2013's LAST BLOG!!!!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

As I begin to write the last blog of 2013, I would like to thank all my readers, followers and friends who have been through this journey. Though it has been just two years since I started my blog, your extended support and constant following has made sure that I do not take a break. 

It is for the first time in 30 years that gold is heading for a negative return. In fact 2013 has been one of the worst years for gold. With the end of 2013, we also see an end to a 12 year rally. This decline was driven by low interest rates and  certain steps taken by global central banks to foster the economy. 

Gold was once again seen trading at 1185 (the low it reached in June 2013). This drop came in when the Fed announced its tapering plan. This was the same reason that had plunged gold prices in June when the Fed had for the very first time stated that it would soon taper its QE. Though that time there was a lot of uncertainty prevailing in the market as to how and when the scaling back would be executed, until Fed finally implemented the tapering plan in December.

Gold traded flat around $1,200 an ounce on Tuesday as activity slowed before Christmas, while signs of a steady U.S. economic recovery could deter investor interest as the metal heads for its biggest annual loss in 32 years.

U.S. economic data on Monday showed consumer spending rose in November at the fastest pace since June, while consumer sentiment hit a five-month high heading into the year-end.

The euro zone crisis has more or less stabilised, global economy seemed to be improving and the US too plans to taper its QE. Though all this makes gold a bit unfavourable in the year to come there are loyal investors who have still not lost faith in gold. 

A risk of deflation could push gold prices higher in 2014. Although perceived by many as a negative for gold such worries could exacerbate the debt problems of weaker euro zone economies and force the European Central Bank to loosen monetary policy further, boosting gold prices.

Another supporting factor for gold could be the Fed's continued asset purchase program. Although the central bank has announced a small taper, it will still be pumping large amounts of stimulus into the economy, which should be supportive for gold. 

Most importantly China’s support will always be crucial to Gold. Frankly, Gold is carrying along with it a big burden of uncertainty in 2014.

As the economy improves, Silver and Platinum demand will surely rise faster as compared to Gold. With the current policies by the central banks across the world, these precious metals are to be watched out for the year 2014. 

Apparently, the poor performance in 2013 has left the precious metals looking less attractive compared to other assets, including equities. But, Gold should and always be considered as a safe haven asset. Being in this industry for so many years, I would always recommend some part of portfolio allocation towards Gold and other precious metals.

The trade range for gold is expcted to be around Rs. 29,000- Rs. 30,000 per 10 gram in the domestic market.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.
- Previous blog -
"Gold- Past Performance, Present Prices & Potential Predictions"
http://www.riddisiddhibullionsltd.blogspot.in/2013/12/gold-past-performance-present-prices.html

GOLD-PAST PERFORMANCE, PRESENT PRICES & POTENTIAL PREDICTIONS

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Gold acted like a new born baby this year. It showed new movements and new trends which were quite difficult to understand, analyze and justify. But this baby though adopted by many was also abandoned by a handful chunk of people.

Gold that has always stood proud in its category, for the first time in 13 years, it gave negative returns. Moreover, it’s headed for an annual drop of 25 percent. Gold has been in a significant bear market since reaching a record high at $1,910 an ounce in 2011. On April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal.  In its collapse gold bullion lost $705 an ounce or 37% of its value to the recent low at $1,195. Some say the no. '13’ as considered unlucky by many; has proved to be inauspicious for gold too.  

The international markets witnessed the following highlights in the year 2013 that were responsible for volatile movement of bullion prices.

• Cyprus Bailout
• Syrian Conflict 
• Statement by FED that it may taper its bond buying program by late 2013
• US government shutdown
• US debt ceiling being raised

Throughout the 1st quarter gold was seen in a range of 1554$ an ounce to 1695$ an ounce. Though gold declined to $1554 in February it managed to cross the 1600 mark in March - Thanks to Cyprus. The Cyprus crisis had offered gold a helping hand, after investors had been pulling out of the precious metal 

On the other hand, the Indian government hiked duty on gold to 6 per cent from 4 per cent to rectify the current account deficit on January 21, 2013. Gold also saw a booster coming in from US lawmakers that were successful in averting the fiscal cliff at the 12th hour, this too pushed up gold prices.

On Friday, 12th April, Gold witnessed a record drop and for the first time in history it crashed 80 dollars in a single trading day this reaching $1484. Panic selling had triggered this downfall.

Some 158,200 taels of gold bullion (roughly six tonnes) were sold in six auctions held by the State Bank of Vietnam. There was news that as soon as the international markets opened, Merryl Lynch sold 4 million ounces of gold.

Heavy ETF selling was also seen in the markets.Gold dropped further trading at 1385$ at one point of time.Till mid June gold managed to be above the $1400 mark but news about the recovery of the US economy dropped gold prices and it was seen trading at around 1385$.

