its 12-month forecast of
$1,940/toz. Expects prices to continue to be driven largely by changes to U.S.
real interest rates, "and with our updated U.S. economic outlook pointing to
continued low levels of real rates in 2012, we continue to recommend long
trading positions in gold." Also expects the euro-zone debt crisis to skew the
balance of risk toward higher gold prices. Spot gold down $4.72 at
$1,741.33/oz.

India Rupee:

Sharply up as private cos, FIIs sell dollars
NewsWire18, Thursday, Dec 1
..............................................................................
At 1318 IST Open High Low Previous
Spot rupee per $1 51.5600 51.8500 51.5200 51.8500 52.2000
1-year fwd premium 3.47% 3.37% 3.51% 3.37% 3.15%
..............................................................................
India Rupee: Sharply up as private cos, FIIs sell dollars
MUMBAI--1318 IST--The rupee rose sharply against the dollar, as some
private sector companies and foreign institutional investors sold dollars.
A large engineering company and a petrochemical company were among the
highest sellers of the greenback.
Rise in local shares also aided the market sentiment. The BSE Sensex was
up 3.08% and National Stock Exchange's Nifty up 2.82%. (Aaheli Bagchi)
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India Rupee: Up more as banks sell dollars noting firm shrs, euro
MUMBAI--1225 IST--(51.6500/$1) The rupee extended its gains against the
dollar as banks continued to cut positions in the greenback noting the rise
in euro and local shares. The BSE's Sensex and National Stock Exchange's
Nifty rose nearly 3% each today.
Euro was at $1.3450 as against $1.3444 Wednesday at close in New York.
"All the banks, mainly foreign banks, who were holding long dollar positions
up till now are selling dollars today," said a dealer with a private bank.
Dollar inflows from foreign institutional investors may have also aided the
rupee's rise, dealers said. (Aaheli Bagchi)
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India Rupee: Fwd premiums rise tracking sharp rise in spot rupee
MUMBAI--1200 IST--(51.6500/$1)--Forward dollar/rupee premiums were up, as
traders booked forward contracts tracking the rise in spot rupee.
Market sentiment got a boost after central banks of six major economies
decided to enhance dollar liquidity throughout the global financial system.
The European Central Bank, along with the central banks of Canada, Japan,
UK, Switzerland, and the US, have agreed to cut the dollar liquidity swap
rate by 50 basis points from Dec 5 to Feb 1, 2013.
The cut in dollar borrowing cost prompted many domestic banks to cut
their dollar positions in spot and buy forward contracts at the current
lucrative levels, dealers said.
Most foreign banks were also actively buying forward contracts, dealers
said. The upward bias in premiums is likely to continue through this week.
"The central banks cutting their rates has led to a lot of paying (paying
premiums, booking forward contracts) today," said a dealer with a brokerage
in Mumbai. (Aaheli Bagchi)
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India Rupee - F&O:Dlr futures decline tracking fall in spot dollar
..............................................................................
At 1025 IST Open High Low Previous
Spot dollar/rupee 51.7550 51.8500 51.6800 51.8500 52.2000
1-mo futures on NSE 51.9850 52.0475 52.0650 51.9000 52.2850
1-mo futures on MCX 52.0075 52.2450 52.2450 51.7525 52.3050
1-mo futures on USE 52.0000 51.9675 52.0600 51.9000 52.2850
..............................................................................
MUMBAI--1025 IST--Dollar/rupee rates in the futures market fell today
mirroring the sharp fall in the spot dollar.
The spot dollar fell 0.85% as banks rushed to cut their long positions in
the greenback after central banks of six leading economies unveiled plans to
boost dollar liquidity by cutting dollar borrowing cost.
However, a further fall in dollar/rupee rates was restricted as traders
refrained from taking large positions on expectation of dollar purchases by
oil importers in the spot market.
Volumes remained firm as initial volatility in the spot market provided
good opportunity for traders to arbitrage.
In options, the December call and put options were most active at strike
price of 52.0000 per dollar on the NSE.
.
Volume, Open interest
--------------------------------
Nov futures at 1025 IST NSE MCX USE
Volume 498,303 491,775 37,587
Open Interest 1,714,271 -- 43,643
.
NSE: National Stock Exchange
USE: United Stock Exchange
(Aaheli Bagchi)
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India Rupee: Sharply up as central banks cut dollar borrowing cost
..............................................................................
At 0935 IST Open High Low Previous
Spot rupee per $1 51.7750 51.8500 51.7300 51.8500 52.2000
..............................................................................
MUMBAI--0935 IST--The rupee surged 47 paise against the dollar as banks
aggressively sold dollars on improved risk appetite after central banks of
leading economies announced measures to provide cheaper dollar funding to
European banks to solve the Eurozone debt crisis, dealers said.
"The rupee should strengthen today as many measures have been taken to help
the Eurozone countries," said a dealer at a state-owned bank. "The central banks
of six countries have announced to provide (dollar) liquidity to Eurozone banks,
so the euro may go further high, which should help the rupee."
On Wednesday, the US Federal Reserve, the European Central Bank, and the
central banks of Japan, Britain, Canada and Switzerland agreed to cut pricing of
the existing dollar liquidity swaps by 50 basis points.
The new pricing will be effective from Dec 5 and can be extended until
February 2013.
High-yielding currencies across the globe rose in reaction to this news.
The euro was at $1.3450, slightly up from $1.3444 at close in New York on
Wednesday. In Asia, the South Korean won rose 1.3%, and Malaysian ringgit 1.0%
against the dollar.
Back home, dealers said the rupee is likely to find strong support at
51.9000 per dollar. Dollar sales by exporters and rise in local share indices
may also lift the rupee higher.
The BSE's 30-stock Sensex and National Stock Exchange's 50-stock Nifty
had risen 3% each in early trade.
The rupee is seen moving in the 51.6000-52.0000 per dollar range today.
(Gayatri Thakore)
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India Rupee: Technical levels for dollar/rupee - Dec 1
MUMBAI - Following are the key support and resistance levels for
dollar/rupee for today, as predicted by leading banks:
.
S1 S2 R1 R2
.
Private bank 51.70 51.50 51.90 --
Syndicate Bank 51.60 -- 52.00 --
Large PSU bank 51.70 -- 52.00 --
South-based PSU bank 51.55 -- 51.90 --
IndusInd Bank 51.73 51.62 51.95 52.02
.
Notes: S1 = 1st Support, S2 = 2nd support, R1 = 1st resistance, R2 = 2nd
resistance
Names of some banks have been withheld as desired.
.
(Gayatri Thakore and Aaheli Bagchi)
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India Rupee - Asia FX: Up as central banks cut dollar borrow cost
MUMBAI - All Asian currencies rose against the dollar today on improved
risk appetite after the central banks of six advanced economies announced
plans to enhance liquidity by cutting the borrowing cost of dollars.
In a press release, the European Central Bank said the ECB along with the
central banks of Canada, Japan, England, Switzerland, and US have agreed to
lower pricing of existing dollar liquidity swaps by 50 basis points.
The new pricing will be effective from Dec 5, and can be extended to Feb 1,
2013, the release said.
As a contingency measure, the central banks have also agreed to establish
temporary bilateral liquidity swap arrangements so liquidity can be provided
in each jurisdiction. Through these temporary swap lines the US dollar, yen,
Canadian dollar, euro, and Swiss franc will be easily available between the
central banks.
However, currencies like the South Korean won erased some of gains after
a disappointing Purchase Manager's Index reading in China. According to HSBC
data, the final November PMI fell to a 32-month low of 47.7, as production and
new orders fell indicating a slowdown in China's industrial sector.
.