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Thursday, 25 August 2016

HIGHER GOLD PRICES FOR THE DOMESTIC MARKET: RSBL

  By Mr. Prithviraj Kothari, MD, RSBL






Firstly I would like to congratulate all the Rio Olympic representatives of India who worked so hard and attained commendable feats for our country. While we saw Indian achieving remarkable feats, at the same time gold prices in the domestic market were shining in spite of a global downtrend.


Where on one hand gold in the global markets was down 0.34 percent at $1,347 per ounce, on the other hand the yellow metal in the national capital, gold of 99.9 and 99.5 per cent purity commenced the week higher at Rs. 31,130 and Rs. 30,980 and advanced to closed at Rs. 31,250 and Rs. 31,100 per 10 gram respectively, showing a rise of Rs. 175 each.

Markets remained closed on Monday for 'Independence Day' and Thursday for 'Raksha Bandhan'. Bullion traders said increased buying by jewellers to meet festive season demand from retailers amid a firm global trend mainly kept precious metal prices higher.
While Makar Sankrant marks a pause to festive celebrations, on the other hand Raksha Bandhan marks the onset of the festive season in India. 

Gold has seen a sharp upsurge in demand on a sudden jump in Japanese yen against the dollar. Crude oil prices have also increased over the last few months. With the investment buying continues, gold is seen touching $1400 an oz in global markets translating thereby setting a new record in near future.

Coming to international markets, analysts hold the dovish July policy meeting minutes issued this week responsible for the decline in prices.


Interest rate expectations are the driving force behind the recent moves in both the dollar and gold. Expectations of higher interest rates here in the U.S. support a stronger dollar while they weigh on the price of precious metals.



Interest Rate Hike- Gold prices slipped on Friday, weighed down by a strengthening dollar after two Federal Reserve officials' comments that increased expectations for an interest-rate increase this year.


Gold is sensitive to higher rates which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The week has seen a run of mixed signals from Federal Reserve policymakers.


San Francisco Fed President John Williams on Thursday joined a growing chorus of his colleagues signalling support for a U.S. interest rate hike in coming months. New York Fed President William Dudley reinforced his confidence in a possible rate hike for a second time in the week.  Dallas Fed President Robert Kaplan, however, saw limited room to manoeuvre on rates.

US Dollar- The dollar against a basket of six major currencies was up about 0.27 percent at 94.414. The current ‘ultra low’ interest rate environment has sent global investors on a search for yield.  Hence any prospect of an interest-rate increase in the U.S. makes U.S. dollar investments more attractive to international investors, leading to an increase in the value of the U.S. dollar vs. other currencies across the globe.
The U.S. dollar, after tapping a seven-week low this week, strengthened Friday, cutting demand for precious metals, which are priced in the currency.

SDPR- Among exchange-traded funds, the SPDR Gold Trust GLD, -0.88% was 0.7% lower. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% to 955.99 metric tons in the week through Thursday, according to Bloomberg data.
ECB- Meanwhile, European Central Bank rate setters agreed not to discuss any policy change at their July meeting and to keep market hopes for more stimuli in check, minutes showed on Thursday.

U.S. Jobs report- Reports showed the number of Americans filing for unemployment benefits fell more than expected last week, while manufacturing activity in the U.S. Mid-Atlantic region saw a mild improvement this month. Members of the Fed's rate-setting Federal Open Market Committee were generally upbeat about the U.S. economy and labour market, but several said any slowdown in future hiring would augur against a near-term rate hike. U.S. economic data will continue to offer clues on the Fed’s next move. Fed Chairwoman Janet Yellen will also speak at a conference in Jackson Hole, Wyo. next Friday. Admittedly, a very strong U.S. labour market report in early September could already be enough to prompt the Fed to hike interest rates next month.

Still range bound, gold looks to break through USD $1,360 as the possibility of a September rate rise tempers.