During mid July the FOMC minutes reviewed that many Fed governors would like to see more signs of improvement in jobs before agreeing to taper.

What came as a turning point for gold was the civil war at Syria. Gold prices rallied above $1430. Meanwhile, in South Africa the National Union of Mineworkers (NUM) has given 48 hours' notice of a strike at South Africa's gold producers. This too affected gold prices.

While in the domestic market, the Indian rupee slipped for the third consecutive day in a row on Wednesday to close at a fresh record low of 68.80 per dollar, as uncertainty over a possible US-led military strike against Syria knocked down Asian equity markets and currencies. This was the biggest ever single day fall for the currency since 1995. But then in September, stepped in Mr. Raghuram Rajan- he was then considered the savior of the depreciating rupee.

The FOMC meet began on 18th September and was over by the 19th. All expectations, rumors, speculations and predictions were finally put to a halt. 

Just when India marked the onset of its festive season, the US was heading for a partial shutdown. Though the partial shutdown did not create much impact on gold prices globally, this shutdown along with the debt ceiling will surely have a major impact on bullion prices worldwide. As shutdown entered its second week, there prevailed a lot of uncertainty in the markets.

Finally, in the first week of November, just after Halloween, the Fed stated that it would not taper its bind buying right away as it needs concrete evidence over US economy's growth. Though this should have pushed up the gold prices, completely opposite happened. Gold was down 6.1% in November, the worst performance since June when prices touched a 34-month low of 1180.5$

U.S. Senate leaders finally announce a deal to end a political crisis that had partially shut down the federal government and brought the world's biggest economy close to a debt default that could have threatened global financial calamity. The deal, however, offered only a temporary fix and does not resolve the fundamental issues of spending and deficits.

But what came in as a silver lining in the dark clouds for gold was the demand for gold from China. It finally overtook India as the largest consumer for gold as it imported 131 tonnes of gold in October through Hong Kong.

It is rather the month of December that was considered a deciding factor for gold's fate as the most awaited and much discussed FED meeting concluded on 18th. It is in this meeting that the Fed was supposed to give a final decision as to when the tapering would begin for the final time in 2013. Though many investors believed that tapering would take place in early 2014, The Fed had a surprise package for all. It probably accommodated a bit everyone for Christmas, by announcing a somehow symbolic $10 billion taper to start in January, target to end QE around the end of 2014, but on the other hand promising to keep low rates for a well past time until the unemployment rate would drop below 6.5%. Gold quickly fell to 1215.80, while the S&P 500 rallied close to the all-time high. Gold in the Indian market dropped Rs.1000 per 10 gram late in the evening. The total Gold ETF holdings are currently 57.41 Moz compared to 86.62 Moz at the start of 2013. Total gold ETF holdings are now back at the lowest level since Novemeber, 2013. 

The tapering news got along with it a firm belief that the Global economic scenario is improving and we will near the end of recession soon.

Conclusion

Gold has lost its appeal as a safe haven asset. But yes, the market is still divided into two segments. Some who have abandoned gold like the net outflows of ETFs while others who have adopted it with the belief that gold prices will rise and the metal will always serve with a safe haven appeal like the central banks of the world. 

I feel, Gold should not be always thought as a short term profit making option, rather it should be thought in terms of grams that would safeguard your future. I always remember my great grandfather saying "don't buy gold to make profits...buy gold because its eternal....it's pure wealth and its enduring and come what may-  GOLD WILL ALWAYS STAND BY YOUR SIDE:- This feeling has sunk in so well not only with me but I guess with entire India.

And that's the reason that gold has always been the favorite metal for Indians.

PREDICTIONS 2014

By now everyone would believe hat 2013 has been one of the worst years for gold.

If we take a look at gold's performance over the past decades we see that gold has given highest returns compared to any other asset in its class. I would advise investors, to have patience and just follow one mantra "Buy on Dips"

It's quite difficult to predict gold prices. A trade range can though be noted down. There are a lot of factors that are involved in the making and breaking of gold prices. These factors influence the price of gold and gold is directly or indirectly dependent on them. What we assume that in case there is another eruption of a financial crisis or any new geo political crisis, gold prices may break new highs and continue to rise strongly as a result of the supposed function of gold as a safe haven.

Following will be the key factors that will be responsible for the movement of gold prices in 2014.

• US Debt ceiling
• QE tapering
• Demand for gold from China
• Union Budget 2014 (for the domestic market)
• Finance ministry directives (for the domestic market)
• Mining companies 
• Interest rates
• US economic data

Gold is still at the mercy of the dollar. What this means is as volatile as it is with the Fed’s back-and-forth on the possible taper, gold will continue to play off what the dollar does into 2014.

