GOLD INTO FOCUS ONCE AGAIN

Gold and silver were on a downward move till Thursday. The decline was mainly due to the two important data reports that were published on Thursday. The US CPI edged up by 0.1% and the Philly Fed Survey showed that that manufacturing deteriorated due to Hurricane Sandy.

The US Jobless Claims reports also added to the decline in gold and silver prices.

On Thursday, the price of gold declined by 0.94% and settled at $1,713.8; Silver also decreased by 0.64% to $32.67. During November, gold slipped by 0.31%; silver rose by 1.1%.

However, Friday was altogether a different picture. Gold  edged up reaching 1713 $.

The EU economic news and the ongoing US Fiscal Cliff worries put traded and investors in a risk averse frame of mind,

If the so-called fiscal cliff package of measures comes in as planned on January 1, the US economy would likely tip back into recession, which would have a devastating effect globally.

The fiscal cliff is essentially, a combination of the expiration of Bush era tax cuts, 8-10% spending cuts in defense and non-defense programs, and the raising of the debt ceiling.  If all components of the Cliff were to come to pass, we would see a crippled US economy that is thrust deeply into recession, and a weakened national defense. 

It will result in an increase in inflation and will thus push up gold prices even further. Some expect gold to cross the $2000 mark too.

This fiscal cliff will have the greatest effect globally and it has already taken over the Euro zone. It poses to be one of the greatest threats to global recovery,

Financial markets were also on edge after Gaza militants fired rockets at both Jerusalem and Tel Aviv, aiming for Israel’s political and commercial hearts and prompting the country to call up thousands more reservists in readiness for potential ground operations.

Moreover on the geopolitical front, the rising unrest in Israel resulted in pushing up gold and crude oil.

Israel’s pledge to take out more Hamas leaders has led to increased tensioned in the Middle East. This situation would turn investors towards gold thus pushing up gold even further.

Gold being eyed by investors will result in increased demand for gold.

Adding to this, the two world giants- India and China have also shown great demand for gold. Demand in India, the world’s biggest gold buyer, rose to 223.1 tonnes in the third quarter, a sharp jump from the 181.3 tonnes in the second quarter and the 204.8 tonnes from the same period last year 

Indian demand was probably due a rebound after several weak quarters, and a strengthening rupee probably provided a catalyst for the third-quarter increase. 

Chinese demand has also feel to a disappointing 176.8 tonnes in the 3rd quarter.

Slower economic growth was blamed by the council, which said stronger conditions on the 4th quarter may increase demand in china.

That is quite likely, but Chinese demand will probably only grow significantly when a rising price trend is re-established or domestic inflation rises again. 

Given that China and India together account for about half of total gold demand, it seems logical to assume they are vital to the outlook  for prices. 

Meeting with Deputy Governor of RBI: Dr. Subir Vithal Gokarn

Meeting with Deputy Governor of the Reserve Bank of India: Dr. Subir Vithal Gokarn on 9th November, 2012. As Deputy  Governor,  Dr. Gokarn looks after the Monetary Policy Department, Department of Economic Analysis and Policy, Department of Statistics and Information Management, Department of Communication and Deposit Insurance and Credit Guarantee Corporation. Dr. Gokarn also represents the Reserve Bank at the G-20 Deputies’ forum.

This meeting touchbased on various prospects so as to enhance the bullion business growth of India.

Gold hangs around the Fiscal Cliff!

Gold slid 2% in heavy last fortnight, breaking below $US1690 an ounce for the first time in about two months as an encouraging US nonfarm payrolls report lowered expectations for economic stimulus provided by global central banks. Gold slid to an eight-week low as the dollar jumped after data showing higher-than-expected US job creation

However, last week opened with an upsurge movement for gold. Gold was up by almost 400 rupees and was seen trading at INR 31,100 on Monday. Predicting an Obama win on November 6th resulted in onside upward movement for gold and silver.

On Tuesday, the most powerful man of the World was re elected: US President Barrack Obama. As we see him march towards his second term, we expect the commodities market to march upwards too.

On Wednesday, gold prices spent some time weaving in and out of positive and negative territory, rising to as high as $1,733 and falling to as low as $1,703. They had climbed nearly $32 on Tuesday, before the election results.

In a five-day long rally, gold prices regained Rs 32,000 per 10 gm level after six-week in the national capital on Friday on sustained buying by stockists to meet the rising festive demand amid a firming global trend.

The seesaw effect in gold prices is very much related to gold’s positive reaction to U.S. debt worries, with weakness from Europe sitting on the other side of the seesaw holding a very, very heavy key to the U.S. dollar.

Obama has always been the markets favorite. His win will bring in positive sentiments for the market. Romney was considered as a threat to the market as he did not believe in the policy of printing currency to accelerate the economy.

This would have inevitable resulted in the dollar strengthening short term, which would have a reverse correlation the price of gold, as the dollar strengthens the price of gold often declines.

Nonetheless, gold will be touching the roof in the days to come. Re election of Obama means that FED chairman Bernanke continues his term and hence the monetary measures remain more or less unchanged

Gold had rallied to an 11-month high above $1,795 an ounce on October 5 after the US Federal Reserve announced a third round of aggressive economic stimulus in September. Gold prices then drifted back to nine-week lows around $1,672 due to uncertainty over the policy impact of the US election.

Analysts and investors were already shifting focus to the fiscal challenges facing Mr. Obama in his second term. Obama's top priority now is to rectify the fiscal cliff.
Gold and Silver jumped near to higher levels of the month following supportive festival demand ahead of Diwali. 

The festive season has seen heavy buying by stockists and retailers. The recent dip in prices has pushed the demand for gold even further. 

Considering a further hike in prices, people have started buying gold and hence this festive season the demand has been much better than expected

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The OBAMACONOMY!

The Most powerful man of the World is here: US President Barrack Obama. As we see him march towards his second term we expect the commodities market to march upwards too. 

Obama has always been the markets favorite. His win will bring in positive sentiments for the market.

Romney was considered as a threat to gold prices as he did not believe in the policy of printing currency to accelerate the economy.

This would have inevitably resulted in the dollar strengthening short term, which would have a reverse correlation with the price of gold, as the dollar strengthens the price of gold often declines.

Nonetheless, gold will be touching the roof in the days to come. Re election of Obama means that FED chairman Bernanke continues his term and hence the monetary measures remain more or less unchanged.

In the short and medium term gold is expected to move in the range of INR 30,000 - 30,500 per 10gm on the lower side and INR 32,000 - 33,000 on the higher side.
In the long term gold is expected to move in the range of INR 29,000 - 29,500 on the lower side and INR 33,000 - 35,000 on the higher side.