tag:blogger.com,1999:blog-20192712545634026832024-03-13T08:13:18.120+05:30Prithviraj Kothari's view on Gold and SilverThe 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 reliableRSBLhttp://www.blogger.com/profile/11071844408363715689noreply@blogger.comBlogger578125tag:blogger.com,1999:blog-2019271254563402683.post-75562295955509657382024-02-29T18:08:00.003+05:302024-02-29T18:08:30.233+05:30Key Drivers Awaiting to Influence Gold - RSBL<p> The past week in the gold market was significantly shaped by the Federal Reserve’s cautious approach to interest rate cuts. Federal Reserve speakers, including Fed Governor Christopher Waller and Fed Governor Lisa Cook, emphasized the need for more evidence of cooling inflation before considering rate reductions.</p><p>Gold prices were set for a weekly gain on Friday, buoyed by a softer dollar and safe-haven demand from escalating tensions in Middle East even as US Federal Reserve officials bruised the hopes of early rate cuts this year.</p><p>Currently gold faces a major threat from inflation data. There is lot of speculation in the market which has pushed investors towards safety buying. Markets even speculate that rate cuts might come soon- probably June or September. </p><p>Though <b><a href="https://www.rsbl.in/">gold prices</a></b> remained range bound as U.S equities performed well, it’s the risk-on environment here versus flight-to-safety buying. </p><p>There are key economic numbers and important data set to release this week. Investors remain focus on these indicators as they will play a crucial role in influencing gold prices-</p><p>•<span style="white-space: pre;"> </span>new home sales on Monday,</p><p>•<span style="white-space: pre;"> </span>durable goods orders and consumer confidence on Tuesday, </p><p>•<span style="white-space: pre;"> </span>Preliminary Q4 US GDP On Wednesday </p><p>•<span style="white-space: pre;"> </span>pending home sales on Thursday</p><p>•<span style="white-space: pre;"> </span>PCE price index on Thursday</p><p>•<span style="white-space: pre;"> </span>ISM manufacturing PMI on Friday.</p><p>Several Fed officials are also set to speak later this week, and are expected to largely reiterate the bank’s outlook for higher-for-longer rates, amid concerns over high inflation.</p><p>Beyond the PCE data, a second reading on fourth-quarter gross domestic product is also due this week, and is expected to show some cooling in U.S. economic growth. But not to an extent that warrants early interest rate cuts.</p><p>Higher-for-longer rates bode poorly for gold prices, given that they increase the opportunity cost of investing in the yellow metal.</p><p>As we know the current market has a host of events lined up for gold, but there are some major Drivers in the current year that will play a key role in pushing gold prices high. We say this owing to the bullish sentiments in the markets and the major events that are lined up- </p><p>•<span style="white-space: pre;"> </span>Geopolitical issues out there that could drive it higher. </p><p>•<span style="white-space: pre;"> </span>Dropping Interest rates d should drive it higher </p><p>•<span style="white-space: pre;"> </span>Weakening US dollar. </p><p>•<span style="white-space: pre;"> </span>U.S Elections </p><p>But a major long-term influencer for gold will be its global demand. Central bank purchases are strong and geopolitical tensions are high. Gold buying by central banks — particularly from China and India — have helped offset money flowing out of gold exchange-traded funds. Those purchases have been driven in part by geopolitical tensions, such as Russia’s invasion of Ukraine, and the Covid pandemic.</p><p>Key to gold’s current popularity is China’s lacklustre post-Covid recovery, which is hitting young people especially hard as youth unemployment soars and traditional investment options such as property suffer, analysts say. Gold prices are poised to rise as central banks purchase the precious metal and as strong retail demand in emerging markets bolsters prices.</p><p>The yellow metal is forecast to climb about 6% in the next 12 months to $2,175 a troy ounce. Gold prices can be seen hitting $2,210 an ounce by the fourth quarter of this year, reaching a new all-time high</p><p><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-81499964950181541562023-10-20T18:37:00.004+05:302023-10-20T18:37:59.365+05:30Gold Rates - RSBL<p>Gold and dollar have long been inversely proportional to each other. Gold is the quintessential “anti-dollar” — a place to turn for those who distrust fiat currency — so it seemed natural that prices would rise in a world of low real interest rates and cheap dollars.</p><p>The unraveling of the relationship between gold and real interest rates could be a paradigm shift for the precious metal, leaving investors struggling to calculate its “fair value” in a world where the old equations don’t seem to apply. It’s also raising questions about if and when the old dynamic might reassert itself – or whether it already has, just from a new base.</p><p>Bullion hasn’t moved much, even as inflation-adjusted <b><a href="https://www.rsbl.in/">gold rates</a></b> soared this year to the highest since the financial crisis. Real yields — measured by the 10-year Treasury inflation-protected securities, or TIPS, — jumped again on Thursday to the highest since 2009, while spot gold nudged down a mere 0.5% the same day. The last time real rates were this high, gold rates were about half the price.</p><p>U.S. 10-year bond yields at fresh 16-year highs as the U.S. dollar near a one-year high continues to keep a lid on the gold market; however, according to one market strategist, the precious metal's downside remains limited as economic uncertainty and rising U.S. debt provide solid support.</p><p>After last week’s monetary policy decision where the Federal Reserve left interest rates unchanged, it is clear the central bank is done raising interest rates.</p><p>Slightly hawkish Fed and global central banks are currently suppressing gold, although some signs of economic stress are also keeping the market supported overall.</p><p>Moreover, ECB hasn’t given any clarity on inflation trajectory going forward and now most FED members are expecting slow landing.</p><p>Gold has a bright future in the coming year, where market participants expect it to rise to a new all time high even if there is a mild recession in the global economy.</p><p>Along with growing economic uncertainty, growing deficit problems in the U.S. are also creating some support for gold as it will limit the Federal Reserve's monetary policy decisions after it raised interest rates at an unprecedented pace.</p><p>Gold has a solid long-term bullish support and an impending government shutdown could create some near-term safe-haven demand for the precious metal</p><p>Looking to the New Year, the analysts said that they see gold prices pushing to $2,200 an ounce by the end of 2024 as investors realize how difficult it will be for central banks to bring core inflation down to their 2% targets.</p><p>There’s always the potential catalyst for a recession that could push investors to safe haven assets like gold. Supporting gold prices is also central bank buying, so the bottom hasn’t essentially fallen out for gold.</p><div><br /></div>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-1147871154404681502023-09-12T18:33:00.001+05:302023-10-20T18:35:41.400+05:30It's Data Packed Week - RSBL<p><b><a href="https://www.rsbl.in/">Gold prices</a></b> edged higher on Monday, helped by a retreat in the dollar and bond yields, while investors awaited a slew of U.S. economic data this week for more clues on interest rate outlook.</p><p>Gold has started the new week on a strong note as the FX market largely remains range-bound in part due to a UK holiday. It's up $7 to $1921 after touching $1925, which was the highest in more than two weeks.</p><p>The dollar eased against rivals, making gold less expensive for other currency holders. The benchmark 10-year Treasury yields held below their recent peak. </p><p>Looking ahead, the precious metal will be very sensitive to incoming US economic reports, given the pledge by the Federal Reserve Bank (Fed) to proceed with caution after having already delivered 525 basis points of cumulative tightening since March 2022 in its most aggressive hiking cycle in four decades</p><p>This is the unofficial last week of summer for the U.S. Look for the marketplace to become more active next Tuesday, following the three-day U.S. Labor Day weekend holiday. This is a big week for U.S. economic reports, so traders and investors are likely to become at least a bit more tuned in as the week progresses. The U.S. economic data pace picks up rapidly on Tuesday and it’s a big data week.</p><p><b>Some Important data releases are due this week- </b></p><p>● U.S. personal consumption expenditures price index report due on Thursday</p><p>● The August US nonfarm payrolls (NFP) report due out on Friday is likely to provide valuable information on the outlook and guide the Federal Open Market Committee's (FOMC’s) decision-making process, so traders should follow the release closely.</p><p>● The strength or weakness of the NFP survey will be pivotal for the US dollar and gold prices, significantly shaping their near-term trajectory by influencing the Fed’s tightening roadmap.</p><p>To sum up, the Gold Price has the majority of catalysts needed for the further upside but $1,940 and broad US Dollar weakness, as well as the downbeat yields, will decide the further advances of the precious metals and the dollar</p><p>The U.S. economy is set to enter a period of very low growth combined with persistent inflation, and this means precious metals like gold and silver are likely to see significant prices increases.</p><p>While we will not rule out the potential for additional upside action in gold and silver prices today, bullish classic fundamental supply and demand information is not overtly clear for the bull camp. Nonetheless, the outlook for China has improved minimally and the charts in gold and silver prices have improved thereby allowing for some follow-through gains. We suggest longs use stops on gold at $1937, with stops in September silver at $24.07.</p><p><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-21141678482961821242023-07-12T18:25:00.001+05:302023-10-20T18:28:58.758+05:30All Eyes On Important US Data - RSBL<p>Last week gold witnessed a series of whipsaws as traders are being dependent on US data releases. Gold swung into action in the range of 1900-1950 $.</p><p>Gold was little changed on Monday as investors awaited U.S. inflation data that could influence the Federal Reserve’s policy stance, </p><p>The Labor Department’s employment report on Friday showed the U.S. economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labour market conditions.</p><p><b><a href="https://www.rsbl.in/">Bullion prices</a></b> have dropped more than 7% since reaching near-record levels in early May as investors scaled back expectations of an end to the Fed’s rate-hiking cycle.</p><p><b><a href="https://www.rsbl.in/">Gold prices</a></b> edged higher on Tuesday as the dollar and bond yields fell ahead of U.S. inflation data that could offer more cues on the Federal Reserve’s rate-hike path.</p><p>Longer-dated U.S. Treasury yields fell on Tuesday as investors awaited Wednesday's inflation data for further clues on whether price pressures are abating and if the Fed is closer to the end of its rate-hiking cycle.</p><p>Sticky inflation is widely expected to attract more rate hikes from the Fed, with the central bank set to raise rates by at least 25 basis points in an end-July meeting.</p><p><b>Higher interest rates dull the appeal of gold, which pays no interest</b></p><p>Recent comments from Fed officials reiterated that while the central bank was close to reaching its peak interest rates, interest rates will still rise in the near-term. U.S. rates are also expected to remain higher for longer.</p><p>While the prospect of an eventual end to the Fed’s rate hike cycle buoyed gold, higher-for-longer rates are expected to keep any further gains in the yellow metal limited, given that they increase the opportunity cost of holding bullion.</p><p>We favour the downside in gold and silver, but suggest traders avoid selling palladium. However, the control of the precious metal markets sits with outside markets, with the dominating force determined by which market (dollar or US interest rates) exhibits the biggest price moves.