The average base price for gold in 2014 is expected to be 1375$ an ounce. In the domestic market gold is expected to move in a range of Rs.25,000 - Rs.33,000 per 10 gram and the average base price for the same is expected to be around Rs.28,000. 

The average base price for Silver is expected to be around $25.00. The average base price for silver is the domestic market would be somewhere around Rs.45,000 per kg and the trade range for silver is expected to be Rs.37,000- Rs.55,000 per kg.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"As the year ends does the bull market for gold end too?"

http://www.riddisiddhibullionsltd.blogspot.in/2013/12/as-year-ends-does-bull-market-for-gold.html

AS THE YEAR ENDS DOES THE BULL MARKET FOR GOLD END TOO?

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

For so many years, gold has given gains and has also been the highest return generating asset in its class. But this trend seems to come to an end now where majority of the market believes that gold is now set to enter the bear market after 13 long years.

Varied reasons are responsible for this sentiments- 

A loose monetary policy, continued fear of a further and worse economic crisis due to weak global economic growth prospers and continuous prediction of impending inflation and devaluation of fiat currencies, these are the major reasons apart from the minute ones responsible for creating  belief in the market that the upswing for gold has come to an end.

Bullion surged 70 percent from the end of 2008 through June 2011 as the Fed bought debt and kept interest rates near zero percent to boost economic growth amid the most-severe global recession since World War II.

Interest rates have been kept low by the fed's massive bond buying programme and this has always supported bullion.

But now there is uncertainty over the market that the Fed may soon start tapering its bond buying programme either in march or may be soon in December. This picture will get clear in the coming Fed Meeting to be held on 17-18 December.

Spot gold hit a three week high on Tuesday trading at $1260.24 during the day, It rose as much as 1.6 per cent. This rise was seen gaining momentum, after the market's recent short-covering rally while investors and analysts speculated over the timing of U.S. monetary stimulus reduction

Just after a gain of two days, gold slipped on Wednesday as short-sellers rushed to cover bets on sharp price falls, as a tentative U.S. budget deal returned the focus to prospects for the Federal Reserve to curb monetary stimulus.

As soon as the US retail sales data was out on Thursday, gold fell 2 per cent. The data boosted the dollar and fueled expectations that the Fed could reduce its bond buying programme in somewhere in December itself.

The US data released in Thursday, showed that retail sales had climbed 0.7 per cent. Many traders and analysts in the market are living with the belief that the Fed may start scaling back its bond purchases at the forthcoming meeting to be held on Dec 17-18. This decision would be based on positive economic data coming in from the US on employment, housing, construction, manufacturing and services sector. Another factor that prompts  the Fed to taper QE is the recent budget agreements that shows hope of a shutdown being overcome.

Though gold rose one per cent on Friday after a two day plunge. the marketers still believe that gold is subject to further downfall in the coming week as we witness one of the most important meetings of the Fed. This shall hopefully be a fate deciding factor for the bullion market.

Apart from the retail sales data, some important news came in from the SPDR Gold Trust- the biggest golf ETF. It states that the holding in the SPDR gold trust had fallen the most in nearly two months in Thursday. The limited inflows has restricted an upward movement in gold prices.

But in the Asian markets gold was seen selling at high premiums. Premiums on the Shanghai Gold Exchange for 99.99 percent purity gold picked up to $10 an ounce from $7 in the previous session.

In a sign of the toll that labour unrest in South Africa is taking on mining companies, North am Platinum said on Friday it expected to lose 500 million rand ($48 million) this year due to a strike by more than 7,000 employees and that talks to end the walk-out would resume only next year.

Moreover, there were reports out that North Korea is selling huge quantity of gold to China because of a possible economic crisis in the country. If at all this news its true and it will be a significant driving point for precious metals.

The trade range for gold is $1210- $1270 an ounce in the international markets and Rs.29000 to Rs.31,000  per 10 gram the domestic markets



The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.
- Previous blog -
"Frenzy Friday"
http://www.riddisiddhibullionsltd.blogspot.in/2013/12/frenzy-friday.html

FRENZY FRIDAY!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

All this week Bullion danced to the tunes of Labour report from US.

Gold is down about 28% this year, heading for the first annual loss in 13 years, as solid U.S. economic data has underlined expectations that the Fed will begin curbing stimulus.

The bond-buying stimulus has strongly supported gold prices as it has served to keep interest rates ultra low, an ideal environment for non-yield bearing assets. It so happened that a 2% increase in Gold prices was the biggest one day gain in over a month’s time. This can be attributed to short covering and new fund buying that deal that the FED plan to exit asset purchase scheme will still take time.

