RSBL Gold Silver Bars/Coins

Monday, 20 May 2013


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

Last week started with festivities for India as we celebrated the auspicious day of Akshaya Tritiya on 13th may. It is considered auspicious to buy gold on this day and hence the demand for gold on this particular day is expected to go up.
But this year demand for gold was not as predicted.  Whatever demand came in was mainly from retailers because the wholesalers and other bullion dealers had already made their purchases during the gold crash that was witnessed between April 12- April 16. Majority  of the purchases were made during this period. Adding to this slide in demand were the anti LBT protests which brought the major gold hubs to a standstill and buyers were confused as to where to procure their gold from.
Hence the overall demand for gold on this Akshaya Tritiya was not up to the mark.

Though world over people were shifting focus from gold to other assets in its class, the lower prices attracted buyers in China-- the world's second largest buyer of gold after India. In fact in Hong Kong and Singapore, gold bars were traded at an all time high premium, paying nearly 40 USD.

In the international markets,  gold prices dropped compelling investors to shift to other asset forms apart from gold. It seems that gold is losing its appeal as a safe haven asset after the gold crash that recorded the worst daily crash in 30 years. This week too gold dropped to a four week low and a straight fall for a seventh session on Friday.

It was the longest flash in four years as there were rumours making rounds that soon the Federal Reserve may rein in the monetary easing, thus lifting the dollar.

One of the reasons behind this decline in gold prices is the perception of investors that gold below $1400 an ounce will take much time to bounce back and hence introduce near term pressure on gold. It has also triggered heavy selling and prompted investors to favour other asset forms.
Spot gold hit a four month low at $1376 an ounce.

There was heavy liquidation coming in from New York's SDPR Gold Trust, that reported an outflow of another 5.7 tonnes on Thursday, bringing the drop in its holdings this week to more than 10 tonnes.

A strengthening US Dollar and a massive selling of exchange traded funds, together, triggered a downfall in gold prices. Moreover, there is a positive sentiment in the market about the recovery of the US economy.

Economists are looking for a stronger growth in the second half of the year and in the early 2014.

Though the development is slow, economists say that the stronger than expected improvement in several areas including labour market and retail sales has compelled investors and general public to believe that development an recovery is on its way.
A stronger US economy brings in concern for gold as people tend to shift to other investment forms like equities that are bound to shoot up when the economy revives,

For this week, the range for gold in the domestic market is expected to be around Rs.25,000 - Rs.27,500 per 10 gram.

“The primary purpose of this blog by Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings in the Bullion world.”

- Previous blog - 
"Debate over Fed QE3 measures raises concern for gold" 

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