</p><p>The focus this week will be on U.S. CPI (Consumer Price Index) data due on Wednesday after last week’s Fed minutes showed a vast majority of the policymakers expected further policy tightening.There is a massive eye on tomorrow's inflation data - it comes too late in the day for the July meeting. That hike is basically sealed and it would take something pretty weak on the inflation side to change that.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-10568628231224774112023-06-19T18:29:00.001+05:302023-10-20T18:33:03.784+05:30Some Turbulence Expected Soon - RSBL<p> The week opened on a slightly negative band for gold, as prices fell on Monday, sticking to a tight trading range seen over the past three weeks as markets turned cautious ahead of upcoming U.S. consumer inflation data and a Federal Reserve meeting.</p><p>Last week gold was supported by soft labour data. This pushed gold prices a bit over expectations that the Fed will skip a gold rate hike at the conclusion of a two-day meeting on Wednesday.</p><p><b>There is a lot of geopolitical and economic uncertainty occurring globally. </b></p><p>The ongoing Ukraine crisis, Fed's economic uncertainty and financial crisis has led to a lot of volatility in the market. It has pushed gold into a tight trading range. </p><p><b><a href="https://www.rsbl.in/">Gold prices</a></b> have stuck to a trading range of between $1,930 and $2,000 an ounce over the past three weeks, with uncertainty over the economy and monetary policy offering little cues for a breakout.</p><p>Gold stands to benefit from any potential pause by the Fed, and is expected to see increased safe haven demand as global economic conditions worsen this year. But given that U.S. interest rates are likely to remain higher for longer, upside in the yellow metal may be limited as returns on debt appear more attractive.</p><p>Rising interest rates had battered gold prices through 2022, as the Fed enacted its most aggressive pace of monetary tightening since the 2008 financial crisis. But the prospect of a pause in 2023 has kept gold upbeat so far this year.</p><p>While we will not argue against an upside follow-through in <b><a href="https://www.rsbl.in/">gold and silver prices</a></b>,we still think the markets lack solid and sustainable bullish fundamental themes.</p><p>While we see the PGM markets continuing to slide, we see gold weakening but remaining capable of respecting consolidation support at $1,950. Silver on the other hand has a very strong chart set up and could be separating from financial market related fundamentals and in turn may be shifting toward factoring tight supply and hope for tech related demand improvement. However, both gold and silver should expect turbulence in the coming 3 sessions with global inflation readings and a US Fed rate decision scheduled for Wednesday afternoon. Uptrend channel support in July silver is far below the trade today down at $23.91 with closer in pivot point support seen at $24.32. As indicated already we see August gold remaining within a $1950 and $2000 trading range, but chart support is likely to be enhanced by weakness in the dollar.</p><p>Sentiment in the gold market remains bullish as momentum supports higher prices but analysts are warning investors that they should not expect prices to break above $2,000 an ounce next week as the Federal Reserve looks to maintain its hawkish monetary policy stance even as it leaves rates unchanged.</p><p>However, signs of a softening US jobs market should provide for ongoing declines in the dollar and ongoing declines in US treasury yields which are probably capable of pushing gold back up into consolidation resistance at $2001. </p><div><br /></div>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-52324636115882809032023-05-23T18:23:00.001+05:302023-10-20T18:25:19.292+05:30Dampened Demand For Gold Over Rate Hike<p> Last week gold ended with a nearly 0.35% gain at $1,989.65, failing to close above $2,000 throughout the week. Concerns about rising inflation continued after 1Q A core PCE QoQ and 1QA GDP price Index came in higher than expected.</p><p>These damp sentiments continued as the week opened. <b><a href="https://www.rsbl.in/">Gold prices</a></b> moved little in early Asian trade on Tuesday, hovering well below key levels as anticipation of a likely interest rate hike by the Federal Reserve supported the dollar and dented demand for the yellow metal.</p><p>Federal Reserve’s policy meeting due in 2-3 May this week remains each investors focus. The Fed is widely expected to deliver another 25 basis point rate hike on Wednesday amid strong US economic data and persistent inflationary pressures. Data showed that US consumer sentiment improved in April, while core PCE inflation exceeded forecasts in March.</p><p>But there is uncertainty about rate hikes and markets are not sure whether the central bank will signal a pause in its gold rate hike cycle.</p><p>This has kept demand for gold limited, given that rising interest rates push up the opportunity cost of holding non-yielding assets.</p><p>Bullion is known as a hedge against inflation and economic uncertainties, but rising gold rates tend to diminish demand for the zero-yielding asset.</p><p>Markets were also watching for a potential U.S. debt default, especially as a deadline for the government to raise the debt limit approaches. Treasury Secretary Janet Yellen warned of a potential default by as early as June 1.</p><p>Gold has struggled to hold the $2,000 an ounce level for nearly three weeks, as the yellow metal consolidated gains after surging to near-record highs earlier in April.</p><p>The short term and near term future of gold , is both uncertain and indecisive </p><p>The next 18 months will be especially risky as the U.S. embarks on the 2024 election season</p><p>The political timetable of the election cycle between now and the 2024 elections in the United States and Taiwan will likely lead to more push-the-limit anti-Chinese aggressive foreign policy from the US. </p><p>Fears of the Fed, coupled with a stronger dollar and yields will continue to see limited safe haven demand for gold, even as concerns over a U.S. banking crisis were renewed by the emergency takeover of First Republic Bank.</p><p>The future path of the yellow metal is likely to be determined by the Fed’s stance on interest rates, any new developments in the banking crisis, important decisions before the election campaigns and most importantly the US China ties. </p><p><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-59885914400774023642023-05-16T18:17:00.011+05:302023-10-20T18:21:50.914+05:30Gold Expected to Remain Elevated <p style="text-align: justify;">The average <b><a href="https://www.rsbl.in/">price of gold in Mumbai </a></b>during FY 2022 was around Rs. 48000 let 10 gram which soared to around Rs. 55000 by the end of the year.</p><p style="text-align: justify;">Currently gold prices are hovering around Rs. 63000 per 10 gm. Gold was seen touching new life highs due to the kn going geo political uncertainties.</p><p style="text-align: justify;">In the first week of May gold jumped significantly. But the speed at which it rose , it was pulled down in double speed by Mid May.</p><p style="text-align: justify;"><b>Reasons for its volatility are many. let's begin with the gold price rise first</b></p><p style="text-align: justify;">In 2022 Central Banks added 1136 tonnes of gold worth around $ 70 billion to their reserves. This addition has so far been the lagrest annual addition since 1967. The World Gold Council data revealed that Central Bank purchases , aided by rigourous retail investor buying and selling Exchange Traded Funds (ETF) outflows , lifted annual gold demand to a 11 year hjgh.</p><p style="text-align: justify;">Frther, the growing inflation triggering Central Banks to raise interest rates, tensions between Russia and Ukraine invoking fears of a full blown global war ,. uncertainty across stocks markets world wide and the recent collapse of the Silicon Valle Bank, followed by stress sale of Credit Suisse to its rival UBS group, have contributed to rising gold prices.</p><p style="text-align: justify;">Investors have reportedly been turning to gold and treasuries after the collapse of the Silicon Valley Bank and Credit Suisse's implosion.</p><p style="text-align: justify;"><b>Now moving to this week's significant drop in the gold prices</b></p><p style="text-align: justify;"><b>Gold is down $230 to $1990 and that's the lowest level since May 1.</b></p><p style="text-align: justify;">The $2070 zone of major resistance continues to hold and the $2000 level had held in two previous selloffs this month before breaking today. The gold market is soft today as the odds of a further fed hike next month creep up to 22% from 12% on strong retail sales, industrial production and home-builder sentiment.</p><p style="text-align: justify;">Gold fell after robust US retail sales helped push the USD higher, weakening investor demand. This is despite an ongoing impasse on US debt ceiling negotiations. More hawkish comments from Fed officials also added to the headwinds for the precious metal.</p><p style="text-align: justify;">We also expect a modest recovery of the dollar in the coming months. The pricing out of some Fed rate cuts and a modest dollar recovery will most likely result in lower gold prices but not in a change in trend. For 2024 we are optimistic about the outlook of <b><a href="https://www.rsbl.in/">gold prices</a></b>. Monetary policy easing by the Fed, ECB and BoE will be a positive for gold prices in 2024 as the rate differences between USD/EUR/GBP versus gold (zero interest rate asset) narrow.</p><p style="text-align: justify;">Basing the outlook on global financial instability , investor's and market players believe that gold will remain elevated in the coming years compared to pre COVID levels.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-56007445962750376562023-05-08T16:20:00.001+05:302023-05-08T16:22:01.408+05:30Dampened Demand For Gold Over Rate Hike<span id="docs-internal-guid-9ebeaa4f-7fff-9ae4-19e7-7b1358c5528f" style="font-size: 14.6667px; white-space: pre-wrap;"><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Last week gold ended with a nearly 0.35% gain at $1,989.65, failing to close above $2,000 throughout the week. Concerns about rising inflation continued after 1Q A core PCE QoQ and 1QA GDP price Index came in higher than expected.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">These damp sentiments continued as the week opened. <b><a href="https://rsbl.in/precious-metals/">Gold prices</a></b> moved little in early Asian trade on Tuesday, hovering well below key levels as anticipation of a likely interest rate hike by the Federal Reserve supported the dollar and dented demand for the yellow metal.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Federal Reserve’s policy meeting due in 2-3 May this week remains each investors focus. The Fed is widely expected to deliver another 25 basis point rate hike on Wednesday amid strong US economic data and persistent inflationary pressures. Data showed that US consumer sentiment improved in April, while core PCE inflation exceeded forecasts in March.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">But there is uncertainty about rate hikes and markets are not sure whether the central bank will signal a pause in its gold rate hike cycle.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">This has kept demand for gold limited, given that rising interest rates push up the opportunity cost of holding non-yielding assets.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Bullion is known as a hedge against inflation and economic uncertainties, but <b><a href="https://rsbl.in/">rising gold rates</a></b> tend to diminish demand for the zero-yielding asset.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Markets were also watching for a potential U.S. debt default, especially as a deadline for the government to raise the debt limit approaches. Treasury Secretary Janet Yellen warned of a potential default by as early as June 1.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Gold has struggled to hold the $2,000 an ounce level for nearly three weeks, as the yellow metal consolidated gains after surging to near-record highs earlier in April.