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Monday, 25 July 2016

Consolidation phase for Gold and Silver Prices: RSBL

                                                                           - Mr. Prithviraj Kothari, MD RSBL


BREXIT, FED, Dollar and many other key influential factors have proved to be beneficial for Gold and Silver prices in 2016. Last week too we saw many such factors influencing bullion prices but in the downward side. Let’s take a close look on the key highlights:

  • The S&P (US Stock exchange) posted a fresh all-time closing high and the major U.S. stock averages 2,163.24 locked in a fourth successive winning week following the Brexit vote.
  • At the weekends G20 summit in China, the world's biggest economies noted they will work to support global growth and share the benefits of trade, in a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism. Philip Hammond, Britain's new finance minister, said the uncertainty about Brexit would begin to abate once Britain laid out a vision for a future relationship with Europe, which could become clearer later this year.
  • On Thursday, 21st July , in Frankfurt, the European Central Bank (ECB) and President Mario Draghi decided to leave rates unchanged after the Brexit-induced market shockwaves have faded somewhat. Draghi and his fellow central bankers gave no indication that the current 1.7 trillion-euro quantitative-easing plan needed to be increased following the UK vote to leave the single market. The council doesn’t meet again till September, but investors aren’t anticipating any adjustment to the bond-buying programme in the near-term thus leaving the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.
Though bullion has benefited from the loose policy decisions coming in from central banks of Europe and Japan, but on the other side the dollar has gained on strong U.S. data, boosting bets the Fed will raise U.S. rates by year-end.

Globally, gold nearly fell to $1,312 and silver to USD 19.46. Traders attributed the fall in gold prices to a weak global trend where the precious metal headed for its first back-to-back weekly decline since May as gains in equities and the dollar ate into demand for the metal as a storage value. Few other important indicators that contributed to the downfall:

  • Data released from the U.S. showed that U.S home resale’s hit their highest in nearly 9 and a half years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.     
  • Adding to the down trend in prices were the figures released by SPDR. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22 percent to 963.14 tonnes on Thursday.

I do feel that the Price action will likely be skewed to the downside and expect to test the post-Brexit low around USD $1,305 and below this USD $1,300 should global equities continue their upward trajectory.

The Jackson Hole Symposium Aug. 25-27, where Yellen is scheduled to speak is where we will most likely get more relevant information about coming Fed policy and the next direction.
Thank You!


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The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:
Gold prices to go up: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/07/gold-prices-to-go-up-rsbl.html

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Wednesday, 20 July 2016

Gold prices to go up: RSBL

                                                                 - Mr. Prithviraj Kothari, MD RSBL




While financial uncertainties were influencing gold prices, we have lately seen geo political uncertainties giving the yellow metal's safe haven appeal a further support if not permanent a temporary one.  The failed military coup in Turkey did manage to shake the markets.

Spot gold prices turned higher, reversing earlier losses in late trade on Friday in New York after Turkish Prime Minister Binali Yildirim said a group within the country's military has attempted to overthrow the government. For several hours overnight on Friday violence shook Turkey's two main cities, as the armed faction which tried to seize power blocked a bridge in Istanbul and strafed the headquarters of Turkish intelligence and parliament in Ankara. But the coup attempt crumbled as Erdogan rushed back to Istanbul from a Mediterranean holiday and urged people to take to the streets to support his government against plotters he accused of trying to kill him. The government declared the situation under control, saying 2,839 people had been rounded up, from foot soldiers to senior officers, including those who formed "the backbone" of the rebellion.

Earlier on Thursday, spot gold price crashed down to a two-week low of $1,320.45 after the Bank of England’s (BOE), contrary to expectations, kept interest rates unchanged in its Thursday meeting. In a somewhat surprising move, the Bank of England (BoE) decided to keep rates steady despite fear over the health of the UK economy following the Brexit vote.

Holdings in Global Gold ETF’s rose on Friday but lost about 10 tons in total over the week to 2002 tons, which was the biggest decline since March/April this year.

Gold continues to trade range bound between USD $1,320 - $1,340, however participants are still looking to play on the long side and we are likely to see moves lower well supported.

I largely see the spot gold price supported at the $1,300 level due to a post-Brexit global economic uncertainty and possibly lower US interest rates and given this critical situation at Turkey, precious metals prices are expected to move higher as they have always been influenced by geopolitical uncertainties.

Thank You!


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The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:
Bullish direction of Gold and Silver prices: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/07/bullish-direction-of-gold-and-silver.html


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Monday, 11 July 2016

Bullish direction of Gold and Silver prices: RSBL

                                                                       - Mr. Prithviraj Kothari, MD RSBL


Gold has once again proved its worth and claims to be the best performing asset of 2016, emerging from a three-year bear market. The yellow metal has gained almost 26% since 1 January, the best half-year performance since 1980, Bloomberg data showed. Silver, following gold, rose 30% in the first six months, leaving other assets such as the US and German bonds, Japanese yen and the US dollar far behind.

The flight to safe haven assets triggered by global political and economic uncertainty has made bullion the year’s most preferred investment, with gold and silver beating other asset classes by a mile.

