IT'S A GREECE GAME FOR GOLD:RSBL

                                                         By Mr. Prithviraj Kothari, MD, RSBL

A very boring week for Gold and rest of the precious metals complex. An extremely tight price range trading showing no clear indication for the next move in price. The $1200 level remains significant for Gold while for Silver it is $16.20, where it continues to place selling pressure.

During the last week it rallied well to move from a two month low near $1160 back up to above $1190 again before easing back to the $1180 level. The key $1170 level has consistently provided solid support and has held it up now for a couple of months.

Somehow the important data released from the US:

• US unemployment claims were in line with forecasts at 271,000.
• US GDP released on Wednesday showed that the retraction in Q1 was just -0.2% better than the expectation of -0.7%, increasing the necessary confidence in US economy growth.
• University of Michigan Consumer sentiment was 96.1, besting forecasts of 94.6, while inflation was rose 2.7 percent.
• Personal spending month-over-month in May was up 0.9 percent, above forecasts of 0.7 percent.

While recent positive US economic data strengthened the dollar and led to speculation over interest rate hike this year, the Greece negotiations have gone haywire.

Talks between Athens and its creditors have failed completely. Still there have been some signs of hope being shown by either parties. But if I understand, tomorrow being Greece's payment date to IMF, I feel they would default. Euro-zone rejected Greek's request for a one month extension to its bailout creating a non-payment type of scenario.

Greek prime minister Alexis Tsiparis called a referendum on July 5 for the Greek bill to approve the bailout demands. Like expected, Greece announced capital controls and will keep its banks closed on Monday until further notice. I feel it is the darkest hour in Greek's economy. 

Even when I see the potential Grexit, there are more chances that gold will be on a bearish side for the week to come particularly if Thursday’s nonfarm payrolls report shows the labor market is gaining strength. Positive data will provide the Fed the reason they need to raise interest rates in September.

So now it all depends on the Greece Game and the important US data.

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 -

"An Important Week For Gold: RSBL:

http://riddisiddhibullionsltd.blogspot.in/2015/06/an-important-week-for-gold-rsbl.html

AN IMPORTANT WEEK FOR GOLD : RSBL

                                                                             By Mr. Prithviraj Kothari, MD, RSBL

I must apologize to my readers for not writing a Blog last week. I would reply to all your queries via the content in this blog. My sole intention was to to see some developments in Greece as it was like a never ending tussle between Athens and its creditors.  It was taking Gold and Silver to rallies which was purely news based. 

Over a period of time we have seen some factors being very crucial for gold compared to the others. US dollar, Fed’s interest rate hike and the Greece crisis have been major drivers for gold prices apart from Geo-political economic crisis, inflation and demand for gold from India and China.

Lets jump straight to the key takeaways:

Greece: The mounting Greek Funding crisis is positive for gold, but its influence could be partial as there is still a chance the two sides can tangle through to come to another short-term agreement.

Polls have stated that the exit out of the Euro is opposed by the Greek people and European leaders, the current deadlock signals prolonged and painful negotiations ahead, with a possible extension of the June 30 deadline on the horizon.

But after Monday's emergency meeting, news have floated that the negotiations between Greece and its creditors have taken a positive step forward. Not much details have been provided yet but the upcoming meeting on June 24th-25th will give the answer as to where this is all going.

Till that time the Bulls and the bears will not allow to have a dramatic impact on Gold price.

US Economic data: Data on Thursday showed that U.S. initial jobless claims fell by 12,000 to 267,000 last week, pointing to ongoing strengthening in the labor market.

A separate report showed that factory activity in the U.S. mid-Atlantic region expanded at the fastest rate in six months in June.

Data also showed that showed that U.S. consumer prices increased at the fastest rate in more than two years in May, climbing 0.4% after a 0.1% gain in April. But economists had forecast an increase of 0.5% and inflation was still well below the Fed’s 2% target.

U.S. economic data as that will have a major impact on forecasts for when the Federal Reserve will hike rates. Positive data that supports a September rate hike will be positive for the U.S. dollar and negative for gold.

Interest Rate Hike: The economic data affects the dollar which in turn affects the interest rate hike. Fed Chairman Yellen also wants to see stronger consumer spending and a higher labor participation rate and wage growth before lifting rates. 

Gold is expected to remain caught in a tug of war between the U.S. dollar and safe-haven demand as Greece’s repayment deadline quickly approaches. Gold ended its second consecutive week in positive territory; the market managed to hold on to most of its gains from Thursday’s 1.5% rally.

