TOO MANY ECONOMIES PUTTING PRESSURE ON GOLD?

- Mr. Prithviraj Kothari, MD, RSBL

The ones who are constantly in touch with the world markets especially precious metals know that the driving force behind gold and the main reason for its volatility between 2008-2011 has been the:

• FOMC’s policy

• Falling long term treasuries rates 

• Higher risk of economic slowdown 

• Fear of inflation. 

Initially all eyes would be glued to the US markets as any one step from this government would create volatility for gold. But nowadays, apart from the US markets it’s the Japanese, Chinese and Euro market that also played an influential role for gold. The economic indicators from these economies have also influenced gold prices to quite some extent.

This week the markets remained calm over the long Thanksgiving holiday, and there was not much volatility for gold and silver in international markets. Interestingly however the gold forwards have tightened significantly in spite of weak physical demand and ETF outflows, down 20k to 51.96 million ounces.

Apart from this the decision on Swiss referendum on gold holdings is also being long waited for. Looking back, Switzerland was the last country in the world to leave the gold standard in 1999 and may be the first to take a major step to becoming a gold-backed currency. One fifth of Switzerland’s 1040 tonnes of gold reserves are in the vaults of The Bank of England while a third are deposited in the Canadian Central Bank.

Under the ‘Save Our Swiss Gold’ initiative the SNB will have to hold at least a fifth of its assets in gold within five years. The bank will also be required to repatriate all Swiss gold held abroad and be banned from selling any of its holdings in future. Speculation that Switzerland could vote in favor of a motion to raise its gold reserves had strengthened prices. But finally on Sunday, a No Vote was passed which could create some ripples in the markets.

During the week, recent strong U.S. data had fueled talks that the Federal Reserve could soon raise interest rates, depressing gold. But the contradictory reports released on Wednesday showed domestic personal spending grew slightly less than forecast in October, while U.S. jobless claims rose to their highest since September and new orders for U.S.made capital goods fell for a second month in October Thus pushing gold prices up. 

Apart from the Swiss and US, data that came in as a surprise package for gold was the easing of curbs from the Indian government. In a move that is likely to bring cheers to traders as well as customers, India eased the restrictions on gold imports by withdrawing the 80:20 schemes.

Under the 80:20 norm, put in place in August 2013 to curb high gold inflows that was widening the current account deficit, at least 20 per cent of the imported gold had to be mandatory exported before bringing in new lots. With this move by RBI, they expected that gold will be kept back at home and thus improve supplies for the domestic market which will further bring gold prices down. Though the policy supported their idea of arresting Current account deficit but in turn created unprecedented growth of illegal channels that support Gold imported in the country. 

This move by RBI is to acknowledge the fact the CAD has reduced and even the Oil price has declined by almost 30% by what it was two months ago. I feel this is a really good move by the government. This will reduce the cost of Gold and procedural issues that the companies were facing with regards to Gold imports. 

Though gold showed mixed trends this week, there are players in the market who still believe that the sentiment for gold is bullish over the longer time frame. 

Following are a few reasons for this belief-

• Slowing of the ETF sales and outflow

• Seasonal demand from India after the onset of festivals and marriages India has witnessed a 100 tonne plus season consumption of gold. 

• Rising demand for gold is expected from China ahead of the Chinese New Year where gold is purchased heavily in the Chinese 

• With executive board member Yves Mersch commenting that gold buying could be part of the asset-purchase program, expectations and, therefore, demand may rise due to potential ECB investment in the yellow metal.

So once again it’s the bull v/s the bear market for gold and would be too early to comment. Now we need to wait for the market to further react to the easing of the 80:20 schemes and the Swiss Referendum. 

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

- Previous blog - "Lots in Basket For Gold This Week"
http://riddisiddhibullionsltd.blogspot.in/2014/11/lots-in-basket-for-gold-in-this-week.html

THE DOLLAR IS BEING WATCHED CLOSELY

by Mr. Prithviraj Kothari, MD, RSBL

Gold's long term appeal continues to remain clouded by doubt. The dollar is getting stronger and the US economy is on the forefront and traders believe that interest rates will rise faster which weighs on gold as they lift the opportunity cost of holding non-yielding assets.