Gold prices fell on Thursday but remained range bound after solid U.S. economic growth and jobless claims data; firmed up talk that Federal Reserve will begin scaling back stimulus programs within the coming months. Even though European Central Bank and Bank of England have continued to hold off from any new policy action, markets are fixated on U.S. economic snapshots and any data that gives an idea when the Federal Reserve might start curbing its bond-buying programme.

Gold prices rode a rollercoaster Friday, regaining some ground after Thursday's sharp losses right ahead the U.S. Bureau of Labor Statistics published strong job numbers, to fall sharply after the announcement.

The game was all being played by forecasts. 

On Friday, as the US Labour report was released, gold was seen in a different mood.

Gold climbed in volatile trade on Friday, bouncing from session lows reached after U.S. jobs data beat forecasts, as traders who had bet on even larger losses rushed to cover their positions.

The actual figure was higher than forecast at 203,000, compared to consensus forecasts of 185,000. The rate of US unemployment also fell to a five-year low of 7%, but economists suggested the figures were heavily skewed by the US government shutdown in October. Thousands of government employees who were temporarily laid off returned to work last month. Unemployment rate in the US fell to 7.0% from 7.3% in October. Economists predicted a smaller decline to 7.2%.

Meanwhile, the Commerce Department said personal income edged down by 0.1% in October after increasing by 0.5% in September. Economist did not expect the drop, as they had expected income to increase by 0.3%. The market fell immediately after the figures showed that U.S. employers had hired more workers than expected in November and the unemployment rate had dropped to a five-year low of 7 percent, which strengthened the case for the Federal Reserve to start reducing bond purchases as soon as this month.

Gold prices have now erased some of their losses for the week but were still down 1.2 percent after having dropped sharply on Thursday as data showed the U.S. economy grew faster than estimated in the third quarter.

The majority looks through the noise towards the end goal, i.e. tapering and a slow normalisation of US monetary policy which is coming closer by the day. As a result, at this stage it appears as if rallies will simply be sold into, whether the data beats expectations or not. Gold ETFs seems to liquidate on every opportunity, with the latest data showing ETF holdings are down another 113Koz. Silver should follow gold and as a result remains a sell into rallies.

The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labour and housing markets.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"China Support for gold"

http://www.riddisiddhibullionsltd.blogspot.in/2013/11/china-support-for-gold.html

CHINA SUPPORT FOR GOLD!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

The world witnessed one of the greatest historic deals as an agreement was reached between the United States and Iran over Iran's nuclear ambitions. This breaking news on the geo political front created hype hoopla in the market.

However, the sentiments subdued on Thursday as the US markets were for the annual Thanksgiving. Hence gold managed to snap a two day losing streak with spot prices closing at $1243.60. Overall Gold had nothing to gobble about this week, with the precious metal mired in the $1,240 range amid low volumes due to the US Thanksgiving holiday.

Gold is down 6.1 percent in November, the worst performance since June, when prices touched a 34-month low of $1,180.50, and is little changed this week. The deal between US and Iran showed signs of decreased tensions in the Middle East which in turn pushed down gold and oil prices. Peace between the two countries means that Iranians will push up crude supplies and this created a drop in prices.

U.S. data this week showed jobless claims unexpectedly fell and leading economic indicators rose for a fourth month. Fed minutes released on Nov. 20 signalled that policy makers expected an improving economy to warrant trimming debt purchases in coming months. Also the jobs reports showed a 10,000 drop in weekly jobless claims, and this pushed gold futures under the 1240$ mark to 1239.60$.

Moreover, holdings in the world’s largest gold exchange-traded fund, the SPDR Gold Trust, fell by 5.7 tonnes on Wednesday, to their lowest level since 2009, Reuters reported

However, the losses were limited by a weaker dollar.

But what came as a silver lining in the dark clouds was the demand for gold from China. This is one country that hasn't lost its appetite for gold and has now set to become the largest consumer of gold in the world taking over India that has been sitting at this position since years. The Asian nation imported a whopping 131 tonnes of gold in October through Hong Kong — the sixth month in a row that China has brought in greater than 100 tonnes of the yellow metal. On Thursday, traded volumes of 99.99 percent purity gold on the Shanghai Gold Exchange hit their highest in seven weeks further driving the momentum on the physical market front.  As the Chinese gold demand will continue to pick up before the lunar New Year at the end of January 2014, China will likely overtake India as the largest consumer in the world in 2013. 

When looking at India; the average import of gold by India was around 60-80 mt per month (up to September). However, most of the gold imports took place during the first six months of this year, after which imports declined sharply. China, in comparison, has imported on average 80mt per month from only Hong Kong (total China gold imports could be higher). 

But the import numbers from India and China should be viewed in light of ETF liquidations. Over the course of the year, ETF liquidation has flooded the market with gold, in particular in April, May and June. The liquidation in April in particular almost matched combined imports into China and India for that month. Furthermore, since July, Indian imports have slowed substantially.