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The short term and near term future of gold , is both uncertain and indecisive </p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The next 18 months will be especially risky as the U.S. embarks on the 2024 election season</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The political timetable of the election cycle between now and the 2024 elections in the United States and Taiwan will likely lead to more push-the-limit anti-Chinese aggressive foreign policy from the US. </p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">Fears of the Fed, coupled with a stronger dollar and yields will continue to see limited safe haven demand for gold, even as concerns over a U.S. banking crisis were renewed by the emergency takeover of First Republic Bank.</p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><br /></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The future path of the yellow metal is likely to be determined by the Fed’s stance on interest rates, any new developments in the banking crisis, important decisions before the election campaigns and most importantly the US China ties. </p></span>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-64365103190074080472023-04-14T16:55:00.003+05:302023-04-14T16:58:49.136+05:30It's A Big Week For Gold<p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Gold was going gaga over the ongoing uncertainties globally. There were a host of reasons combined that led to this spike </span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Gold, the safest haven amid the ongoing uncertainty, also emerged as one of the most lucrative investment options in financial year 2022-23 with an impressive return of 16.1 per cent in rupee terms, and 2.3 per cent returns in dollars.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Since quite some time we have seen <b><a href="https://rsbl.in/precious-metals/">gold rates</a></b> playing to the moves of either inflation number from US or the Ukraine Russia war. However, there have been a lot of influential factors that have been responsible for the rally in gold prices lately and will continue to do so. </span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Effect on <b>Gold rates</b> due to the </span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>Banking crisis</b>- The banking crisis, triggered largely by continuous hikes in the US rates, has led to bleeding bond portfolios and only large banks can survive these losses, the rest could belly up. It has definitely played a key role in gold prices rally and shall continue to do so as many analysts believe that this is just the beginning of a banking crisis.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>This scenario will keep safe haven appeal for gold rates</b></span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>Inflation and gold rate hike -</b> A lot hinges on whether inflation in the US stays above four per cent and the Federal Reserve effectively gives up its target of bringing inflation down to two per cent.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">This could happen if there is intense political pressure on the Fed or if the US economy enters recession or suffers a banking crisis.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">If the Fed starts cutting the <b><a href="https://rsbl.in/">gold rates</a></b> while inflation is still high, gold may see an accelerated move higher.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>Geopolitical -</b> Apart from the ongoing Russia- Ukraine war there are other countries following suit which will definitely benefit gold. If China attacks Taiwan and if the US decides to defend Taiwan, gold prices could shoot up.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">On the other hand, if Washington does not defend Taiwan, expect a quick move up and a quick retracement in the price of gold.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>Physical demand -</b> The key thing right now is that Russia and China appear to be accumulating reserves in a diversification away from US dollars. That China’s appetite for gold remains insatiable as the latest data from the People’s Bank of China bought 18 tones of gold last month.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>China’s gold shopping spree hit its fifth consecutive month</b></span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">According to many analysts, China’s dominating presents in the precious metal market is completely changing the investment landscape, creating solid value for investors.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Analysts note that China is expected to continue to increase its official gold reserves as it builds international credibility for the yuan. China continues to make important strides as it competes with the U.S. dollar as a world reserve currency. Any kind of physical demand will set gold prices rolling up.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">However on the domestic front the recovery gold prices will not rise comparatively for Indian investors as the movement of the dollar-rupee rate is expected to be a key determinant and is likely to limit the gains.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Meanwhile, the volatility will continue if the new US jobs report this week confirms there will be worries ahead for the economy.</span></span></p><p style="text-align: justify;"><span style="font-family: Arial;"><span style="font-size: 14.6667px; white-space: pre-wrap;"><b>It's a big week ahead for Gold!</b></span></span></p><p style="text-align: justify;"><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-41079711014363603082023-03-27T17:00:00.006+05:302023-03-27T17:02:17.238+05:30Financial Stress Attracts Safe Haven Buying In Gold<p> <span face="Calibri, sans-serif" style="font-size: 11pt; text-align: justify; white-space: pre-wrap;">Gold has gained almost $100 in the last two trading days. As we all know, the SVB collapse has been the sole reason behind these dramatic movements. And when this was not enough another bank shut down within a space of 72 hours- The Signature Bank. </span></p><span id="docs-internal-guid-320be672-7fff-c722-78a8-965726f0c8ce"><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Global banking shares plunged as a move by the US to guarantee deposits at tech-focused lender SVB failed to reassure that other banks remain financially sound. </span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;"><br /></span></p><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">The gold market saw great attention coming in from safe-haven trade in a chaotic market environment amid growing fears of contagion from Silicon Valley Bank's (SVB) collapse.</span></p><br /><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Several </span><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: 700; vertical-align: baseline; white-space: pre-wrap;"><a href="https://rsbl.in/">gold dealers in Mumbai</a></span><span face="Calibri, sans-serif" style="font-size: 10pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;"> </span><span style="font-family: Arial; font-size: 10pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">shared their opinion. “</span><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">There are two major drivers pushing the gold prices - the financial sector distress and the actions that will be taken by the Fed to overcome this turmoil. Markets are also reassessing interest rate hike expectations ahead of the Federal Reserve meeting on March 22.”</span></p><br /><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Friday’s market reaction saw a surge in gold buying as the bank's stocks came crashing down. This entire incident put the nonfarm payrolls number on the side and became the main influencer world over. The US authorities decided to step in over the weekend and cover all depositors at the Signature Bank. </span></p><br /><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Owing to this, there are expectations that the Fed would hold back from increasing interest rates by an outsized 50 basis points next t week. This strain on the banking system and Fed’s efforts to reduce its repercussions has created speculation in the market as to whether the Fed will push ahead with such an aggressive tightening cycle. </span></p><br /><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">Gold jumped tremendously in a day's trading since November as markets went into panic mode and investors tried to seek haven in bullion. This sudden spike is expected to mellow down, once markets get stable, and the Fed succeeds in regularising the situation. </span></p><br /><p dir="ltr" style="line-height: 1.2; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;"><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;">The upcoming US February Consumer Price Index and US Retail Sales reports are expected to be critical for monetary expectations in the </span><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: 700; vertical-align: baseline; white-space: pre-wrap;"><a href="https://rsbl.in/precious-metals/">gold price today</a></span><span face="Calibri, sans-serif" style="font-size: 11pt; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; vertical-align: baseline; white-space: pre-wrap;"> and all these numbers will be monitored closely. However following the unexpected SVB collapse, markets are pricing in a more relaxed stance by the Fed.
</span></p><p dir="ltr" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt; text-align: justify;">The fact of the matter is gold prices this week could swing by $200 in both directions as the trade is already within a very hyper volatile posture leading into a wave of global price report measures this week that are expected to impact the US Fed rate decision on March 22nd. In fact, along with the flight to quality buying interest early today, falling US treasury yields and steep declines in the dollar create a very broad strong bull case for gold which could produce significant upside price action. In retrospect, we are more confident in last week's lows becoming solid value than we are projecting gold reaching $2,000 this week. It should be noted that it has been a very long time since gold was perceived as "the hot market" but that potential is for real over the coming three sessions. Therefore, we suggest traders implement April near the money near to expiration April options against gold positions to ride through potential very wide swings in prices. Pushed into the market, we recommend long positioning over the coming days, but will consider purchasing June Gold puts later this week if prices extend the current rally straightaway.</p><div style="text-align: justify;"><br /></div></span>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-7973002884091806312023-03-09T14:45:00.004+05:302023-03-09T14:58:37.574+05:30Markets Await Cues From Fed Minutes<p style="text-align: justify;"><span style="white-space: pre-wrap;">Volatility in the markets across all asset classes remained low as the 21st Feb was US President's Day Holiday. <b>According to the Bullion Dealer in India</b>, “Last week was pan ultimate week of volatility where the US Dollar and US Bond yields surged abnormally over fresh hawkish US-based Data, which further implied till June 2023. This data soared the mood of the US equities and precious metals to some extent even though both have shown the ability to digest the data and comments for Fed and also their future limitations to implement more.”
During the weekend some geopolitical tensions mounted as the US ambassador warned China to cross redline if they directly support the military aid to Russia for its invasion of Ukraine. Hence the word of caution prevails across the Asian markets, which majorly opened flat. With a low profile day for precious metals, the only positive sentiment is the renewed geopolitical tension, especially between US and China.
Gold prices hit their highest since April 2022 early this month, but have since lost about $120 after a slew of economic data showed signs of a resilient U.S. economy and a tight labour market, fuelling concerns that interest rates would stay higher for longer.
“The price of the yellow metal has struggled in conjunction with the broader financial markets due to fears that the US central bank will continue to press the trigger to raise interest rates in its battle to beat inflation.” Shared the<b><a href="https://rsbl.in/"> Gold dealers in Mumbai</a></b>.
Gold prices hovered around a six-week low on Monday, moving little as traders awaited more cues on U.S. monetary policy.
Stubborn inflation, coupled with signs of strength in the jobs market, gives the Fed enough impetus to keep raising interest rates. The minutes of the Fed’s February meeting, due on Wednesday, is likely to reiterate the central bank’s hawkish stance.