Till Thursday, gold price remained in a tight trading range. Precious metals sliced back early gains on Thursday after the lower than expected jobs number were released. Unemployment claims climbed 290000 more than the estimated 282,000 and Jolts jobs opening disappointed at 4.74 million against the expected 4.81 million.

The WGC released its Gold demand Trends report for Q3 and it showed that gold demand has been lying low along with the declining demand for jeweller, falling investment demand for bars and coins and reducing central bank purchases.

For the past few days gold has been hovering around $1159.20. But lately, gold has stabilised. After hitting its weakest level of the year till date on November 7.

But on Friday gold got the big push after a sudden weakening of the US dollar . Gold surged 2.5 percent on Friday to just shy of $1,200 an ounce.

Bullion secured more that $40 to a two -week high at $1,193.34 in New York after dropping more than 1 percent in early trade to test the $1,145 level, where strong support was seen twice in the last four sessions, triggering pre-weekend short covering.

Now that the dollar has been moving back and forth and everybody is watching the dollar very closely.

The dollar lately has hit a two-year high against the euro and seven-year high against the Japanese yen, fuelled by diverging interest-rate outlooks.

There are expectations that the US monetary policy will tighten next year as it is considered to be a stronger economy than Japan or the Euro zone. Which further dictates the fact the US dollar will strengthen  as precious metals often move inversely to the U.S currency, it means that they are bound to decline. 

Gold is often bought as an alternative currency when the dollar weakens, and vice-versa, while a muscular dollar also makes all commodities more expensive in other currencies and thus can hurt demand.

Next week a number of key economic indicators are lined and all investors will be closely watching over these. 

Monday- Industrial production and the New York Federal Reserve’s Empire State manufacturing index

Tuesday-  The producer price index 

Wednesday-  Housing and the Federal Open Market Committee releases minutes of its last meeting.

Thursday-  Jobless claims, the consumer price index, existing home sales and Philadelphia Fed manufacturing survey.

Moreover on Wednesday one of the key influential factors will the upcoming US economy data which will be a deciding factor for the Fed to decide as to when it is likely to increase the interest rates.

Apart from the key economic indicators traders will also we keeping an eye on physical demand for gold and the Swiss refendrum.

Demand -China and India are the world’s two largest gold-consuming nations. The Indian wedding season will primarily witness gold buying and the Chinese too stock up the metal ahead of the country’s New Year festivities.

Swiss referendum- Swiss gold referendum is scheduled for Nov. 30. In this referendum the Swiss voters will decide whether the Swiss National Bank would have to hold at least 20% of its assets in the precious metal. This would open doors for more demand for gold as the central bank would have to accumulate much more gold, adding to the requirement side of the equation. Also, the referendum asks voters if the SNB should be banned from selling gold and whether all of its gold reserves should be held in Switzerland.

With the Dollar Index at a four-year high, the U.S. stocks reaching new highs, disinflation occurring in Europe and Asia, and commodity prices plunging, the gold prices have a hard time rallying. 

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

- Previous blog -

"Is Gold Being Completely Controlled By The Dollar?"

http://riddisiddhibullionsltd.blogspot.in/2014/11/is-gold-being-completely-controlled-by.html

IS GOLD MAKING A COMEBACK?

by Mr. Prithviraj Kothari, MD, RSBL

Gold has fallen nearly 40% from its 2011 high above $1900 to reach below $1200 at the start of the week. A resurgent dollar, coupled with positive U.S. economic data, had been driving gold's declines over the past few weeks. Investors tend to withdraw from non-interest-bearing assets to seek higher yields elsewhere when the dollar gains.

But gold picked momentum in the past seven days. We finally saw gold catching a bid on global risk aversion. It has rebounded nearly 4 percent from the 15-month low of $1,183.46 it hit on Monday on heavy selling pressure that followed a better-than-expected U.S. payrolls report last week.

There were various factors responsible for the rise in prices-

• The end of QE
• Geopolitical uncertainty
• Falling global growth estimates

All these factors once again made gold a good prospect as a safe haven asset.