There are ample amount of prospects for the market players to adjust their interest rate expectations as there is a slew of economic data including housing sales data, durable goods numbers, along with preliminary manufacturing data due to be released. Markets will also receive the final gross domestic report for the first-quarter, although this is now backwards looking, some economists warn that any major revision will impact annual economic growth projections

On the domestic front, Government of India is planning to issue Sovereign bonds linked to the bullion price in an effort to divert an estimated 300 tonnes of annual demand for Gold bars and coins. The provision of a 2 percent interest rate and use of the bonds as collateral are among the the key take away points that would attract the investors.

• 24th June:  Germany IFO business climate index, the U.S. final Q1 GDP and Euro Group Meetings
• 25th June: U.S. core price index 

Summing it up, a dramatic move in precious metals is expected in the coming days!

TRADE RANGE:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1170- $1220 an ounce	Rs.26,250- Rs.27,700 per 10gm
SILVER	$15.60- $17.00 an ounce	Rs.36,000- Rs.39,000 per kg

 

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 -

"Bulls and Bears to Clash"

http://riddisiddhibullionsltd.blogspot.in/2015/06/bulls-and-bears-to-clash.html

SPARSH - Touch of Elegance - Third showroom: RSBL

We are pleased with the heartening response received from the first two showroom launches at Zaveri Bazaar and Borivali, Mumbai.This has motivated us to launch the third showroom in Bandra. Sparsh - Touch of Elegance an exclusive diamond jewellery brand from RSBL DIA Jewels would be promoted through this showroom.

•    Showroom stands to offer exquisite and assorted gold and diamond jewellery to its customers
•    Buy back facility available for customers

We create products keeping in mind our customer’s specific needs and budget. This insight has helped us better understand our customers and provide them with the best possible service that exceed their expectations.

Contact details:
10/A, Rizvi Mahal, Waterfield Road,
Bandra (W), Mumbai - 400050.
Phone No. 022 – 2645 6555, 26442391.
Email : bandra@rsbl.co.in

BULLS AND BEARS TO CLASH

                                              By Mr. Prithviraj Kothari, MD, RSBL

 

Over the past year and to be precise, lately, there has been a strong belief in the market that the U.S. is on it way of raising its rates. While evidence of continued improvement in the US economy is not gold-friendly and ultimately acts as an obstacle for the price rise in yellow metal.

Let’s have a quick glance to the important highlights during the last week:

Non farm payrolls data: 
       The most awaited or rather the most influential factor this week was the jobs report. The US created 280,000 new jobs in May, significantly above analysts’ estimates of 222,000 and the highest climb in jobs figures seen in months. US indicators have increased in importance at the moment as the Federal Reserve specifically identified US jobs data as one of the key factors on its decision when to raise interest rates from near zero.
      The unemployment rate was essentially unchanged at 5.5 percent. Private sector job growth has increased 63 straight months, a US record.

EUROZONE:
      In the Eurozone, French trade balance in April was a negative three billion, above forecasts of four billion, while German factory orders month-over-month in April was up 1.4 percent, beating consensus of 0.6 percent. With investor sentiment for gold so weak gold prices may well continue lower, but we do feel this is leading to a better buying opportunity and given developments in Greece and with potential for corrections in other asset classes, it may not be too long before the markets start looking for a safe-haven again.

DOLLAR:
    The dollar jumped to a 13-year high against the yen and gained against most major currencies, cutting the appeal of precious metals as alternative assets. The expectation of an interest rate hike has benefited the dollar and it has enjoyed a dramatic and sustained rally. 

GREECE: 
      Meanwhile in Greece, the country delayed a 300-million-euro repayment to the IMF until the end of June and bundling all the payments together, increasing the risk of a Greek exit from the bloc. 
      Prime Minister Alexis Tsipras reportedly rejected proposals put together by its lenders, arguing that any deal to unlock crucial bailout funds must be based on his own side’s conditions. But the two sides remain “very close” to agreeing a deal, after creditors supposedly proposed lower primary surplus goals.


Geopolitical Tension:
       Ukrainian troops and pro-Russian separatists on Wednesday fought their first serious battles in months and Ukraine's defense minister said an attempt by rebels to take the eastern town of Maryinka had been thwarted.

Post the US job data release, gold prices tumbled as the economy showed strong signs of recovery after a lackluster first quarter. Investors have been barring gold on signs that the economy has grown enough adhesion to damp the need for haven assets, encouraging worry that better progress will push policy makers to raise rates. 