The main factor for metallic commodities - and global financial markets - is the policy of the US Federal Reserve. While there was some hope that the US central bank might soon hit the pause button on its quantitative easing efforts, the recent wave of inflation data has cast doubt on the inflation-lowering narrative.
According to the <b>Gold dealers in India</b>, “Gold marked three straight weeks of losses, falling sharply from a nine-month high hit earlier this year as overheated inflation readings and signs of strength in the US jobs markets indicated that the Federal Reserve had enough impetus to keep raising interest rates in the near term.
Still, <b><a href="https://rsbl.in/precious-metals/">gold and other precious metals</a></b> could benefit from safe-haven buying later in the year, especially if slowing economic growth forces the Fed into reversing its hawkish
Markets are now uncertain over where U.S. interest rates will peak this year, with some analysts positing a potential terminal rate of over 6%.
Rising interest rates boost U.S. Treasury yields, which in turn increase the opportunity cost of holding non-yielding assets such as gold. The yellow metal plummeted in 2022 as the Fed embarked on an aggressive rate hike spree to curb inflation.
Focus this week is also on the personal consumption expenditures price index reading for January. The data, which is the Fed’s preferred gauge of inflation, is expected to have remained steady in January from the prior month, indicating sustained inflationary pressure.
</span></p><div style="text-align: justify;"><br /></div>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-23005082488171673802023-02-01T16:33:00.005+05:302023-02-01T17:37:05.859+05:30Gold Portfolio Allocation Slows Down <p style="text-align: justify;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Up- down, high- low, see- saw- Gold was totally on a contradictory move in the past few days. Well we can’t blame the precious metal for this confused behaviour. A host of global factors were responsible for creating this wave in the prices of precious metals.
Firstly we saw gold touching several month highs over a softening dollar which was a result of lower than expected U.S data numbers.
Gold prices recovered slightly from a two-day losing streak on Thursday amid growing uncertainty over a potential recession and the path of U.S. monetary policy.
U.S. retail sales and industrial production data for December read weaker than expected on Wednesday, ramping up concerns over a broader economic slowdown in the country as it struggles with tight monetary policy and relatively high inflation.
Then came in, one of the most influential factor – Interest rate hikes. The latest message delivered by Chairman Powell expressed that the Fed intended to slow the pace of interest-rate hikes in 2023. This message was reinforced by Patrick Harker- the president of the Philadelphia Federal Reserve. Reuters news reported that “he‘s ready for the U.S. central bank to move to a slower pace of interest rate rises amid some signs that hot inflation is cooling off”.
Though gold prices dropped on Tuesday, gold stalled its ongoing corrective downside, staging a decent comeback on Wednesday.
The US Dollar has reversed its early gains amid falling US Treasury bond yields, which has helped Gold price recover lost ground. Meanwhile, Gold price continued to benefit from increased bets of smaller US Federal Reserve (Fed) rate hikes, although the US Retail Sales and Producer Price Index (PPI) will help shed more light on the same.
However later in the day , <b><a href="https://rsbl.in/precious-metals/">live gold price </a></b>turned negative, erasing gains made on weak U.S. economic data yet staying above the $1,900 level, as key members of the <b>Federal Reserve</b> signaled their intent to keep pushing interest rates higher to combat inflation.
The <b>Federal Reserve </b>raised its benchmark rate more aggressively last year than any other time since the 1980s. Beginning in March 2022 the Fed raised rates at every FOMC meeting with four consecutive jumbo 75-bps rate hikes. This took the Fed’s benchmark rate from 0-25 bps in February to 425-450 bps by the end of the year. The Federal Reserve is currently anticipating that they will raise rates until they reach their target of 5 ¼ to 5 ½% this year.
Still, overnight comments from several Fed members, including Loretta Mester and James Bullard, called for more interest rate hikes, given that inflation is still well above the central bank’s annual 2% target. They also forecast that U.S. borrowing rates will likely peak around 5%, although most members supported a slower pace of hikes.
"High interest rates often suppress the <b><a href="https://rsbl.in/">price of gold</a></b>, as other investments become more attractive. However, central bank buying, particularly from developing countries turning away the dollar, has propped up the gold price." is what bullion dealers in India have to say.
Now when we look at portfolio allocation, we really need to see the best performing assets Vis a Vis its counterparts. And for gold, the strongest contender is crypto.
Gold and crypto currencies have sometimes been seen as competing for investor attention Of course, both crypto and gold can be a means of payment, a store of value and either is 'no-man's' liability. With the world becoming multi-polar, the latter point is important for central banks, especially in emerging markets. To that point, in the run-up to the war in Ukraine, Central Bank of Russia had reduced USD holdings while at the same time boosting exposure to gold.
Nonetheless, gold has a solid and credible history and is way superior compared to others assets in its class.
Precious metals, including gold, silver, platinum and palladium, have grown in prominence in recent years as viable investment alternatives to include in asset allocations. Asset allocation seeks to increase risk-adjusted returns through diversification, based on the principle that different assets perform differently under varying market and economic conditions. For several decades, investors have achieved this through traditional asset classes, such as stocks, bonds and cash.
Though, currently, investment allocation in gold has halted for awhile, we believe that as things start to settle, and we start to see the outcome of gold price today rises, not only in the U.S. but globally we're going to start to see how gold will fit back into people's portfolio.
</span></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-3828546195444106322023-01-13T18:38:00.001+05:302023-01-13T18:41:35.180+05:30Gold Welcome 2023 With a Bang! <p style="text-align: justify;"><span style="font-size: 14.6667px; white-space: pre-wrap;">Nothing or nobody <b>welcome 2023</b> with a bang the way gold did. The yellow metal had a glittering start to the year as it hit another six-month high on Wednesday, 4th January. Safe-haven demand is featured so far this first trading week of 2023, amid shaky global stock markets, global economic growth worries, rising Covid infections, the dollar and inflation worries-
MINUTES - Gold price clanged to gains around $1850 following the release of the Federal Reserve’s Open Market Committee (FOMC) minutes for the last meeting, which emphasized the need for the central bank to tighten conditions amid stubbornly high inflation levels.
The Federal Reserve released the minutes from last month’s FOMC meeting. Unanimously Fed officials agreed that the central bank should slow the pace of its aggressive rate hikes. This would allow them to continue to ratchet up the cost of credit to curb inflation. They continue to be worried that market participants have an inaccurate perception of hoping for rate cuts this year. However, they left the door open to tightening even more aggressively if inflation rises.
Gold and silver prices did back well down from their daily highs ahead of the early-afternoon release of the minutes from the last Open Market Committee meeting of the Federal Reserve (FOMC). <b><a href="https://prithvirajkothari.com/">Bullion dealers in India </a></b>were wondering if the minutes might produce a hawkish surprise.
The December minutes showed that policymakers agreed to slow the pace of interest rate hikes but added that a slowdown is not a “weakening commitment to achieving price stability on that inflation is already on a persistent downward path.” Fed officials added that the US central bank had made significant progress in moving to restrictive policies and added that no rate cuts would be necessary for 2023.
In the minutes, officials noted that a slower pace of rate hikes does not mean an easing of financial conditions. The gold market was able to hold some of its daily gains following the release of the Federal Reserve's December meeting minutes, with price trading above the $1,850 an ounce level.
At the December meeting, Fed officials confirmed their commitment to bringing down inflation and warned against "unwarranted" loosening of financial conditions.
The meeting minutes also revealed that officials were worried about any "misperception" in financial markets around their actions.
<b>RISING COVID INFECTIONS-</b> The rallies in the gold and silver markets this week also come amid worries about rising Covid infections in China continuing to crimp the world’s second-largest economy.
<b>SLOW ECONOMIC GROWTH- </b>Global stock markets were mostly firmer overnight. U.S. stock indexes are higher today. Still, there is keener trepidation in the marketplace this week. Potentially slowing economic growth in the major industrialized countries along with problematic price inflation in 2023 are keeping traders pensive and prompting safe-haven demand for the precious metals
Gold prices ticked higher on Thursday, aided by a softer dollar, while market participants braced for U.S. jobs data that could influence the Federal Reserve’s policy trajectory.
<b>INFLATION WORRIES-</b> Additionally, policymakers added that inflation risks could be more persistent and that further increases to the Federal Funds rate (FFR) would be appropriate.
<b>Gold price today</b> is holding close to the highest level in seven months above $1,860 in the European session, accelerating the upbeat momentum, as the US Dollar tumbled across the board following a hot start to 2023.
<b>U.S. DOLLAR- </b>the US Dollar remains under heavy selling pressure, as the European equities opened higher. Further, the sell-off in the US Treasury bond yields gathered steam and exacerbated the pain in the greenback, allowing the non-yielding Gold price to extend its uptrend into the fourth straight session.