On the second day of the week, gold was up after the  International Monetary Fund cut its global economic growth forecasts and weak German industrial data stoked further concerns. Following this the dollar fell which further gave a push to gold prices.

Gold rose consecutively for four days marking its longest winning gain in seven months. In fact traders witnessed heavy short covering for gold rise over the Fed minutes which created uncertainty over the timing of a Fed interest rate rise.

*source- www.kitco.com

The minutes of their last policy meeting showed that they are still struggling to come to grips with the dual threats of a stronger dollar and a global slowdown and hence they were further uncertain about linking the interest rate rise to U.S economic progress. Equities further weakened on concerns over global growth mainly in China and Europe.

Gold prices bounced off 2014 lows this week after testing support around the $1,180 area, a price gold hadn’t seen since June and December 2013. Analysts said short covering, which is the buying back of previously sold positions, and the return of Chinese traders from their Golden Week holiday helped return the yellow metal above $1,200.

However, In India it's a different scenario this year. Last year the volumes were much high as people rushed to buy gold, when prices crashed. This year prices have been consistently low. Moreover, disappointing monsoons and continued import restrictions have also affected gold demand in India.

Now the market awaits movement in equities, dollar and crude oil which could have a major role in influencing gold prices. Also, gold-market watchers will keep an eye on the Indian market to gauge metal demand ahead of the Diwali holiday later this month. Apart from this, the market player will also watch the economic data that will be flowing in- China releases a slew of economic reports, while The U.S. will see inflation data with the producer price index expected to show falls in energy and food prices, reflecting the recent drop in commodity prices.

If the US equities market continue to drop then it could create a favourable position for gold but if investors flush in more money into equities keeping the "buy on dips" funda in mind then we could see the dollar rally and gold would once again be pulled back from its gains.

Current view: BUY ON DIPS

Trade Range:

METAL	INTERNATIONAL price range	DOMESTIC price range
GOLD	$1207 - $1242 an ounce	Rs.26,500 - Rs.28,000 per 10 gm
SILVER	$16.85 - $17.85 an ounce	Rs.38,000 - Rs.40,000 per kg

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

- Previous blog - "Gold's Future at Stake!"

http://riddisiddhibullionsltd.blogspot.in/2014/10/golds-future-at-stake.html

INVESTORS LOSING INTEREST IN GOLD OVER INTEREST RATE RISE

by Mr. Prithviraj Kothari, MD, RSBL

Last week we saw that the dollar denominated all the markets especially gold. It was the strengthening dollar that was responsible for the plunge in gold prices. 

This week it was even more worse. Precious metals tumbled down and the losses coincided with the recovery of USD against leading currencies such as Euro and Yen and the rally of U.S equities. 

The main market movers were the US Dollar and the Chinese economy. 

Though other markets have also seen volatility, the impact on the precious metals markets has been severe. Equities have been on a bull run but commodities have consistently been on the downside and have been hit with sliding prices and withdrawals by investors, squeezing profit opportunities for funds and traders. 

Gold closed at $1205 in 2013 and picked up well in 2014, rising to a high of $1380 in March. But post March, gold prices plummeted and have witnessed a loss of 5.5 per cent so far in September.

Gold prices declined for the third straight week after the Fed raised it approximate for a key lending rate even as policy makers confirmed an assurance to keep borrowing costs close to zero percent for a substantial time.

The chief reason for the recent weakness is the US Federal Reserve's projection for where official interest rates will be heading. The reason why the market has been so reactive to the interest rate rise is that an increase in interest rates and bond yields would raise the opportunity cost of holding gold. Currently gold has is not strong and has been giving negative returns. The strong co relations between gold and US bond yields will further reduce gold prices. Moreover, higher rates also tempts investors to shift to riskier assets like stocks that have been considerable returns. Moreover it continued to set records in 2014.

On Thursday, gold settled at its lowest closing price since the end of December, pressured by the dollar’s move higher after the Federal Reserve meeting on Wednesday

Spot gold was down 0.5 percent on Friday and among other precious metals, silver was down 2.5 percent to $18.01 an ounce. It touched $17.81, its lowest since August 2010.

