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The primary purpose of this blog (Prithviraj Kothari - MD, RSBL | Bullion market blog) is to educate the masses of the current happenings in the Bullion world. This blog contains my opinion, which is not to be construed as investment advices. Information provided in these blogs is intended solely for informative purposes and is obtained from sources believed to be reliable
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Saturday, 29 October 2016
Friday, 28 October 2016
Tuesday, 25 October 2016
AN ACTION PACKED DECEMBER: RSBL
By Mr. Prithviraj Kothari, MD, RSBL
Gold prices appear to have found a base either side of the $1,250 per ounce,
basis spot, with prices now getting some lift and silver prices are well placed
to challenge recent resistance $17.78 per ounce
On Friday, 21st October, San Francisco Fed President John Williams said at a mortgage
conference that "it makes sense to get back to a pace of gradual rate
increases, preferably sooner rather than later." His comments followed
recent hawkish talk from central bank officials including New York Fed Chief
William Dudley and Fed's vice chair Stanley Fischer, which prompted investors
to price in an interest rate increase this year.
The main concern currently is the conflicting scenario between Fed officials
like Fischer and Dudley who have been signalling a rate hike before the end of
the year, while the ECB has arguably signalled a likely extension of its asset
purchases.
The ECB kept interest rates at historic lows last Thursday, and its
President Mario Draghi kept the door open for more stimuli, effectively
quashing any speculation that the bank was poised to taper its 1.7 trillion
euro asset-buying programme.
Being only a few days before the U.S. presidential election, many analysts
are not expecting the Federal Reserve to take any concrete steps.
However, expectations for a December move jump to 75%, the highest it has been all year as we see all the action happening in December.
As we head into what has seasonally been the best time of year for the
sector, here are a few possible major data release that could influenced gold prices during coming months.
November 4th: The Non-farm Payrolls Report (NFP) for
October will be released on this date. The gold sector usually
sells off into this report and becomes very volatile after the release as
trades are set beforehand based on the expected number of jobs created. This is
a highly anticipated report as the results will be heavily factored into the
Fed’s decision process of whether or not to raise interest rates in December.
The market is factoring in a 70% chance of a quarter point raise on December
14th as of this post.
November 8th: The US election could very well be a major promoter
as during the last Presidential Debate, Donald Trump made accusations of the
election possibly being rigged against him. He has also stated if defeated, he
will not commit to accepting the outcome, stating “I
will tell you at the time”. This is a very dangerous statement and could
easily trigger violence after the outcome. Also, if victorious, the decision
could very well cause a “Brexit” type response in the gold sector as Trump is
the anti-establishment candidate.
December 2nd: The release of the final NFP report before
the highly anticipated last Federal Reserve Open Market Committee (FOMC)
meeting of the year will be released . This could possibly be the
deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise
rates this year.
December 14th: On this date the market will finally find
out the answer to the question of, “will she, or won’t she”. If the Fed decides
to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold
sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been
bullish for gold as we saw back in the late 1970’s when former Fed chair Paul
Volcker raised rates to over 20%. During this time gold had the largest bull
market in history as it soared from $105 in September, 1976 to $850 in January,
1980. Also, in December of last year after 7 years of zero rates, the Fed
finally decided to raise rates a quarter point.
There are a lot of major U.S. reports coming and if the data is positive
then there is no reason why the U.S. dollar can’t go higher and that could hurt
gold. So as the world waits the month of December for its Christmas Celebration,
the financial markets await the same month as a lot of action is bound to take
place.
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 Crashed But Lands Safely: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/10/gold-crashes-but-lands-safely-rsbl.html
AN ACTION PACKED DECEMBER: RSBL
By Mr. Prithviraj Kothari, MD, RSBL
Gold prices appear to have found a base either side of the $1,250 per ounce,
basis spot, with prices now getting some lift and silver prices are well placed
to challenge recent resistance $17.78 per ounce
On Friday, 21st October, San Francisco Fed President John Williams said at a mortgage
conference that "it makes sense to get back to a pace of gradual rate
increases, preferably sooner rather than later." His comments followed
recent hawkish talk from central bank officials including New York Fed Chief
William Dudley and Fed's vice chair Stanley Fischer, which prompted investors
to price in an interest rate increase this year.
The main concern currently is the conflicting scenario between Fed officials
like Fischer and Dudley who have been signalling a rate hike before the end of
the year, while the ECB has arguably signalled a likely extension of its asset
purchases.
The ECB kept interest rates at historic lows last Thursday, and its
President Mario Draghi kept the door open for more stimuli, effectively
quashing any speculation that the bank was poised to taper its 1.7 trillion
euro asset-buying programme.
Being only a few days before the U.S. presidential election, many analysts
are not expecting the Federal Reserve to take any concrete steps.
However, expectations for a December move jump to 75%, the highest it has been all year as we see all the action happening in December.