Looking at all this physical demand for gold is not the key driver for gold prices. There are other factors responsible for its movement. The prices of the metal move more on the basis of developments in the paper market as well tracks the comments and policy directives from major global central banks.

This is why Gold despite being having decent physical market demand is headed for its biggest monthly drop since June while is on track to its first annual loss in 13 years. 

What one needs to monitor is the final November PMI from China, E17, U.K. as well as the U.S. on 2 December, the U.S. initial jobless claims and the U.K. and the ECB monetary policy decisions on 5 December as well as the November U.S. non-farm payrolls, the unemployment rate, and the October core PCE price index

The extended rise in US and other western equity indices is leading traders and investors away from gold which is treated as a hedge against economic and financial uncertainty

The trade range for gold is $1210- $1277 an ounce in the international market and Rs.29500- Rs. 31,500 per 10 gram in the domestic market.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"FED UP?????"

http://www.riddisiddhibullionsltd.blogspot.in/2013/11/fed-up.html

"FED" UP?????

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Post 2008 gold prices have sky rocketed and this made gold an investors favourite. Following the 2008 crisis, investors turned to gold as a hedge against inflation that was expected to rise as a result from central banks effort to stabilise the economy through bond purchases. But 2013 has been considered one of the worst years for bullions as it turned tabled for all precious metals.

Now with the US economy in the recovery mode and with inflation being more or less tame, many investors have disowned and abandoned gold and shifted to equities.

By the end of 2013 we see that god prices have tumbled 26 per cent over the uncertainty that the Federal Reserve will start to cut its monthly bind buying program which has even strengthened the dollar. Global demand for the precious metal fell 21 percent in the third quarter as investors continued to dump holdings through exchange-traded funds and central banks slowed purchases, the World Gold Council said.

After Janet Yellen's statement released last week, many believe that the uncertainty over Fed bond buying program has been lifted. Janet Yellen — the likely next Fed chair — said last week that she would press forward with the bank’s ultra-easy monetary policy until officials were confident a durable economic recovery was in place that could sustain job creation. Gold witnessed selling pressure immediately after the minutes of the latest meeting of the Fed raised supposition that the central bank could taper its bond buying program, as soon as December

Gold declined this week and it enters the sharpest weekly drop in more than two months as gold prices plunged on Friday. Spot gold was up 0.1% to $1,242.91 an during the trading hours, after hitting a fresh four-and-a-half-month low of $1,236.29 in the previous session

Furthermore, gold prices remained under pressure after data that showed that US consumer prices last month rose at the slowest pace in four years. This clearly indicates that inflation has been contained and when inflation is tame who would buy gold.

Summing it up, the week was not so good for gold because:

1. The Fed’s massive bond-buying programme has burnished gold’s appeal as a hedge against inflation

2. Solid US data over the past few weeks was hurting bullion prices as it could bolster the case for curbing stimulus soon.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 3.6 tonnes to their lowest since early 2009 at 856.71 tonnes on Thursday. Outflows have totalled 450 tonnes this year

Earlier this month the European Central Bank announced a surprise interest rate cut which put more pressure on gold. It also drove up the value of the dollar versus the euro and made investors loos its faith in gold as a store of value

Moreover, what cane as a surprise package was the announcement coming in From China stating that they have taken a step further in liberalizing the gold market. Swap trading on the Shanghai based China Foreign Exchange Trade system has been started by interbank gold.

Bullion has slumped 26 percent this year to $1,245.45 an ounce in London, reaching $1,236.88 yesterday, the lowest since July 9. The declines are another blow in what's been an awful year for gold bulls

Virtually it was the same scenario for other precious metals as we saw platinum struggling and silver trying to keep up.

Silver, like gold, is still a sell into rallies.

Gold support is at $1,238 and $1,227. Resistance is at $1,253 and $1,272. Silver support is at $19.50 and $18.85, resistance is at $20.37 and $20.65.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.
- Previous blog -
"QE Support- US reamins fragile"
http://www.riddisiddhibullionsltd.blogspot.in/2013/11/qe-support-us-remains-fragile.html

QE SUPPORT- US REMAINS FRAGILE

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

2013 ends on a red note for gold as it heads for its first annual drop in 13 years.

Gold has seen a lot of movements throughout the year. The main reason for this drop was the uncertainty over the QE tapering. QE was responsible to set record highs for gold and the same is the reason for its downfall in 2013. Even today, QE tapering is under one’s scanner- the question is not IF but WHEN.

Gold has been disowned by many, as investors have lost faith in this yellow metal and it is no longer considered a safe haven asset. Though investors have not been buying much gold, lower prices have boosted the demanded for jewellery coins and bars. These have mainly been purchased by the small time buyers.