On Friday the price of gold fell again, reaching a fresh 2014 low following three weeks of straight selling on the back of a strong dollar and expectations of a rise in US interest rates

Globally, we have witnessed financial uncertainty from 2009-2012. This had compelled investors to adopt gold as gold has always been considered a safe haven asset in turmoil.

The Fed now expects that short-term interest rates will be back to normal levels of around 3.75% by the end of 2017.

With the US Federal Reserve announcing a further $10 billion reduction in its monthly purchases, leaving the programme on course to be shuttered next month, it has also made clear that record low interest rates would be around for at least a few more months.

China followed by India are the worlds largest consumers of gold. But this year, demand for gold from both countries faded. Demand in China, which overtook India to become the top consumer of the metal last year, fell by 22 per cent to 351 tonnes in the first half of the year as the country's economic growth slows down, after reaching record levels in 2013. Jewellery fabrication in India, the world's second largest gold consumer, declined by 18 per cent to 296 tonnes in the first half on lower official imports after the hike in imports duty last year.

We still await some rise in demand from both countries because July, August and September are typically months for strong months of Gold performance months as buying from Asia increases – particularly due to upcoming festivals and wedding season in India.

A good gauge of demand is buyers' willingness to pay a premium over the international price.

Gold imports travelling through Shanghai's Pudong International Airport surged by 200 percent month on month since June as the Shanghai Gold Exchange (SGE) announces plans to allow foreign investment into China's gold market.

Some modest signs of increased demand in the physical gold market after a dramatic slump in Asia this year, have emerged.

To conclude, I think that precious metals are more likely to suffer tougher times if the dollar stays strong and if positive data continues to flow in from US. Well if it happens otherwise then gold may witness a bullish run.

WEEKLY TRADE RANGE-

METAL	INTERNATIONAL price	DOMESTIC price
GOLD	$1206 - $1256 AN OUNCE	RS. 26,200 - RS. 27,500 PER 10 GM
SILVER	$1750 - $1825 AN OUNCE	RS.39,000 - RS. 41,000 PER KG

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

- Previous blog - "Denominating Dollar"

http://www.riddisiddhibullionsltd.blogspot.in/2014/09/denominating-dollar.html

A BOOSTER MONTH FOR GOLD?

by Mr. Prithviraj Kothari, MD, RSBL

Gold has established a support level at $1275 since March and prices have risen post this level. 

But, during the second half of March gold fell heavily from resistance around $1400 back down to a several week low near support at $1275.

As 2014 began, gold moved very well for the initial months towards a six month high near $1400 and has now plunged to levels closer to $1300.

As news of the escalating tensions in Middle East and Ukraine gained momentum, gold gained 5.4 per cent year due to rise in demand for this safe haven asset.

After hovering at around $1290 gold has plunged sharply over the last week and has broken through the support at $1275. 

It rallied a day ago however ran into further resistance at $1275 before falling lower to a four month low around $1258.  

Though gold has always been the markets favourite metal during uncertainties, but this time bullion investors continue to worry over strong U.S. economic data and its impact on the dollar.

This week we saw gold falling to its lowest level in three months, on Friday before it recovered modestly.

On Tuesday, Gold witnessed its greatest drop this week as the market broke through recent support at the $1,270 area.

Gold was  unable to capitalize on the news of the ECB’s interest rate cut and QE program as the euro weakness offset any support gold would have received from the new liquidity programs.

AS tensions lingered over Ukraine and a weak dollar forced bargain hunting, we saw gold prices rising on Wednesday after prices earlier fell to a two and a half month low.

The yellow metal was under pressure after the Russian President drew plans for a ceasefire but then regained its prices when the Ukraine prime minister later dismissed Russia's proposal.

The metal is under pressure as the euro languished near a 14-month low versus the dollar on Friday, struggling to regain its footing after the European Central Bank delivered a fresh round of stimulus and promised even more if needed.

Gold was standing firm above the $1270 level in Thursday as it was impacted by a weaker Euro and surging equities after the European Central Bank cut interest rates to record lows which was counteracted by lower than expected U.S. jobs data. 