Bullion is seen as a hedge against inflation, but rising rates dull non-yielding asset's appeal. The short-term expectation is that live gold price will climb to $1,880 per ounce and trade broadly around $1,800 for most of the year[Text Wrapping Break]
Gold has had a good start to the year, helped by a weaker dollar and expectations that the Fed might slow its pace of rate hikes. Recession risks and central bank buying should also support bullion this year.</span> </p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-74104141777996274032022-12-19T18:51:00.001+05:302022-12-19T18:51:26.916+05:30Gold- Near & Long TermIt’s a roller coaster ride, all the way up especially when a falling USD suddenly sparks a pullback which further sends the metals into spiralling mode. Alongside the metals we saw a large unwind! However, bullion dealers in India noticed that the 1% jump in USD caused -2 to- 3% cuts in gold and silver on Monday, 5th December in the late trading sessions. A constantly improving data and positive numbers from the US leaves an impression that the Fed’s effort to cool down economy by calibrating interest rate hikes, does stand a partially achieved step only. Having said that, the USD Index showed an uptick along with US Bond yields and marred the Tech and Metal sectors in Asia Markets. <br /><br />The price of gold advanced after Federal Reserve Chair Jerome Powell signalled the pace of tightening would slow at the next meeting, ahead of economic data that could bear on the central bank's future rate hikes. The gold market, seeing a solid breakout from last month's two-year lows, appears to be getting comfortable around $1,780 an ounce; however, one bank is warning investors that gold's recovery looks fragile. There is a risk gold prices retest supports at $1,750 an ounce and in spite of this rally, there is some hesitancy in the marketplace.<br />Investors – big and small, continued to liquidate their holdings in gold-backed exchange-traded products.<br />Giant gold-backed investment fund the SPDR Gold Trust yesterday saw shareholder liquidation for the 3rd session running, shrinking the world's largest gold ETF by 0.5% since last Wednesday<br /><br />Gold is still in danger of falling lower and giving up its recent gains, but the longer-term outlook is more constructive as the Federal Reserve shifts from tightening to easing next year. <br />Gold has been seeing head-turning gains in November and the beginning of December, but the rally has a high chance of fizzling out as the U.S. central bank is still raising rate<br />But looking into next year, <a href="https://rsbl.in/" target="_blank">largest bullion dealers in India</a> predict that things might begin to shift for the precious metal, which has been battered down by this year's strong U.S. dollar and higher yields.<br />Global economic uncertainty and heightened geopolitical tensions will create a "worldwide war economy" that prioritizes domestic supplies and price caps, ensuring that inflation will remain persistently high through 2023.<br /><br />The tone of the gold market is getting more positive as Jerome Powell signalled the pace of rate hikes would slow at the Fed's next meeting. In some ways, the market has taken the lead from the Fed. In November, gold gained 8% with talk of Covid loosening in China, but the dollar lost 5% in conjunction with a rise in gold and some anticipation that the Fed can't keep raising rates this fast. We had a major blow up with the crypto space, and now Blackstone's $69 billion real estate fund for wealthy individuals announced it is limiting redemption requests on the fund as total requests to liquidate exceed the threshold withdrawal limits. Gold is beginning to get interesting as other investment returns look less certain. <br /><br />Higher for longer consumer prices, improvement in Chinas economy, pumping liquidity into the global financial markets by the central banks (owing to the great recession), will drive gold prices dramatically high says gold dealers in India at RiddiSiddhi Bullions Limited. <br /><br />As well as being an inflation hedge, gold will also remain an attractive asset for nations looking to further reduce their exposure to the U.S. dollar. <br />Gold is still in danger of falling lower and giving up its recent gains, but the <a href="http://rsbl.in/" target="_blank">top gold dealer in India</a> can assure you that the longer-term outlook is more constructive as the Federal Reserve shifts from tightening to easing next year<br />Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-53777445265409068472022-12-07T13:01:00.001+05:302022-12-07T13:01:18.593+05:30Markets wait for 2022 to end on a positive note <p> “Gold ticked higher on Monday as a retreat in the dollar made bullion more attractive for other currency holders, drawing further support from some safe-haven demand from China amid wide protests over its strict COVID-19 curbs.” says the <a href="https://rsbl.in/" target="_blank">top gold dealer in india</a>.<br /> <br />The US markets fell on Monday post the sudden hawkish comments released by the Fed and also the ongoing unrest in China. But on Tuesday morning there were reports that China State Council will have a press conference to hopefully call off the zero Covid policy. This created a direct and positive impact ion Hong Kong and Shanghai markets, noted by bullion dealers in India.<br />If the China COVID situation does not come under control and the crisis gets worse then it could be positive for the gold market. <br />On one hand we have the escalating crisis in China and on the other hand we have hawkish Fed comments. Both these are acting as opposite drivers for the yellow metal.<br />Gold prices slipped from a more than one-week high on Monday, as the dollar rose from session lows on hawkish comments from members of the U.S. Federal Reserve reiterating their fight against inflation.<br />Various members of the Federal Reserve have been extremely vocal about upcoming interest rate hikes. One of the more hawkish Federal Reserve members is the St. Louis Fed President James Bullard. Last week he commented on the need for the Federal Reserve's benchmark rate to go as high as 7% to deal with lowering inflation. This week speaking to Greg Robb an editor at Market Watch when asked a question about how long expects the fed funds rate will need to remain in the 5% to 7% range, he said that "the Federal Reserve will likely need to keep its benchmark policy rate north of 5% for most of 2023 and into 2024 to succeed in taming inflation.<br /><br />Spot gold last fell 0.86% to $1,740.557 per ounce, after hitting its highest since Nov. 18 earlier in the day. U.S. gold futures settled down 0.8% at $1,740.3.<br />The dollar turned positive after falling to a near two-week low earlier in the session. A stronger dollar makes greenback-priced metals more expensive for other currency holders.<br />Fed Presidents James Bullard and John Williams stated that there was a long way to go to fight inflation, with Bullard stating that rates should be held high “throughout next year and into 2024.”<br /><br />But a very strange or rather bizarre trend being witnessed in some of the leading economies (excluding US) is the reduced dollar dependency. <br />This has been highlighted even more post the Russian –Ukraine War. <br />West sanctions against Russia are backfiring, particularly fir the US dollar, which is slowly but surely losing its grip on global dominance. <br />After witnessing western nations unilaterally freeze Russia’s foreign assets in response to Moscow’s military operation in Ukraine, largest bullion dealers in India noticed that central banks have been boosting their gold reserves so the same thing doesn’t happen to them should Washington suddenly turn unfriendly. Over $300 billion of Russian foreign reserves— not including assets owned by businesses and individuals— were frozen by the Biden administration and other western allies<br /> <br />China and Russia are allies with the former closely associated with the World Economic Forum, whose plans to implement the Chinese social credit system globally are well advanced. <br />On the other hand, social unrest, inflation, disrupted supply chain and food supplies etc have created pressure on the dollar and its importance as a world currency has depleted. <br />If this continues to happen, the U.S. will no longer be able to exchange piles of intrinsically worthless paper for the goods and services produced by the rest of the world and will rapidly become a banana republic, kind of like Haiti but without the mild winter climate. China and Russia have been moving toward this goal for many years, which is why they have been accumulating vast quantities of gold at knockdown prices in preparation for the day when they will launch a gold-backed currency that will see the dollar might lose its significant hold at astonishing speed.<br />They have been waiting for the right moment, and with the Fed doubling the number of dollars in existence every few years now, that time is believed to have arrived. The imminence of this may explain why the dollar tanked this month.<br />But this data is not being supported by strong evidence and we can do nothing but wait for concrete facts. Meanwhile some important data coming up- <br /> <br />Jerome Powell is due to speak at a Brookings Institution event on Wednesday, on the outlook for the U.S. economy and the labour market<br />U.S. non-farm payroll data for November is due on Friday, which might shift expectations around the Fed’s policy move in December. Traders currently anticipating a 50-basis-point rate hike.<br /><br />Keeping fingers crossed, we at RiddiSiddhi Bullions Limited hope global markets to end 2022 on a positive note, thus benefiting the max.<br /><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-33470810330931614092022-11-18T11:51:00.003+05:302022-11-29T11:53:57.647+05:30Heavy Decline in gold prices- Unlikely<p> What a year it’s been world over. Financial markets have swung from all-out bullishness to maximum bearishness. Most asset classes- equities. Bonds, crypto-coins, commodities (ruling out energy) have fallen by a fifth or more from their highs. In such a situation gold should have been shining and how. But dollar, monetary policies, inflation and rate hikes have dampened the bullish sentiments for the yellow metal.<br />Bullion prices plummeted this year, recently hitting an over two-year low as rising yields drove up the opportunity cost of holding gold. The metal has largely lost its safe-haven status this year, and also appears to have failed as an inflation hedge. <br />“With U.S. inflation staying stubbornly high this year, rising interest rates are expected to pressure bullion prices in the near-term” says the largest bullion dealers in India.<br /> <br /> <br />Gold has tumbled from above $2,000 an ounce in March to around $1,650 as the U.S. Federal Reserve and other central banks raised interest rates rapidly to tackle inflation.<br />Higher rates pressured gold by lifting returns on other assets such as government bonds and the dollar that compete with gold for investment<br /> <br />And this was very well witnessed in the current week by <a href="https://rsbl.in/" target="_blank">gold dealers in India</a>.<br />The precious metal quickly tumbled during Powell's press conference, which followed Fed's decision to raise rates by 75 basis points for the fourth time in a row. The latest hike means that the Fed has already raised rates by 375 bps since March, bringing the key policy rate to a range between 3.75%-4%.<br />Gold prices fluctuated in a narrow range on Thursday, following a volatile session after US Federal Reserve Chair Jerome Powell tamped down on expectations of a policy pivot saying it was “premature to discuss pausing”.<br />Gold lost all gains, post-Fed statement, as Chair Jerome Powell signalled that the "ultimate level" of interest rates would likely be higher than previously thought. He also said the window for a soft landing has "narrowed."<br /><br />Spot gold rose as much as 1.3% after the release of the policy statement at the end of the two day meet. However the price rise dampened post Powell’s remarks. <br /><br />Powell said that even though a slowdown in rate hikes might happen in December or February, the U.S. central bank is likely to take rates higher than previously thought. "At some point … it will become appropriate to slow the pace of increases as we approach the level of interest rates that will be sufficiently restrictive to bring inflation down to our 2% goal," he said. "We still have some ways to go. And incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected."<br /><br />Powell also acknowledged that the window for a soft landing has "narrowed" as monetary policy has become more restrictive this year. "The inflation picture has become more and more challenging over the course of this year," he said. "That means that we have to have policy be more restrictive, and that narrows the path to a soft landing."<br />Although gold is considered a hedge against inflation, higher US interest rates increase opportunity cost of holding the non-yielding asset and this further boosts the dollar. <br />During the press conference, Powell hinted that rate increases could be less aggressive from now on. According to him, the critical question becomes not how fast but how high to raise the policy rate and how long to keep it elevated.<br />Another hawkish point was that it was still premature to think about a pause in rate hikes, with the December meeting expected to reveal how high the Fed might raise rates thus strengthening the dollar and pushing gold down further.<br /><br />But one positive outcome of all these events will be will be the old trading mantra- BUY ON DIPS.<br />“Well then it’s obvious that any dip in prices of the yellow metal will result in a surge in its demand and people are more likely to buy it given the uncertain times that lie ahead. Hence gold won’t be under a strong impact thus a heavy decline in its prices is not expected.” is predicted by the top gold dealers in India at RiddiSiddhi Bullions Limited.<br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-67283343566291919472022-10-19T14:31:00.001+05:302022-10-19T14:31:18.326+05:30Global Recession<p> This year has seen a correction in the gold price, corresponding with rising interest rates/ bond yields, and the spectre of more to come. The precious metal has also been hammered by a strong US dollar, which is negatively correlated to the gold price.<br /><br />Spot gold has fallen from $1,801.40 at the start of the year, to $1,666.45 currently, a drop of 8%. On Sept. 15, gold plunged to its lowest level since April, 2020, on expectations of a 0.75% interest rate increase by the Federal Reserve, which happened on Sept. 21.<br />Were almost nearing the end of 2022 and this year the <a href="http://rsbl.in/" target="_blank">largest bullion dealers in India</a> have seen that Gold has been sensitive to geopolitical risks, US dollar, inflation and rate hikes.<br /><br />GEOPOLITICAL RISK- gold has always been relative to geopolitical risks. During times of crisis and uncertainties, it proves to be a safe haven asset. In a report published on 25 June 2022, The Economist pointed the historical relation between gold food, fuel price inflation and political unrest.<br />INFLATION- Escalating food and fuel prices have led to political violence and supported gold in the past. Drops in living standards and resultant unrest have had adverse impacts on financial markets, ending up supporting gold. Political violence – even if it does not result in a change of government – has added to economic dislocation. Social disorder has deterred both direct and portfolio investments, says the top gold dealer in India. This has reduced GDP, weakened equity markets and boosted safe-haven buying in gold. Although gold may still be more sensitive to monetary policy and US dollar levels than overall inflation, food and energy- in certain circumstances- may nonetheless exert influence in bullion. <br /><br />INTEREST RATE HIKE- According to the vast majority of economists, a fed funds rate of 5% or higher would have a devastating effect on the economy. It would be negative for stocks and earnings and lead to more selloffs in bonds. It could in essence shut down the ability for loans to be granted from individual loans such as mortgages or loans to corporations.<br />Even more worrisome is there are some economists expecting fed funds rates to rise to 6% at some point. The repercussions could easily aggravate and accelerate a global recessionary scenario creating a major disruption in the global economy.<br />Bullion dealers in India say, “the sad truth is that this scenario could have been avoided had the Federal Reserve acted on rising inflation in 2021. While they certainly were not responsible for the black swan event that was a pandemic leading to a recession, they are completely responsible for not acting in an efficient and reasonable time when it was quite evident in 2021 that inflation was beginning to spiral out of control.”<br />This helps reaffirm the views of <a href="http://rsbl.in/" target="_blank">RiddhiSiddhi Bullions Limited</a> that while gold prices are most likely headed lower as a consequence of tightening monetary policies, more moderate fiscal policies and a strong US dollar, these likely losses should be tempered and measured. In our view, geopolitical risks and food and energy increases, as well as strong retail coin and bar demand, will moderate any potential price declines<br />DOLLAR- The main culprit making things challenging for gold is the hotter-than-expected inflation forcing the market to re-price the aggressive Federal Reserve rate hike expectations. And that is giving the U.S. dollar an additional boost. The USD’s relationship with gold has strengthened recently. This is likely to put pressure on gold, as further rate hikes should see the USD continue to strengthen. The wildcard is central banks defending their currencies by selling US Treasury bonds. That would be an upside risk to our view.<br />Gold dealers in India are being warned the gold market could continue to struggle through year-end as higher interest rates support the US dollar. The longer the Fed continues on its current path, the longer that a strong dollar will depress the gold price<br /><br />Rising geopolitical and economic risks are having limited impact on haven buying. Instead, investors continue to seek protection in the USD. Investment flows have been negative for the last two quarters. This could continue with exchange traded funds (ETF) as elevated holdings still leave room for further liquidation. Nevertheless, lean investors’ positioning in futures looks less of a concern.<br /><br />In medium term there's greater chance for gold to go higher than lower. We're going to see negative outcomes in the economies globally, which could eventually tip the scales in favour of rate cuts.<br /><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-11518606186578330072022-10-07T18:21:00.000+05:302022-10-07T18:21:10.753+05:30Bullions could be in for more volatility<p> Just last week we were discussing the opportunities ahead that would makes gold strong in the near future. And here it is! Finally gold moved on to the upside and there was complete turn of tables as gold once again witnessed safe haven buying. <br /><br />For <a href="http://rsbl.in/" target="_blank">RiddhiSiddhi Bullions Limited</a>, there was enough evidence to prove that gold was definitely here to stay. Once again, it has proved its worth as a safe haven asset in times of uncertainty and also as a hedge against inflation. Strong reversal signs from U.S. and EU markets, the U.S. bond from its peak and the subsequent fall in the USD made markets run on extreme short coverings and extreme over sold zones. This paved way for gold which is expected to scale towards $1732-1735 bracket very soon.<br /><br />Gold prices jumped more than 2 per cent on Monday boosted by a dip in the US dollar and bond yields, as recent lows enticed investors and also sparked a rally in silver in potentially its best day since late-2008. <br /><br />The two precious metals are catching a solid safe-haven bid as the global stock and financial markets remain jittery, as media outlets are focusing on a desperate Russian president that may resort to using nuclear weapons in his war with Ukraine, and amid bullish outside markets that see higher crude oil prices and a weaker U.S. dollar index on this day and not forgetting the geo political and economic crisis. <br /><br />Fed and Dollar- Gold soared the most since March, helped by a continued decline in Treasury yields, as traders weighed concerns that central banks’ monetary tightening will lead to recession and the possibility that bond rates may have reached a peak.<br />Bullion extended its first weekly gain in three weeks, as lower bond rates boosted the appeal of the non-interest bearing asset. Silver gained the most since February 2021 as traders bought back their previously short positions with the dollar and bond yields moving lower. It seems clear that apart from the above mentioned concerns- what’s driving the precious metal right now is the dollar- it continues to remain important remains important for gold prices, although even its impact on the metal appears to have weakened. <br /><br />Central Banks- Central banks will also continue to support gold prices with their buying<br />The fact that the Fed and the ECB are leaving interest rates low could provide support for gold alongside weak economic growth. However, gold appears to be in a holding pattern for now and looks strong from here. <br /><br />Global stock and financial markets and Recession. There are reports and rumours swirling that investment bank Credit Suisse may be in serious financial trouble. If a major global investment bank may be on the verge of collapsing and the dictator of the nation with the most nuclear warheads in the world has his back against the wall, while at the same time major global economies are battling inflation and teetering on recession, it appears increasing numbers of the public are now opting to possess gold and silver. “It will be important for the gold and silver bulls to show follow-through price strength this week, which would then begin to suggest sustained price uptrend, could develop in both metals.” says the <a href="http://rsbl.in/" target="_blank">top gold dealer in India</a>.<br /><br />once again, it appears when the heat in the marketplace gets turned up significantly hotter and trader/investor anxiety rises above what could be considered normal or even a bit elevated levels, demand for the safe-haven metals kicks in more aggressively<br /><br />As mentioned above, there are a number of factors that have influenced precious metals, but we need to see gold and silver in the broader perspective. Comparatively, gold has so far been one of best performing assets in its class in 2022. Gold has outperformed U.S. bonds, foreign bonds, S&P 500, foreign stocks, NASDAQ and US Treasury Inflation Protected Securities (TIPS)<br /><br />The largest bullion dealers in India are running an hypothesis stating that traders will now look to US jobs data due on Friday for more clues on the future path of central bank monetary policy. That means bullion could be in for more volatility.<br /><br />Now as geopolitical and recessionary crisis escalate, we will see more and more investors shifting focus to gold as a move of their defensive strategy. Rise in demand of such high quality liquid assets will put gold at the top position per se returns generation in its asset class.<br /><br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-75477010601703895992022-09-30T11:17:00.000+05:302022-09-30T11:17:22.680+05:30Noisy Challenges ahead for Gold<p> Many believe that markets have been behaving very strange lately. But frankly speaking, I did not find this new. This was bound to happen amid rising US dollar and US bond yields. Needless to say, the recession is prevailing in most EU economies and if DOW has tumbled-3500 (-12%) in the past 6 weeks, it got discounted on day to day basis after data releases.<br /><br />According to the <a href="https://rsbl.in/" target="_blank">gold dealers in India</a>, “The Pound's crash is showing markets have a lack of confidence in the UK and that its financial strength is under siege. The UK is now in the midst of a currency crisis. British government bond prices collapsed on Monday, pushing yields to their highest in over a decade with 2-year Gilt yields jumping by more than 50 basis points for a 2nd session running to 4.53%, the highest since September 2008.<br /> <br />That means UK bond prices are on track for their biggest slump of any calendar month since at least 1957, according to a Reuters analysis of Refinitiv and Bank of England data.