-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.
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"Is it the calmness before a gold thunderstorm"
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