The main refinancing rate was cut to 0.05 per cent from 0,,15 per cent and the ECB lowered the rate on bank overnight deposits to -0.20 percent. 

But what surprised the market was Fridays U.S. jobs data that gave gold a push thus helping it to return to modest levels overnight. 

The U.S. Labor Department said the economy created 142,000 jobs in August, far below expectations for a figure of over 200,000. The unemployment rate fell to 6.1%, a six-year low. The average pace of job creation this year is 215,000, up from 194,000 in 2014. 

Gold rose from an 11-week low, after U.S. employers added the fewest jobs this year, adding some pressure on the Federal Reserve to maintain lower interest rates.

Initially data reports had stated the US economy was back on the path of recovery but Fridays number were a bit disappointing .

A stronger greenback is a setback for dollar denominated gold as it makes the yellow metal more expensive for users of other currencies.

 Gold traders are likely to keep an eye on currency moves next week after the euro fell to a 14-month low versus the dollar Thursday, following the surprising move by the European Central Bank to cut interest rates and embark on a quantitative easing program.

Traders will also extend a warm welcome to the month of September as it has historically been the best performing month for gold giving an average return of 2.16 per cent since 1969.

A spike in retail demand in India is another reason for the typical bump.

We hope this month the be a booster for gold.

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

- Previous blog -

"Bull v/s Bear"

http://riddisiddhibullionsltd.blogspot.in/2014/08/bull-vs-bear.html

INTERESTING TIMES TO COME

by Mr. Prithviraj Kothari, MD, RSBL

Last year was catastrophic for gold as it performed terribly and ended the year at around $1200, almost 28 per cent down. However, in 2014 we saw a decent act from gold as it reached $1380 in March before falling back to $1240 and then, moving up to $1340. Since then gold has been hovering around $1295, approximately 8 percent up. This highlights a good progress for gold but if we compare it to its life time high of $1900 (In September 2011), it's still 32 per cent down from its peak.

Currently, gold looks weak.

• The ongoing political tensions in Ukraine, Iraq, Israel and Syria have been weighed down 
• No major economic reforms announced by the Government of India for Bullion industry
• Chinese demand for gold has slowed down
• sales out of the gold ETFs seem to have reversed to become net purchases (just) so far this year, 
• The Fed has expressed a comfort in the economic growth and a positive recovery.

The market had been awaiting the end of the U.S. Federal Reserve's two-day policy meeting on Wednesday to see if the central bank will raise interest rates faster than expected.These sentiments created nervousness in the market and gold fell on Tuesday. On Wednesday too, gold fell after the Federal Reserve announced a sixth $10 billion cut to its bond-purchases program amid signs that the U.S. economic recovery is gaining traction.

The monthly bond buying programme has been tapered to $25 billion, which if followed will put an end to the purchase program in October.

The Federal Reserve on Wednesday reaffirmed it was in no rush to raise interest rates, even as it upgraded its assessment of the U.S. economy and expressed some comfort that inflation was moving up toward its target. After a two-day meeting, Fed policymakers took note of both faster economic growth and a decline in the unemployment rate, but expressed concern about remaining slack in the labour market

Gross domestic product in the second quarter rose at a 4 percent annualized rate, compared with a revised 2.1 percent drop in the first quarter.

Though, amidst the Middle East and Ukraine tensions, gold has climbed up, but the positive growth reports released on Wednesday, subdued this rise in prices. Now any further disturbing news coming in would push gold prices high as once again the market would run behind this safe haven asset.

The dollar weakened versus major rivals in the wake of the data. Commodities priced in dollars are sensitive to movements in the currency. A stronger dollar can weigh on gold by making it more expensive to users of other currencies, while a weaker dollar can lift the commodity.

Till Thursday gold was down, but on Friday, gold prices spiked, recovering almost half of the weeks 1.8% loss and was seen trading at $1295 an ounce post the US  nonfarm payrolls jobs data release for July, was weaker than expected. This data dampened talks of an early interest rate rise by the Fed and this increased gold's appeal.