<br /> <br />European bond prices also slid on Monday, led lower by Italian sovereign debt, after victory for a coalition led by the Brothers of Italy in the country's snap election, forced by parties across the spectrum pulling their support for former European Central Bank chief Mario Draghi as caretaker premier. There’s a fear that the new actions will add uncertainty to the economy. <br /> <br />“The key question will be what does this mean for ultimately weakening the European economy, which is an important consideration for how the U.S. economy is going to perform. The USD surge along with bond yields are at a new decade high, making the recession woes more amplified and asset grinding.” shared the largest Bullion dealers in India. <br /> <br />Amidst all this gold too was not spared. Gold prices rose on Tuesday as the dollar slipped, but the metal languished near a 2-1/2-year low on prospects of further rate hikes by the U.S. Federal Reserve to tame soaring inflation. As long the Dollar continues its relentless rise and until the market reaches peak hawkishness and yields start to top out, gold will struggle to act as a defence against stagflation.<br /><br />As fears of a widespread U.S. recession mount, the global marketplace started Monday in choppy waters. The dollar’s continued strength has been a headache for gold bugs, as the Yuan hit 2008 lows and the British pound sterling was hit by the U.K.’s plan to sell more government bonds in a bid to better their economic growth. The dollar’s advance stalled on Tuesday, providing relief for the non-interest-bearing metal. While gold is seen as a traditional haven in times of economic distress, fears of a global recession stoked by central banks’ monetary tightening have instead triggered big gains in the greenback.</p><p>Global stock markets fell for the 15th session in the last 20, while government bond prices also fell again together with most industrial and energy commodities in Dollar terms.<br /><br />The <a href="https://rsbl.in/" target="_blank">top gold dealers in India</a> believe that The focus is still on dollar strength, and it could continue to weigh on the precious metal as more rate hikes to tame inflation will dent gold’s safe-haven status. <br />Gold prices started the week on the defensive amidst shrinking open interest and volume, hinting at the likeliness that further losses look not favoured and therefore a potential rebound could be in the offing. In the meantime, decent contention has so far emerged around the $1,620 level per ounce troy.<br />The prevailing upside risk to inflation and, hence, monetary policy tightening still remains a key obstacle limiting gold's upside.</p><p>Fed officials on Monday sloughed off rising volatility in global markets and said their priority remained controlling inflation. </p><p>Gold prices have declined more than 20% since rising above the key $2,000 level in March, as rapid U.S. rate hikes made the non-yielding bullion less attractive and also pushed the dollar to multi-year highs. </p><p>But there are some who believe otherwise. Even though gold prices have fallen more than $400 since the precious metal broke through a critical $2,000 level in March, some experts are seeing positive signs amid the noisy challenges. </p><p>The gold loyalists believe that the yellow metal could jump in value if the Federal Reserve's campaign of interest-rate hikes fails to crush inflation. Owing to the rate hikes, investors could lose faith in the central bank and their long-term inflation expectations would rise, boosting demand for the metal as a hedge.</p><p>This week, the market may face fresh volatility from the release of US inflation data and public speaking engagements by Federal Reserve officials including Vice Chair Lael Brainard and New York Fed President John Williams.<br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-66222028366939852862022-09-23T14:51:00.001+05:302022-09-23T14:51:41.435+05:30Buy on Dips - the new mantra for gold<p> Gold prices rose through the first few months of the year, as investors sought a haven amid the geopolitical chaos unleashed by the war in Ukraine. Credit Suisse analysts said they see central bankers taming inflation through higher interest rates and a shallow recession as being a more likely scenario than a deeper downturn. As a result, they lowered their gold price estimates this year to US$1,725 per ounce from US$1,850 per ounce, and they forecast US$1,650 per ounce in 2023.<br /> <br />The yellow metal is now well on track to record its sixth consecutive monthly loss amid a period of high inflation, something that has helped bullion prices in the past but not always. The <a href="https://rsbl.in/" target="_blank">largest Bullion dealers in India</a> believe that The global fight against inflation in the form of aggressive and simultaneous rate hikes by central banks is raising the risk of a recession and a string of financial crises in 2023, the World Bank said in a report.<br /><br />Inflation appears out of control for the first time in decades. Stock markets have been pummelled. The shadow of a recession is looming amid rapidly rising interest rates. Russia’s ongoing assault on Ukraine has unleashed chaos on global food supplies, trade and the political order.<br /> <br />The gold dealers in Mumbai shared, “All these factors traditionally drive investors to buy gold, a safe store of value for centuries. Yet the prices of gold, along with the equities of gold miners, are in free fall. As gold falls below its support of $1,675thanks to the strengthening dollar that is weighing down the precious metal. Gold and the U.S. dollar often move in opposing directions. The dollar held close to two-decade highs, making green back–priced bullion more expensive for overseas buyers. Traders and investors appear to be favouring the perceived safe-haven greenback and US Treasuries over the precious metals. The dollar has been the biggest weigher on the price of gold along with the Federal Reserve’s rate hikes.<br /> <br />Last week, gold fell three per cent to US$1,665 per ounce after the release of data that showed that U.S. inflation hit 8.3 per cent in August, the opposite of what you would have expected given fresh evidence of intense upward price pressure. Gold has now sunk some 20 per cent since hitting US$2,087 per ounce in March. Gold is not an inflation hedge, but rather "a hedge against stagflation" and "a hedge against investors losing faith in government and currencies." <br /><br />The Federal Reserve has been laser-focused on bringing inflation down to an acceptable level of approximately 2%. However, inflation remains exceedingly hot, and persistent. The CPI index hit a 41-year high in June at 9.5%. The most recent data revealed that inflation remains extremely elevated coming in at 8.3% in August<br /><br />According to the <a href="https://rsbl.in/" target="_blank">top gold dealers in India</a>, “Marketplace focus is now on this week’s FOMC meeting that begins Tuesday and ends Wednesday afternoon. The FOMC is generally expected to raise the key U.S. Fed funds rate by 0.75% in the Fed’s effort to tamp down problematic price inflation. However, there is scattered talk the Fed could do a full 1.0 per cent rate hike. One investment bank’s research team said the Fed raising 100 basis points is possible but not likely. The Bank of England also holds its monetary policy meeting later this week. The higher nominal rates coupled with potentially moderating inflation over the coming months (even if still well above the Fed’s 2 per cent target) will likely lead to lower gold prices. This could lead to a spike in demand for the yellow metal as investors would take advantage of “buy on dips. This would probably improve the fundamentals for gold amidst rising political tensions domestically. <br /></p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-63308171043248103332022-08-19T13:44:00.000+05:302022-08-21T13:52:16.553+05:30The gold price tested the $1,800 mark for the first time in over a month on TuesdayWhile we give credence to the recent uptrend action in gold and silver, we now see the potential for a top. Gold prices steadied on Friday and were on track for their fourth consecutive weekly gain, as broader weakness in the dollar countered pressure from an uptick in the Treasury yields and prospects for US interest rate hikes. “Fundamentally gold is facing conflicting factors here. On one hand, we have a weaker US dollar helping, but the other side of the equation is of course the rise in yields.” said <a href="https://rsbl.in/" target="_blank">top gold dealers in India</a>. <br /><br />“On the other hand, do not underestimate the importance of bringing inflation under control and continuing to tamp down recession fears through less aggressive rate hikes as that could remove macro-economic headwinds for many commodities” shared gold dealers in Mumbai. <br /><br />Let's take a look at the conflicting factors affecting gold-<br /><br />Weakening US dollar- The dollar was set for its third weekly loss in four, making gold less expensive for other currency holders. [USD/] . Gold has struggled to make significant headway despite the correction in both the U.S. dollar index and the easing in the 10-year U.S. treasury bond yield," said independent analyst Ross Norman.<br /><br />The dollar index weakened, making bullion appealing to overseas investors<br /><br />Interest Rate Hike- U.S. benchmark rates are currently between 2.25% to 2.5%. Their comments offset optimism over an unexpected fall in U.S. producer price inflation in July, data showed on Thursday. This came after reading on Wednesday showed U.S. consumer price inflation remained static through July, after rising exponentially earlier in the year. Gold prices retreated on Friday, as hawkish comments on interest rate hikes by the Federal Reserve outweighed optimism over signs of cooling U.S. inflation. <br /><br />But overnight comments from Fed officials on the path of policy tightening kept investors uncertain over future interest rates. Data on Thursday showed U.S. producer prices unexpectedly fell in July. It came a day after news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices.<br /><br />Inflation - "With U.S. inflation data now behind us, it is almost like the calm after the storm and that has led to tight ranges for currencies and commodities after a spell of volatility a couple of days ago. Fed funds futures traders are now pricing in a 61.5% chance of a 50-basis-point hike in September and a 38.5% chance of a 75-basis-point increase. Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion. Weighing on gold by increasing the opportunity cost, benchmark U.S. 10-year Treasury yields hovered near a three-week peak.<br /><br />However, Fed policymakers noted that they would continue to tighten monetary policy until price pressures were fully broken. U.S. Data- the number of Americans filing new claims for unemployment benefits rose for the second straight week, indicating further softening in the labour market despite still tight conditions as the Federal Reserve tries to slow demand to help tame inflation.<br /><br />The U.S. economy unexpectedly contracted in the second quarter, with consumer spending growing at its slowest pace in two years and business spending declining. The second straight quarterly decline in gross domestic product largely reflected a more moderate pace of inventory accumulation by businesses as job gains overall have stayed strong.<br /><br />Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-86723475739658926152022-08-05T10:38:00.001+05:302022-08-21T13:42:31.932+05:30Gold gives it best Over 5 weeks<p style="text-align: justify;">Both gold and silver prices have spiked dramatically higher over the last two weeks and accelerated their upward momentum over the last two days as per <a href="https://rsbl.in/" target="_blank"><b>the gold dealers in Mumbai</b></a>. Gold and silver prices have moved to new multiweek highs in response to two major events that have confirmed what the American public has been acutely aware of for some time. Firstly,</p><p style="text-align: justify;"><b>Recession-</b> The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one. Multilateral cooperation will be key in many areas, from climate transition and pandemic preparedness to food security and debt distress. Amid great challenges and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomics fragmentation.</p><p style="text-align: justify;">These latest reports indicate that the Federal Reserve's aggressive rate hikes have been ineffective in reducing “headline” and core inflation. Recent rate hikes by the Federal Reserve have taken the Fed funds rate from near zero to 2.25% leading to only one major accomplishment if you can call it that. They have effectively contracted the U.S. economy for the last two consecutive quarters.