Increased central banks liquidity has always benefited gold over the past years. However gold has fallen nearly 25 per cent since the Fed stated that it could begin slowing its $85 billion in monthly bind purchases. This week did see a lot of news impacting Gold prices - Statement by Mrs. Yellen, weaker US dollar, SPDR Gold Trusts holding and the gold demand from China and India.

Statement released by Janet Yellen, who is nominated to take charge of the central bank next year, moved the table for gold. Janet Yellen’s confirmation that she will continue the stimulus program of the fed so long as the economic recovery in the U.S. remains fragile was the big news for the bullion market

A weaker dollar index against a basket of major currencies also boosted gold buying,

Also, prominent hedge fund Paulson & co maintained its stake in SPDR Gold Trust. The SPDR gold ETF saw no change in its holdings and no change in the in the Gold Trust, leaving their holdings at 865.713 tonnes and 172.21 tonnes. These also supported the prices.

Demand from China, India and the Middle East surged a combined 27 percent in the 12 months through September, the World Gold Council estimates. Central banks bought 93t of gold in Q3 2013, reserves up almost 300t year-to-date

With India's 10% gold import duty on top of other capital controls, the price one has to pay for gold in India has reached a record spread of 21.6%. A premium of nearly $120 has attracted lot of Scrap gold in the market.

Gold gained nearly one percent this week till Friday, but prices were pulled back on Friday,

It recovered to be flat on the day after the dollar fell 0.3 percent against a basket of currencies, which followed data showing U.S. industrial output had slipped last month for the first time since July

Headlines about potential production threats continued to hit the wires, with Amplat reporting a two day sit-in strike by 2300 workers and Zimbabwe’s President Mugabe saying it may halt exports of raw Platinum to South Africa in order to force the mining companies to build a refinery in the country. Zimbabwe is the second largest Platinum producing country after South Africa. Further support came from a leak of semi-annual Johnson Matthey Platinum Group Metals Reports. According to an apparent leak by Fastmarkets, Platinum slipped deeper into deficit in the first half of 2013, due to strong global demand growth. It forecast a deficit of 605’000 ounces for 2013, mainly driven by an uptake in industrial usage. Wage negotiations continue in the platinum sector in South Africa. A price range for the next 6 months is of $1360 – 1580 per ozs.

China's domestic mining industry does produce a lot of gold. For 2013, it is estimated to be 440 tonnes.  However, China and its miners have a serious problem. Remaining mineable reserves are put at 1,900 tonnes. So unless China can turn up some major discoveries - and they have been somewhat unsuccessfully looking - then they have less than five years of production remaining. China's government has urged national gold producers to boost development of overseas resources in neighboring countries and in Africa and Latin America, according to its 12th Five-Year Plan which ends in 2015.

Next week, we need to note Bernanke's speech, Draghi's speech, the October FOMC minutes release as well as the US October CPI, retail sales and existing home sales on 20 November as well as Germany November IFO business climate index on 22 November.

Whether gold breaks out of that range depends on the direction of the U.S. dollar and further sentiment about the fate of the Federal Reserve’s quantitative easing program vs. what one has to pay in countries where there are no such controls or import duties.

Gold support is at $1,274 and $1,269. Resistance is at $1,292 and $1,310. Silver support is at $20.60 and $20.38, resistance is at $21.02 and $21.40.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"All Glitters or Just Jitters for Gold"

http://www.riddisiddhibullionsltd.blogspot.in/2013/11/all-glitters-or-just-jitters-for-gold.html

ALL GLITTERS OR JUST JITTERS FOR GOLD?

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Gold made a snake; like movement last week , ending on a downward note as the week concluded. 

The dollar pushed broadly higher against the other major currencies on Friday, after the release of strong U.S. jobs data fuelled further speculation that the Federal Reserve could soon begin tapering its stimulus program. 

Gold has lost about a fifth of its value this year after these news. The bond purchases and low interest rates has burnished gold's inflation-hedge appeal.

However, lately, as the Fed delayed its decision to taper its monetary easing , the market was compelled to believe that the FED may not start withdrawing its support for the economy soon and this gave the yellow metals a rebound in the recent weeks.

The FED also stated that they needed enough evidence about the progress of the US economy to taper its program. Hence this week as the US data reports were released, the market scenario changed.

Gold showed wave like movements this week ending on a downwards pattern as the week concluded.

The prices of gold and silver changed direction again and bounced back on Thursday along with other commodities prices including crude oil and natural gas.

Gold prices fell under $1,300 after a much stronger-than-expected U.S. October nonfarm payrolls report released on Friday.