As we head into what has seasonally been the best time of year for the
sector, here are a few possible major data release that could influenced gold prices during coming months.
November 4th: The Non-farm Payrolls Report (NFP) for
October will be released on this date. The gold sector usually
sells off into this report and becomes very volatile after the release as
trades are set beforehand based on the expected number of jobs created. This is
a highly anticipated report as the results will be heavily factored into the
Fed’s decision process of whether or not to raise interest rates in December.
The market is factoring in a 70% chance of a quarter point raise on December
14th as of this post.
November 8th: The US election could very well be a major promoter
as during the last Presidential Debate, Donald Trump made accusations of the
election possibly being rigged against him. He has also stated if defeated, he
will not commit to accepting the outcome, stating “I
will tell you at the time”. This is a very dangerous statement and could
easily trigger violence after the outcome. Also, if victorious, the decision
could very well cause a “Brexit” type response in the gold sector as Trump is
the anti-establishment candidate.
December 2nd: The release of the final NFP report before
the highly anticipated last Federal Reserve Open Market Committee (FOMC)
meeting of the year will be released . This could possibly be the
deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise
rates this year.
December 14th: On this date the market will finally find
out the answer to the question of, “will she, or won’t she”. If the Fed decides
to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold
sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been
bullish for gold as we saw back in the late 1970’s when former Fed chair Paul
Volcker raised rates to over 20%. During this time gold had the largest bull
market in history as it soared from $105 in September, 1976 to $850 in January,
1980. Also, in December of last year after 7 years of zero rates, the Fed
finally decided to raise rates a quarter point.
There are a lot of major U.S. reports coming and if the data is positive
then there is no reason why the U.S. dollar can’t go higher and that could hurt
gold. So as the world waits the month of December for its Christmas Celebration,
the financial markets await the same month as a lot of action is bound to take
place.
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 Crashed But Lands Safely: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/10/gold-crashes-but-lands-safely-rsbl.html
Tuesday, 11 October 2016
GOLD CRASHES BUT LANDS SAFELY: RSBL
By Mr. Prithviraj Kothari, MD, RSBL
Gold prices
have rallied 31.4 percent since the December low at $1,046.40. Safe-haven
demand increased due to the following factors:
- The US Federal Reserve proposed in December four rate increases in 2016 but at best it might deliver just one rise before the end of the year
- Its inverse relationship with the dollar index has allowed gold to climb
- The growing number of negative-yielding sovereign bonds has made safe-haven assets that bear no yield much more appealing
- Pro-long utilisation of easy monetary policies by global central banks has eroded the value of paper money
- Speculative funds as well as ETF investors have flocked into gold in search of yield
Though
2016 has been one of the best performing years for gold since 2012 the yellow metal registered its biggest daily drop in three years on last Tuesday and
extended losses in the previous session after forecast-beating U.S.
manufacturing data and comments from Fed officials saying there was a strong
case for raising rates.
Gold fell
for the eighth straight session on Thursday, slipping to a four-month low,
pressured by a stronger dollar after U.S. weekly jobless claims fell and ahead
of key data that could put the Federal Reserve on track to raise interest rates
this year.
Gold fell
for a ninth straight session on Friday on a stronger dollar ahead of key U.S.
jobs data and the metal was headed for its worst weekly dip in over three years
on increased expectations of a Federal Reserve rate rise by year end.
Initial
claims for state unemployment benefits unexpectedly declined by 5,000 to a
seasonally adjusted 249,000 for the week to Oct. 1. The U.S. dollar .DXY rose
to the highest in more than two months against a basket of currencies as the
data reinforced the view that the Fed would raise rates at the end of the year
This declined gold prices drastically but by the end of Friday gold futures staged a modest recovery amidst all these concerns.
Though the unemployment benefits declined, a slow growth rate
was recorded for the third straight month in September. Gold prices got an
initial boost from this.
In Europe, the European Central Bank (ECB) intends
to push on with its aggressive stimulus policy of negative interest rates and
massive bond buying until it is happy with the outlook for euro zone inflation,
senior officials said. ECB Vice President Vitor Constancio said a Bloomberg report
suggesting that there was already consensus among ECB rate setters to reduce
the 80 billion euros ($89 billion) monthly bond purchases was mistaken.
The report aggravated a sell-off in gold on Tuesday
as the yellow metal fell over three percent to its worst one-day fall since
September 2013.
In the
short term, gold prices might remain under selling pressure. While the metal
could consolidate lower and put the bulls to the test, it remains to be seen
how long or deep the consolidation process will be. But we remain friendly
towards gold – our medium-to-long-term view remains bullish and we could see
the metal seeking a strong technical support to rebound into.