The past four sessions following the Brexit vote saw gold prices spike about 6%, while silver advanced about 5%. Gold has definitely benefited from the Brexit incident, but there have been reasons more than one that this yellow metal has once again has got into limelight.

Global economic uncertainty, slower growth in China, accommodative monetary policy of the major central banks and weakness in dollar earlier this year had prompted investments into safe haven assets like gold and silver.

Global Uncertainty:
The market continues to benefit from safe-haven investment flows in the wake of the UK vote to exit the EU, which has led to heightened uncertainty over global economic prospects and increased risk aversion.

Dollar:
Strength in the US dollar was the major contributor to weakness in gold and commodity prices for the past few years. However, increasing uncertainty about economic and political developments, low-to-negative interest rate environment as well as doubts over global economic recovery post the collapse of Lehman Brothers in 2008 have led to demand for precious metals, analysts said.

China:
Economic slowdown of the Chinese economy has raised questions over the global growth and development. These concerns have put an upward pressure on gold. 

Monetary Policy:
The current economic backdrop, along with fading prospects of an interest rate hike by the US Fed at least till December validates further march of bullion on the upwards trajectory over medium-term.

Contradicting these prospects, the Jobs report released pulled gold prices down but not significantly. The report stated that in June, 287,000 Americans entered the labour market, far exceeding expectations of 174,000 while average hourly earnings period ticked up 0.1 percent, below the forecast 0.2 percent.

Still, the unemployment rate rose to 4.9 percent from 4.8 percent after the May figure was revised down to 11,000 jobs from what was already a multi-year low of 38,000. The June employment figure had gained greater significance following the disappointing May report, which suggested the US recovery was beginning to slow after seven years of expansion.

It was a session marked by extreme volatility on Friday with gold experiencing a $35 range and silver $1.00, with NFP's driving price action. The prices send a solid signal for the Gold price to move beyond $1400 in short to medium term.

Further supporting gold was the Chinese gold reserves figures. It stated that China's gold reserves stood at 58.62 million fine troy ounces at the end of June, up from 58.14 million at the end of May, the central bank said on Thursday. Such a stock up already appears to be in motion for the gold stocks.

Given these supporting factors for safe haven metals, investors have engaged themselves into purchases of gold and silver and this is further giving and upward thrust to precious metals.

Thank You!


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The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:
Sharp increase in Silver prices: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/07/sharp-increase-in-silver-prices-rsbl.html

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Tuesday, 5 July 2016

Sharp increase in Silver prices: RSBL



                                                       -  Mr. Prithviraj Kothari, MD RSBL


On announcement of BREXIT, the markets panicked and this was reflected in the movements of gold prices. Initially gold prices soared and were at fresh highs of past few years. Once markets settled, gold did see some correction but then there were signs of a modest pick-up in risk appetite leading to further rise in gold prices. Once again gold was considered as a saviour in times of uncertainties and it regained its safe haven appeal with current prices at US$1,350.

But what surprised the market were the movement in prices of the white metal: Silver. 

Silver jumped to the highest level since September 2014 as investors speculated central banks will need to continue support the global economy in the wake of Britain’s vote to quit the European Union. Governor Mark Carney said on Thursday the Bank of England could cut interest rates within months as it tries to shield an unstable UK economy. 

The price of silver climbed 26% through the first four months of 2016. That not only beat gold prices by 7.5%, but it also bettered the Dow Jones Industrial Average and S&P 500 by 24% and 25%, respectively. Silver prices had surged to a high of $20.46 (a near two year high) and currently trading at $19.80. 

Silver Price rise_RSBL SPOT Terminal

Apart from BREXIT, the Caixiin Chinese manufacturing purchasing managers index (PMI) released on Friday continued to raise concerns about China’s weaker-than-expected economic recovery with the Chinese manufacturing PMI for June read 48.6, which was below forecast of 49.1 and May’s number of 49.2. It was the index’s third monthly decline in a row and marked the steepest deterioration in manufacturing conditions since February.

Not only the above news item, but Silver’s bullish stance can be supported by the below given key points:
  • Lower Gold/Silver ratio. The current ratio stands around 75 much lower than the peak of around 84 in March. Over the same time the Silver prices have gone up by nearly 11 off percent.
  • Prospects for further US interest-rate increases have been wound back since the BREXIT vote. Commodity prices in US usually benefit from lower interest rates.
  • Silver plays a key role in Photovoltaic (PV) cells that are being used in Solar panels. World economies around the globe are jumping on clean energy bandwagon to reduce the pollution levels and solar energy plays an important role. With an avid increase in solar energy contribution, Silver demand will increase exponentially.
  • India is one of the key importers of Silver over the past few years and the demand has only been increasing in the wake of lower prices till Jan, 2016.
 
Silver prices still have room for further movement upwards and the current panic and fear in the markets could raise these prices further. Gold may have a room to correct till $1,280 – 1,300 in short term but the political and unknown economic conditions created by BREXIT, could raise prices further for precious metals.

Thank You!



You may follow me on:
The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.


Previous blog:
UK Departs, GOLD prices shine: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/06/uk-departs-gold-prices-shine-rsbl.html


Photo courtesy: http://news.goldseek.com/GoldSeek/1441894582.php
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