Having touched 1-week highs above $1419 per ounce on Thursday, gold fell back through $1400 on Friday as European stock markets erased earlier losses.

Among other precious metals, silver was down one percent at 21.53 an ounce and platinum was trading at $1439.49 an ounce, down by 0.6 per cent.

Rallying US equities and a soaring US dollar sent gold to a three week low as bullion underperformed silver and platinum group metals.

GOLD and silver prices whipped sharply Friday lunchtime in London, as new US jobs data matched analyst forecasts with a 175,000 rise in Non-Farm Payrolls for May and a slight rise in the jobless rate to 7.6%.

The Labor Department said 204,000 jobs were created in October, nearly double the expectations going into the report. September and August employment numbers were revised up by a combined 60,000, while the unemployment rate rose to 7.3% from 7.2%. That was likely an effect of the shutdown.

Though researchers believe that the Federal Shutdown have impacted the jobs figures,  the Labour Department said that survey responses have been normal.

In fact, this stronger than expected US jobs report has led to a downfall in gold prices and is expected to continue to do so in the near future.

Gold market watchers said prices fell on thoughts that the stronger jobs report, along with Thursday’s higher-than-expected gross domestic product data, mean the Federal Reserve may consider tapering its bond-buying program known as quantitative easing, earlier than expected.

This news may have contributed to the strengthening of the USD.  The American trade balance deficit declined – exports of goods rose by a larger rate than imports had during September. This news was also a positive signs for the progress of the U.S economy. Nonetheless, there are still concerns in regards In Europe MPC and ECB kept their respective short term rate unchanged.

But any concrete comment can be made only when the debt ceiling crisis (which has been temporarily resolved) will re surface in Feb.

Till then we need to keep patience.

Other reports that will hold importance for gold is the UoM Consumer sentiment, China Industrial Production and Chinas Trade Balance

As of the previous monthly report, China’s trade balance increased to a $27.7 billion surplus; if the surplus will further expand, it could indicate that China’s economic growth is increasing and thus may positively affect prices of precious metals.

Meanwhile, we celebrated Dhanteras and Diwali last week, two festivals closely associated with bullion buying and the country's wedding season, another major driver of gold sales, is in full swing.

But scarcity of physical gold coupled with weak rupee put a huge damper on sales for gold this year.

In fact, gold sales this year have been just 50 per cent of last year's sales. On the other hand we saw more demand for silver and platinum coins.

Nonetheless, as the marriage season is in full swing we see more demand coming in for gold jewellery and the demand supply gap of gold will soon be filled.

the trade range for gold for this week is expected to be Rs.29,000- Rs.31,000 per 10 gram

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Halloween Hangover for gold"

http://www.riddisiddhibullionsltd.blogspot.in/2013/11/halloween-hagover-for-gold.html

Happy Diwali


Have a Wonderful Year Ahead Filled With Peace, Prosperity and Happiness

HALLOWEEN HANGOVER FOR GOLD

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

The Halloween fever seems to have caught hold to gold too as we saw some tricks and treats for the yellow metal.

There were mixed sentiments in the market as the much awaited Fed meeting concluded on the 30th Oct. The Federal Reserve has offered a bundle of surprises this week due to which gold and other precious metals fell on Thursday.

The US Central bank stated that it will keep buying $85 billion in bonds a month for the time being.  The Federals Reeves October policy statement further confused the market as some believe that there is soft growth seen for US while some believe that the situation may worsen.

On Thursday, a sharp rise in the dollar index  broadly pressured commodities after data showed business activity in the U.S. 

Spot gold was down 1.4 percent at $1,323.69 an ounce during the trading hours.

The Fed's comments about the U.S. economy continuing to expand at a moderate pace and lower-than-expected inflation weighed down on gold.

The expectation of Fed tapering further down the road has already been factored into the gold market, and its comment about moderate growth and no inflation triggered some selling.

Moreover as the month ended we saw people shedding off their positions which led to decline in gold prices.

The Fed wants more evidence that the economic progress and growth of the labour market is sustainable. hence they haven't hurried a lot and kept the pace of the QE unchanged for the time being

The U.S. latest weekly jobless claims decreased 10,000 to 340,000 compared to the expectation of 338,000. In Europe, the October inflation rate fell to an almost four-year low of 0.7 percent compared to an expected 1.1 percent, opening the door for the ECB to ease monetary policy further

Nonetheless the Fed has still left open the possibility of tapering open in December or January. This resulted in a decline in gold prices.

However, the market detects a slightly hawkish tone by the Fed, who has left open the possibility of tapering in December or January. As a result, the U.S. stocks and the gold prices got beaten down while the dollar surged. 

Meanwhile, Fed officials continue scratching their heads on what they could do to avert a potential hyperinflation in the near future without damaging the recovering economy.