But there
are chances that gold might trade sideways in the short term keeping in mind
the following factors-
- Strained projected longs show that this trade is very much overcrowded. With no fresh buyers, the path of least resistance is downward
- Profit-taking could be a theme and, should panic ensue, panic selling could escalate as speculators and ETF investors are sitting on large unrealised profits
- The bulls’ bounciness has not really been tested and a mild correction/pullback should do the overall bull structure a lot of benefit
- Physical demand has been subdued due to high future prices – the current rally has not had the backing of strong physical up-take
- The Fed has armed its policymakers to prepare the market with combative messages that the US economy is primed for a 25-basis-point-rate rise before the end of 2016
These put
a limitation to the bullish trend for gold. Nonetheless as we approach towards the
last quarter of 2016 we all hope that it ends on a similar note as its
beginning.
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:
"Volatile Markets: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/10/volatile-markets-rsbl.html
Monday, 3 October 2016
VOLATILE MARKETS: RSBL
By Mr. Prithviraj Kothari, MD, RSBL
Markets
were volatile as the week ended and this volatility was reflected in the
movements of gold prices.
Gold
prices fell on Friday, after shuffling between gains and losses as investors
weighed concern about Europe's banking woes against heightened expectations of
a Fed rate increase in December.
The yellow
metal had fallen to as low as $1,311.95 on Friday – the lowest since September
21 – following news that Deutsche Bank was near a settlement with US
regulators.
Amidst
rise of uncertainty over the health of a financial industry, traders have
shifted focus to gold to provide what it best does- safe haven.
Traders are
seeking for the yellow metal as uncertainty prevails after the news reports by Bloomberg
that 10 hedge funds that do business with Deutsche Bank have pared their
exposure. Its shares fell to a record low, and European and Asian equities
retreated. There’s heightened haven buying as anxiety grows over the German
lender, Australia & New Zealand Banking Group Ltd. said in a note.
Investors
had been nervous about the uncertainty surrounding Deutsche Bank after some of
its clients, among them several big hedge funds, were reported to have
withdrawn securities or cash from the German lender amid concerns about its
stability and their exposure.
But, on
Friday, safe haven demand for gold dwindled after stocks in major markets largely recovered from a
sell-off on easing concerns about Deutsche Bank. This lead to a fall in gold
prices. Spot gold was down 0.3 percent at $1,316.32 per ounce during Friday
trading hours.
As the
session wore on, the focus turned to increasing expectations that the U.S. Federal
Reserve will raise rates by the end of the year. Fed-funds futures, used to bet
on central-bank policy, showed investors assigned a 61.6 % likelihood to a rate
increase in December, up from 52% the previous day, according to CME data on
Friday.
Expectations
for higher rates tend to weigh on gold, which yields nothing and struggles to
compete with Treasury’s and other investments when borrowing costs rise.
Hence
there were sluggish sentiments in the market as it might have to edge lower before
finding firm support.
A collapse in Deutsche Bank's already beaten stock
had sent Europe into a fresh tailspin early on Friday and left world equity
markets slipping towards their worst week in three months. Safe-haven demand
had sustained bullion until the market turned its attention to U.S. economic
data and important numbers coming from China.
The Commerce Department said on Friday that U.S.
consumer Spending fell in August for the first time in seven months while Inflation
showed signs of accelerating, mixed signals that could keep the Fed cautious
about raising interest rates.
Let’s have a look on the key economic indicators-
US
- In US data released Friday, the core PCE price index was as expected at 0.2 percent but personal spending and personal income undershot at 0.0 percent and 0.2 percent.
- The Chicago PMI was better than expected at 54.2. Revised UoM consumer sentiment and revised UoM inflation expectations at 91.2 and 2.4 percent respectively were also better than forecasts.
- A string of manufacturing PMI numbers are due from Eurozone countries as well as the US later today. The ISM manufacturing PMI, construction spending, ISM manufacturing prices and total vehicle sales from the US will also be of note.
- In US data released on Thursday, second quarter final GDP growth came in at 1.4 percent quarter-on-quarter, slightly better than expectations of 1.3 percent. Weekly unemployment claims for last week was also better than expected at 254,000, against a forecast of 260,000.
- Pending home sales for August, however, fell 2.4 percent month-on-month – a 0.1 percent decline was called for.
China
- China’s official manufacturing PMI for September was at 50.4 (close to expectations of 50.5),
- China’s manufacturing sector remains in expansion mode alongside stable production and demand growths, the NBS said.
- But the foundation of the manufacturing sector’s stable growth is not solid as firms continue to face operating difficulties while industries eliminate excess capacities, the Bureau cautioned.
- The country’s official non-manufacturing PMI, which represents the services sector was at 53.7 in September, was up from August’s figure of 53.5.
- The official PMIs added to the continued Chinese growth story and risk on mood in markets, National Australia Bank said on Monday.
- For the time being The precious metals are looking quite diverse with gold prices struggling to rise and when they do they struggle to hold on to any gains
- For the time being The precious metals are looking quite diverse with gold prices struggling to rise and when they do they struggle to hold on to any gains.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:
"Buy And Hold Gold: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/09/gold-buy-and-hold-rsbl.html
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