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:

"Indian Gold Bullion Market- Issues, Challenges, Opportunities and the way forward: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/08/indian-gold-bullion-market-issues_13.html 



Saturday, 13 August 2016

Indian Gold Bullion Market- Issues, Challenges, Opportunities and the Way Forward: RSBL

                                                    - Mr. Prithviraj Kothari, MD RSBL



Do have a look at the video to know more on:
    Indian Gold Bullion Market- Issues, Challenges, Opportunities and the Way Forward


                                              https://youtu.be/EjkHGg0NJR4 



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:

Indian Gold Bullion Market- Issues, Challenges, Opportunities and the Way Forward: RSBL

                                                    - Mr. Prithviraj Kothari, MD RSBL





Do have a look at the video to know more on:
    Indian Gold Bullion Market- Issues, Challenges, Opportunities and the Way Forward

video

                                              https://youtu.be/EjkHGg0NJR4 

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:

Monday, 1 August 2016

Gold and Silver prices on RISE: RSBL

                                                                                      - Mr. Prithviraj Kothari, MD RSBL




Precious metals price rise is eminent and it ended the week on a positive note post poor US data released. The negative data sent the dollar tumbling, stimulating a good recovery for the yellow metal and its white counterparts.

Data released from the US was as follows:
  • GDP data out of the U.S. disappointed on Friday, growing at a seasonally and inflation adjusted +1.2% during Q2 (exp: +2.5%) as business inventories contracted for the first time since Q3 2011
  • The University of Michigan’s consumer sentiment index dropped to 90.0 in July (exp: 90.2) from 93.5 in June as both current and future conditions declined.
  • The poor data countered the Fed’s statement that the US economy is stable and the near-term outlook is positive. Even though the unemployment rate is around five percent, the policy-board has been ineffective at spurring inflation or consistent wage growth. All eyes were on this meeting as something crucial was expected to happen regarding the interest rate hike. But negative data has postponed this hike and this gave gold the push. 
Apart from the US there was news that came in from other economies which affected the gold price: 

U.S Dollar:
Major downturn in the dollar created by the release of second quarter US GDP where it plummeted to 95.38 around the lowest mark since mid-June, before staging a modest uptick to 95.60.

Japan:
Host of new data releases and a Bank of Japan decision to inject further stimulus, markets were directionless this week with volatility and volumes continuing to drift lower. The Bank of Japan (BoJ) decided to adopt a minor adjustment to the existing monetary policy by increasing its purchases of exchange-traded stock funds to 6 trillion yen and expanded its dollar lending programme to $24 billion but kept its policy rate unchanged at -0.1 percent while maintaining the pace of government bond purchases.

The BOJ certainly doubled purchases of exchange-traded funds (ETFs) and said it will “conduct a thorough assessment of the effects of negative interest rates and its massive asset-buying program in September.”

The bank was considering a $265 billion package, part of which would target low-income citizens in another attempt to boost inflation and weak wage growth.

This can be understood as- either the central bank may feel that Japan’s economic growth needs very, very extensive stimulation and they have yet to formulate an appropriate plan or it can be interested that they want to see how the chips fall in eight weeks and move cautiously from there.

India:
Coming to the domestic markets- India being one of the largest consumers of gold, but currently the demand for gold isn’t intense. Frankly speaking, very few people want to invest in gold at this price. Buyers, it seems, feel that the current price is not sustainable and hence, they wait for a correction. Gold price in India is governed by two major factors: global economic conditions and the movement of rupee against the dollar. Both factors have contributed to the current price rise. While global economic conditions continue to pose a greater risk by the day following fluctuating recovery trend in the United States, Britain’s exit from the European Union (BREXIT) and other geopolitical tensions. On the other hand, Indian rupee has depreciated against the greenback despite reports of good inflow of dollars.

Since BREXIT, spot gold price jumped rapidly but, stayed elevated. Also, rainy season is considered as a lean period for gold purchase due to the lack of festivals, weddings or any other occasions during this season. Also, consumers have faced two subsequent years of deficient monsoon rainfalls. Although, the current year has seen normal rainfalls yet its distribution continues to remain uneven. Also, the crucial rainfall month – August – is yet to come. So, let’s keep our fingers crossed for the Kharif sowing and harvesting this year. In case of normal monsoon and its even distribution, Kharif crop would bring some cheers for farmers with higher output which would translate proportionate increase in gold demand.

In India, therefore, standard gold is available at Rs. 31,300 per 10 grams approx. Gold price may touch $1400 in near future in the international markets which will translate in rupee term at Rs. 32,500 per 10 grams. While the uptrend continues there could be some profit booking.

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:


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