The Labor Department said nonfarm payrolls increased 209,000 last month, below economists' expectation of a 233,000 job gain. Unemployment rate also rose to 6.2 percent from 6.1 percent as more people entered the labour market. 

Portugal will spend 4.9 Billion Euros ($6.58 Billion) to rescue its largest listed bank, Banco Espirito Santo, testing the Euro's resilience to another banking crisis.

There isn't much US data this week except the US Non-Manufacturing ISM and the ECB rate decision that could keep the market alive.

Moreover there is a positive outlook for the month as demand from Asia particularly India will pick up as India witnesses the onset of its festive season beginning with Rakshabandhan.

The month of August will be an interesting one as it will give us an indication of which way this market is going. Should it fall significantly then we could be in for a re-test of the June 2013 lows of $1180/oz. 

The presence of tapering and the expectation of interest rate increases cast a dark shadow over the precious metals  making it difficult to predict  just where the momentum for higher prices will come from.

TRADE RANGE

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1275- $1314 an ounce	Rs.27,500- Rs.28,500 per 10 gm
SILVER	$20.15- $21.00 an ounce	Rs.42,000- Rs.45,500 per kg

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

- Previous blog -

"Escalating Tensions....Escalating Prices"

http://riddisiddhibullionsltd.blogspot.in/2014/07/escalating-tensionsescalating-prices.html

GLOBAL MANTRA- "JUST WAIT AND WATCH!"

                                                     - by Mr. Prithviraj Kothari, MD, RSBL

Once again, gold was surrounded by a cloud of doubt.....doubt of gold being a safe haven asset...doubt of gold being the most dependable asset in times of uncertainty.

While Thursday showed signs of gold on the path of recovery, the US jobs data released on Friday once again proved fatal for gold. Bullion climbed 0.8 percent on Thursday, reaching the highest since May 30, after the euro strengthened against the dollar as the market discarded the European Central Bank’s unparalleled effort to weaken the single currency and strengthen growth. On Thursday, The European Central Bank announced a new and aggressive monetary stimulus package. This once again raises a question over the global economic recovery. This package along with dovish corresponding remarks from ECB president Mario Draghi  considered stock market and European bond market bullish. 

This move of the ECB has reinforced the notions of some in the market place that the U.S. Federal Reserve may be forced to back off its plan of “tapering” its quantitative easing. 

This has created a contradictory environment in the economic world where the European Union is stimulating its monetary policy while at the same time the Fed is tapering its monetary easing.

It was this tapering of the FED that gold saw its worst performance in 2013. It was in 2013 that we saw the yellow metal dropping almost 28 percent over expectations that the Federal Reserve will taper its monetary stimulus programme as the US economy strengthened. Since January, 2014, The Fed has made four tapers as we saw US moving gradually towards the path of recovery

This week too gold dropped on positive jobs data released on Friday. Gold prices fell on Friday as the dollar index swung back into positive territory, after a closely watched U.S. employment report came in almost exactly in line with expectations, showing a solid pace of hiring in May. Friday morning’s U.S. employment report for May showed a slightly higher than expected rise of 217,000 in non-farm payrolls. The key in the report was forecast to rise by 210,000. Nonfarm payrolls increased last month, the Labor Department said on Friday, against expectations for a 218,000 rise, while data for March and April was revised to show 6,000 fewer jobs created than previously reported.

The bearish trend in the international market is further expected to bring down gold prices in the near term. This sentiment further strengthened as premium on gold in the domestic markets dropped. 

At the same time, gold consumers in India are waiting to exhale. Consumers in India are following the "wait and watch" policy as they expect prices to decline below the crucial Rs.25,000 level in the near future as the market expect customs duty to decline.

Post election, gold premiums have dropped drastically. premiums had slid from 10% to 1% and 2%, soon after the government allowed premier trading houses to import gold and increased the availability of the metal in the market. and markets have a positive feel towards a lot of sectors including precious metals. Investors and traders now await a new gold policy to be unveiled by the government.

Many have even postponed their purchases as they feel that prices will decline further.

Jewellers expect prices to slide further in the next 4-6 days, given the price slump in the international market.