</p><p style="text-align: justify;">It is emphatically clear that the United States economy has met the definition of a recession regardless of what the government wants us to believe. Therefore, yesterday and today's extremely robust move in both <b>gold</b> and <b>silver</b> were highly warranted and long overdue.<b> </b></p><p style="text-align: justify;"><b>Interest rate hike</b>- after Fed is done with consecutive hikes of 0.75%, the markets now await PPE data which, for the month of July, is expected to be +0.5%. with US advance GDP data. There was a late rally in US markets which otherwise were flat during Friday. Gold emerged to be a winner after Fed Powell’s first word. These are the significant time for traders to capture unusual profits.</p><p style="text-align: justify;">The US Federal Reserve on Wednesday raised interest rates by 75 basis points to 2.25-2.5% as markets expected. Fed Chair Jerome Powell sounded less hawkish in his press conference, saying the final rate hike decision at the September meeting will be determined by the incoming economic data</p><p style="text-align: justify;">The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. Many of the downside risks flagged in our April World Economic Outlook have begun to materialize.</p><p style="text-align: justify;">Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-45893272873673581102022-07-18T10:20:00.004+05:302022-08-03T20:52:11.669+05:30Dollar creates a strong impact worldoverIn the past year, we have seen the dollar strengthening massively. The US dollar has been on a major surge against leading global currencies. Recently the dollar hit levels that it had not seen in the past 20 years. It has gained 15 % against the British Pound, 16% against the Euro, and 23% against the Japanese Yen.<p style="text-align: justify;">The dollar is the world's reserve currency, which means it is used in most international transactions. As a result, any change in its value has a significant impact on the entire global economy.</p><p style="text-align: justify;">In such volatile markets, 3 main questions that come to our mind are-</p><p style="text-align: justify;"><b><i>Why has the dollar strengthened?</i></b></p><p style="text-align: justify;"><b><i>What impact is it creating?</i></b></p><p style="text-align: justify;"><b><i>What next?</i></b></p><p style="text-align: left;">Answering the first question- <b><i>Well there are two main reasons- Economic and Geopolitical-:</i></b></p><p style="text-align: justify;">ECONOMIC- The Central bank of the US- The Federal Reserve- has been hiking interest rates aggressively and also reserving its policy of creating money by Quantitative Easing (QE). This is to curb inflation caused by Covid supply issues, the war in Ukraine, and QE. The stronger US dollar is a side effect of these higher interest rates. Because the dollar now offers a higher yield when deposited in a US bank, it encourages foreign investors to sell their local currency and buy US dollars.</p><p style="text-align: justify;">Geopolitical (Dollar Parity)- the other reason for the surging US dollar is because it is a classic haven when the world is worried about a recession- and the current geopolitical situation is arguably making it still more appealing. The Euro has suffered from the European Union's proximity to the war in Ukraine, its exposure to Russian energy, and the prospect of another Eurozone crisis. It is close to dollar parity for the first time since its early years.</p><p style="text-align: justify;"><b><i>IMPACT?</i></b></p><p style="text-align: justify;">A rising US dollar will have the following impact</p><ol><li style="text-align: justify;">High Inflation- Petrol and most commodities are usually traded in US dollars. So, these items tend to get expensive in the local markets as they are priced against the dollar.</li><li style="text-align: justify;">The threat faced by low-income countries- Many developing countries owe their debts in US dollars, hence the amount they owe now is much more.</li><li style="text-align: justify;">Bigger US trade deficit- Since goods priced in the US dollar will get expensive, other countries won’t buy them resulting in a bigger trade deficit for the US economy,</li><li style="text-align: justify;">Fears in the Euro Zone- the strong US dollar is creating pressure on the European central banks to raise their interest rates to prop up and subdue the cost of imports including energy, thus putting more pressure on the Eurozone.</li><li style="text-align: justify;">Breaking Precious Metals and Equities market- Furious mega rise in USD at 22 years high at 108.3. the single reason that global equities and metals are under stress despite -20% to even -35% deep cuts. Already seen in just six months.-NASDAQ slipped more than 2% on Monday, 11th July with DOW and DAX remaining weak. Gold and silver started breaking Monday’s low and they may exhibit more weakness causing the <a href="https://rsbl.in/" target="_blank"><b>largest bullion dealers in India</b></a> to face the consequence as the dollar surge continues.</li></ol><p style="text-align: justify;"><b><i>WHAT NEXT</i></b></p><p style="text-align: justify;">Strength in the dollar makes greenback-priced gold by some of the <b>largest bullion dealers in India,</b> more expensive for buyers holding other currencies. It is difficult to predict the future direction of the US dollar especially when there are so many moving parts in the world economy.</p><p style="text-align: justify;">Looking forward, fears of an economic slowdown appear crucial support, and hence chatters surrounding the same will be important to track ahead of important data releases from the US.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-70124977576592604482022-07-01T20:18:00.004+05:302022-08-03T20:51:06.638+05:30Investors Are Optimistic About Gold<p style="text-align: justify;">In the previous session, gold prices were tailored into a tight range as investors and <b>bullion dealers in India</b> were caught up between pressure from prospects of higher interest rates and support from recession risks. While the bull camp can periodically seize control, the gold market has been unable to throw off a recent pattern of lower highs and lower lows, and more importantly, prices have not shown a definitive bullish sensitivity to the classic bullish developments.</p><p style="text-align: justify;">With gold periodically lifted by economic uncertainty, yesterday's stronger-than-expected US durable goods readings tampered with uncertainty and likely caused some long liquidation yesterday. Going forward, seeing positive US economic data released on the tail of the solid and durable goods report potentially rekindling widespread expectations of a 75-basis point rate hike next month and would likely prompt a fresh wave of long liquidation/fresh selling in gold and silver. Therefore, gold and silver remain under a liquidation watch.</p><p style="text-align: justify;">The price of the yellow metal has been mostly rangebound for June, which has made for shorter-term two-way business between the final weeks of the month between $1,848 and $1,820 in the main. However, rather than rebounding from down here, the price is starting to eat into liquidity below with bulls checked by gains in the US dollar and inflationary pressures that are running at a 40-year high. Higher US yields, as a consequence, are detrimental to the yellow metal since gold does not offer investors and <b>bullion dealers in India</b> any yield.</p><p style="text-align: justify;">That said, the gold traders and <b>gold dealers in India</b> should keep their eyes on the monetary policy discussions among the central bankers from the US, the UK, and the European Union (EU) at the ECB Forum seem for a fresh impulse. The US Core Personal Consumption Expenditure (PCE) for Q1 2022, expected to remain unchanged at 5.1%, could entertain traders.</p><p style="text-align: justify;">The US Federal Reserve policymakers promised further rapid interest-rate hikes to bring down high inflation on Tuesday. Still, they pushed back against growing fears among investors, <b>gold dealers in India,</b> and economists whose sharp higher borrowing costs will trigger a steep downturn.</p><p style="text-align: justify;">Although gold is seen as an inflation hedge, higher interest rates and bond yields raise the opportunity cost of holding bullion, which yields no interest. It is worth noting that the latest weakness in the macro data joins inflation fears and geopolitical tussles surrounding Russia and China to amplify the risk of economic slowdown.</p><p style="text-align: justify;">After peaking at the more tremendous highs from earlier in the year, gold prices have now been weighed down by a strong US dollar. But markets continue to remain optimistic and expect the gold price to rise by the end of the year- thanks to high inflation, ongoing geopolitical tensions, and the threat of recession. So, hopefully, gold awaits to enter the bulls by the end of 2022.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0tag:blogger.com,1999:blog-2019271254563402683.post-90840370115728462352022-05-21T09:47:00.002+05:302022-07-05T17:51:05.447+05:30Everything Is Down & So Is Investor Confidence<p style="text-align: justify;">Fed’s Powell has never been so elaborative where he sounds cautious on future job markets and added comments on the US economy and inflation prospects on globalization. He also stressed on a reverse theme, which means the global trade (inter-country) might shrink going forward, and factors may be running war with China. Later, the Fed’s Evan released a strong statement stating, “witness a slowing pace of hikes to 0.25% steps before December” - maybe all these helped recede the USD index at 103.4.</p><p style="text-align: justify;">Precious metals could continue to struggle as the US dollar trades around its highest level in 20 years, much to the chagrin of the <b>gold dealers in Mumbai</b>. The widening gap in global monetary policy, with the Federal Reserve leading the charge on interest rate hikes, is supporting the US dollar’s current rally. There are growing expectations that the Federal Reserve will raise interest rates by 50-basis points at the next three monetary policy meetings.</p><p style="text-align: justify;">By Wednesday/Thursday, the US markets sank to almost CY 2022 lows. This nasty fall in US Dow -1200 overnight, after leading a pivotal fall from -6% to -28% in a single day, (Walmart, Tesla, Target, Apple etc.) add this fall. It continued as Fed members commented on the interest rates going forward. The notable Mr Harker said - "0.50% in June and 0.50% in July policy, only then the Fed will achieve the 2% target inflation".</p><p style="text-align: justify;">Most of the policy thinkers in G-7 are brainstorming on averting stagflation, recession, and how to deal with hyperinflation. Still, the equity markets are witnessing a real carnage as liquidity support has been withdrawn (Earlier stimulus and now balance reduction across). Amidst all this, a hope from China to open up in June as they mention allowing more business options in zero covid areas. This should act as a booster for most base metals, following suit, silver will not lag, giving the <b>gold dealers in Mumbai</b> a sigh of relief.</p><p style="text-align: justify;">Gold is bouncing from the lows of $1800, but the overall trend still is bearish, according to the largest <b>gold dealers in India</b>. A small bounce might be because gold prices are trading near an oversold region, but investors are reluctant to take long positions when fundamentals point to lower prices. The rally in the US dollar and treasury yields is providing a lid on gold prices. The entire premium from the war between Russia and Ukraine has been eroded away, and even if the conflict worsens, we may not see any spike in prices as investors are focused on inflation and higher interest rates.</p><p style="text-align: justify;">We see the short-term path of least resistance shifting to gold and silver, as the markets have consistently disappointed the bull camp over the last 30 days. In fact, without the very significant range down the action in the dollar resuming, fresh modest economic optimism and a pause in hawkish Fed dialogue, gold and silver look to stall and chop newly established ranges. However, if pushed into the market, we prefer selling rallies in gold above $1828 and selling rallies above $21.77 in the July sale.</p>Prithviraj Kotharihttp://www.blogger.com/profile/12394819668371477161noreply@blogger.com0