Gold surged more than 4 percent when the Fed Open Market Committee released its previous policy statement on Sept. 18. Some analysts said the support from U.S. monetary stimulus will eventually fade. 

The market is again divided into two sets of believers- some say that there are hopes of recovery ahead while some say that is going to be a long hard road ahead as the world economy plod along the edge of recession, deflation and then a small recovery. 

While in the Indian markets, the Festival of lights did add much brightness. The demand for gold has not been  as impressive as last year.

Gold sales during India’s festive season have slumped to half their usual levels this year 

India is known as the world’s biggest consumer of gold and sales  traditionally peak around Diwali, the Hindu festival of lights, which is seen  as a particularly auspicious time to buy.    

Diwali has been calm. Sales are down 50 percent compared to last year. There's no demand because prices have soared so much, the economy is slow and inflation is high.

Moreover scarcity of gold has resulted in life high premiums being charged. However, as the 8o 20 policy has been introduced, this demand supply gap will soon be filled and won last much. in fact it will tackled post Diwali.

Gold is expected to trade in the range of Rs.29,500- Rs.31,500 this week.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Is it the calmness before a gold thunderstorm"

http://www.riddisiddhibullionsltd.blogspot.in/2013/10/is-it-calmness-before-gold-thunderstorm.html

IS IT THE CALMNESS BEFORE A GOLD THUNDERSTORM??

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Gold has always been the most favourite metal in its class as it has given tremendous returns since the past 12 years. In fact it has history of 12 years of gains which is why it enjoys the status of a safe haven asset.

But this year gold has fallen almost 20 percent over issues that the Fed would start tapering its easy money police by cutting its $85 billion monthly bond purchases. This has fuelled gold's appeal as a hedge against inflation.

The Fed who first stated that they may begin tapering n September, later released a statement that it might cut its easy money policy if the economic data released is positive and meets certain levels of growth.

The metal, however, has rallied about 8 percent in less than two weeks as disappointing U.S. economic data and lingering budget uncertainties in Washington increased gold's safe-haven appeal.

The recent trend in gold and its volatile reaction to the most recent economic release show the market is still heavily data-dependent for price direction.

After the US shutdown and the temporary delay of the Debt ceiling, the market believes that the worse is yet to come and that US has still not started walking on the path of recovery. these actions will further delay the Feds bond tapering act.

And that will be beneficial for gold and silver.

Bullion was headed for a 1.7 percent gain on the week, having hit four-week highs on Thursday as it benefited from weaker-than-expected U.S. non-farm payrolls data earlier in the week. 

Gold broke the $1350 level for the first time in more than a month as it rose 1 per cent on Thursday. All these upward movements were justified with the expectations that the Federal Reserve will continue its monetary stimulus due to disappointing US jobless claims data,

Bullion prices rallied after the number of Americans filing new claims for unemployment benefits fell less than expected last week. The jobs data bolstered expectations the Fed will not start to rein its stimulus program until well into next year.

Gold inched up slightly on Friday as disappointing U.S. economic data reinforced expectations that the U.S. Federal Reserve will keep its stimulus intact well into 2014.

Spot gold was up $4.62, or 0.34 percent, at $1,351.16 an ounce during the day, hovering below its highest level since Sept. 20 of $1,351.61.

Bullion eked out gains even as the dollar recovered from a nearly nine-month low against a basket of currencies. Other reasons cited for this gain in gold prices was technical buying and a two month high in the open interest for US gold futures

Some players think that gold is poised to rise into an upcoming Fed meeting as economic data isn’t thought to be strong even to alter the Fed’s decision to delay tapering. While the Nonfarm payroll report released earlier this week was considered old news, the government shutdown is thought to have added to the slowing in the US. 

Seeing gold stand up in the face of adverse currency market action was also seen as a positive by some traders . 

An issue that might provide gold with some support early next week is the prospect of a platinum strike in South Africa next week.

The gain in spot prices has further deterred physical demand in most Asian countries. 

In India, premiums were at a record high of $120 an ounce as dealers struggled to meet demand amid tight supplies.

Diwali is just round the corner and demand for gold in India is expected to soar (though it will be just half of last years demand).

However, dealers are struggling to get supplies and thus paying hefty premiums to fill in the gap.

Indian sellers have struggled to source supplies for domestic use for almost three months, since the central bank introduced a rule that required 20 percent of all imports be re-exported. 

   

In fact premiums are elevated and are expected to rise further... and the expectation is that they (stocks) are likely to run out completely around November at a time when the demand will be the highest on account of Diwali

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Financial calamity avoided or the worse is yet to come??"

http://www.riddisiddhibullionsltd.blogspot.in/2013/10/financial-calamity-avoided-or-worse-is.html