In the international markets people have shifted focus from gold to equities. Following suit, In India too, stocks are stealing the lime light as gold has been sidelined. Moreover, customers expect a further fall in import duties after which gold prices are anticipated to fall further. Demand in the domestic market is also expected to remain slack for the next two months, as there is no festive season.

Many traders who had resorted to hoarding gold due to supply concerns would refrain from doing so now, as import norms for exporters have been relaxed to a certain extent, said jewellers. Moreover, June is considered a slow month as far as demand is concerned.

So as of now gold is just hanging around. While some people have shifted focus to equities and physical demand for gold isn't strong, the announcements of the ECB meeting has found some cover for gold.

Most people will just wait for the market to make a decisive move before entering at this dip.

While the only mantra now is wait and watch I expect gold to be in the range of $1238- $1273 and Rs.26,200- Rs.27,500 in the international and domestic markets respectively.

On the other hand silver is expected to move in the range of $18.15- $20.15 and Rs.39,500- Rs.41,000 in the international and domestic markets respectively.

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

- Previous blog -

"A Dreadful Week For Gold"

http://www.riddisiddhibullionsltd.blogspot.in/2014/06/a-dreadful-week-for-gold.html

A DREADFUL WEEK FOR GOLD

                             - by Mr.Prithviraj Kothari,MD,RSBL(RiddiSiddhi Bullions Ltd.)

It's been a dreadful week for gold. The yellow metal is down almost 3%, the most in any week since late March. 

I have repeatedly been making a point that gold prices are being pulled by the bullish and bearish factors and it has been moving on a see saw as we get a positive growth report from US on one hand and escalating Ukraine crisis on the other.

Finally the strong resistance of $1280 gave up. On Wednesday, Gold prices fell to a near 4-month low as easing Ukraine crisis paved way in the market. But gold prices bounced off these levels after data showed that the U.S. economy contracted in the 1st quarter for the first time in three years. The US Commerce Department approximated that GDP dropped in the 1st quarter. Economists held severe weather conditions responsible for this. 

On the other hand, the US Labour Department report showed application for jobless benefits declined last week which reduced the safe haven appeal for Gold as the market is now moving their focus to riskier assets like equities that have given better returns than gold in the past year,

At each dip there are more people exiting the markets than entering.

In 2013, we saw gold moving in exorbitant quantities from West to East. Last year China overcame India as the world's top gold importer and gold jewellery and investment demand, rising to a record 1,065.8 tons. Most of that sold gold ended up in China and India and other growing gold consuming nations in Asia led by Vietnam and Indonesia.

But in the first quarter of 2014, that demand tanked. Mainland China's demand for gold fell 18% in the first quarter of the year as investors bought fewer bars and coins, offsetting record demand for jewellery.

India's bars and coins buying also showed a huge drop-off of 54% to 98 tonnes and with jewellery consumption also sliding overall gold demand on the subcontinent slid 26%.

One of the most important ongoing news was about the Major metal exchanges emerged as contenders in developing an alternative to the London silver price benchmark, or "fix", after the century-old system for setting the globally recognized price is disbanded in August. The major exchanges CME and LME both said on Thursday that they were working with LBMA and the precious metals industry to find an electronic-based solution.

Meanwhile, expectations remain high that a strong US economic data report might support the Fed's policy of scaling back its bullion friendly stimulus. 

The market will now be glued to the ECB meeting that will be held next week when the bank might take further steps to ease its monetary policy and enhance growth.

Gold remains 5% to the upside for 2014 but is down $120 an ounce from highs reached mid-March as the rally on the back of safe haven demand and bargain hunting loses steam.

Further for the week gold is expected to be in the range of $1238-$1273 in the international market and Rs.26,000 - Rs.27,800 in the domestic market.

While silver is expected to move in the range of $18.15 - $18.85 and Rs. 38,500- Rs.41,00 in the international and domestic markets respectively.

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

- Previous blog -

"Gold Investors be Cautious"

-http://www.riddisiddhibullionsltd.blogspot.in/2014/05/gold-investors-be-cautious-mr.html