It’s not possible to give a clarity to what exactly the price of gold is going to be tomorrow. Nor it is easy to take a buy call in Silver as the metal continues to follow gold with the risk to the downside. There are many factors that support and upper drive and a contrary lower drive for gold prices.

First, we think about international geopolitical tensions. Second, the uncertainty coming from Greece is still lingering in the minds of traders and captains of industry. Third, strategic or policy-related bullion purchases by central banks remain significantly high: After eight quarters of capital outflows from the ETF industry, the first quarter of 2015 saw a rebound in gold purchases.

However, two factors might hamper the bullion’s technical ascent, reducing the precious metal’s value over time. The first element comes from long-term charts: Gold is still in a long-term bearish trend, which has caused the precious metal to drop 30% in value from the peak reached during the summer of 2011. Second obstacle to higher gold prices: the strong US dollar and the historically negative correlation between the American currency and the yellow metal. To add Hedge funds and money managers cut net long positions in gold and silver during the week ended June 2, U.S. Commodity Futures Trading Commission data showed on Friday.

A stimulating clash awaits for bulls and bears in the coming months! But, as usual, the final word rests with the markets.

TRADE RANGE:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1151 - $1191 an ounce	Rs.25,700 - Rs.27,300 per 10g
SILVER	$15.70 - $17.00 an ounce	Rs.36,500 - Rs.39,500 per kg

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 -

"Calmness before the big move in Gold and Silver"

http://riddisiddhibullionsltd.blogspot.in/2015/06/calmness-before-big-move-in-gold-and.html

Calmness before the big move in Gold and Silver: RSBL

                                          - Mr. Prithviraj Kothari, MD - RSBL

In order to understand why I have given this title for the week's blog, I would like you to have a look at the price movements in the below charts of Gold and Silver:

Gold price range: RSBL SPOT Terminal

Silver price range: RSBL SPOT Terminal

If you see the above 2 charts of the price movements in Gold and Silver for the week (courtesy: RSBL SPOT terminal), you would agree with me that the price movements are identical. I would even look forward to quote it as same. That's how these 2 metals are coupled with each other.

In the third week of May, both the metals hit their key resistance and fell while last week both of them hit their key support and now have stabilized in their month on month trading range.

With the amount of news flow reducing, physical support dying out, these metals are just trying to stay up float. For the last week I saw more news coming from physical demand of these metals:

1. According to BBG, China's net Gold imports from Hong Kong fell for a third month as buyers deferred purchases in anticipation of further price drops and amid increasing government scrutiny of bullion trading. Net inbound shipments dropped to 46.6 metric tons last month from 61.8 tons in March and 65.4 tons a year earlier, according to data compiled by the Hong Kong Census and Statistics Department.

2. Switzerland exported 143.9 tons of gold in April which is 36% less than March. More startling were the exports to China which were down 67% to just 15.1 tons.

Judging from the physical demand shrinkage of the metals, I feel that these prices are not so inspiring for investors to invest in them.

Economic news from US showed:

• GDP figure contracted in Q1, hurt by Frigid winter and a debilitating West coast port strike. 
• The Chicago PMI tumbled in May to 46.2 (53.0 expected), reversing all the gain recorded in April (52.3 April). 
• Initial unemployment claims in the U.S. edged up from 275k to 282k in the week ended May 23 (270k expected).  Despite the latest increase, the level of claims remains extremely low by historical standards which is positive

When it comes to technical levels: US$ 1180 of Gold and US $16.70 acts as a fortress for these metals. Until the prices do not breach these levels, I feel that the ongoing range specific price movements is a part of a calm sea which could induce violent storms in no time for the next big move.

Things to watch out for in this week are:
1. News about Greece payments to IMF - All week
2. ISM Non-Manufacturing PMI - Monday
3. ADP Non-Farm Employment Change - Wednesday
4. ECB Press Conference - Wednesday
5. Non Farm Payrolls data - Friday

TRADE RANGE:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1181 - $1238 an ounce	Rs.26,600 - Rs.28,300 per 10g
SILVER	$16.70 - $18.00 an ounce	Rs.38,500 - Rs.42,000 per kg

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 - Gold prices Fall after hitting key resistance! - RSBL
http://riddisiddhibullionsltd.blogspot.in/2015/05/gold-prices-fall-after-hitting-key.html