Pages

RSBL Gold Silver Bars/Coins

Showing posts with label Bank of England. Show all posts
Showing posts with label Bank of England. Show all posts

Tuesday, 11 October 2016

GOLD CRASHES BUT LANDS SAFELY: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL











Gold prices have rallied 31.4 percent since the December low at $1,046.40. Safe-haven demand increased due to the following factors:
  • The US Federal Reserve proposed in December four rate increases in 2016 but at best it might deliver just one rise before the end of the year
  • Its inverse relationship with the dollar index has allowed gold to climb
  • The growing number of negative-yielding sovereign bonds has made safe-haven assets that bear no yield much more appealing
  • Pro-long utilisation of easy monetary policies by global central banks has eroded the value of paper money
  • Speculative funds as well as ETF investors have flocked into gold in search of yield
Though 2016 has been one of the best performing years for gold since 2012 the yellow metal registered its biggest daily drop in three years on last Tuesday and extended losses in the previous session after forecast-beating U.S. manufacturing data and comments from Fed officials saying there was a strong case for raising rates.

Gold fell for the eighth straight session on Thursday, slipping to a four-month low, pressured by a stronger dollar after U.S. weekly jobless claims fell and ahead of key data that could put the Federal Reserve on track to raise interest rates this year.

Gold fell for a ninth straight session on Friday on a stronger dollar ahead of key U.S. jobs data and the metal was headed for its worst weekly dip in over three years on increased expectations of a Federal Reserve rate rise by year end.
Initial claims for state unemployment benefits unexpectedly declined by 5,000 to a seasonally adjusted 249,000 for the week to Oct. 1. The U.S. dollar .DXY rose to the highest in more than two months against a basket of currencies as the data reinforced the view that the Fed would raise rates at the end of the year

This declined gold prices drastically but by the end of Friday gold futures staged a modest recovery amidst all these concerns.



Though the unemployment benefits declined, a slow growth rate was recorded for the third straight month in September. Gold prices got an initial boost from this.

In Europe, the European Central Bank (ECB) intends to push on with its aggressive stimulus policy of negative interest rates and massive bond buying until it is happy with the outlook for euro zone inflation, senior officials said. ECB Vice President Vitor Constancio said a Bloomberg report suggesting that there was already consensus among ECB rate setters to reduce the 80 billion euros ($89 billion) monthly bond purchases was mistaken.
The report aggravated a sell-off in gold on Tuesday as the yellow metal fell over three percent to its worst one-day fall since September 2013. 


In the short term, gold prices might remain under selling pressure. While the metal could consolidate lower and put the bulls to the test, it remains to be seen how long or deep the consolidation process will be. But we remain friendly towards gold – our medium-to-long-term view remains bullish and we could see the metal seeking a strong technical support to rebound into.


But there are chances that gold might trade sideways in the short term keeping in mind the following factors-
  • Strained projected longs show that this trade is very much overcrowded. With no fresh buyers, the path of least resistance is downward
  • Profit-taking could be a theme and, should panic ensue, panic selling could escalate as speculators and ETF investors are sitting on large unrealised profits
  • The bulls’ bounciness has not really been tested and a mild correction/pullback should do the overall bull structure a lot of benefit
  • Physical demand has been subdued due to high future prices – the current rally has not had the backing of strong physical up-take
  • The Fed has armed its policymakers to prepare the market with combative messages that the US economy is primed for a 25-basis-point-rate rise before the end of 2016
These put a limitation to the bullish trend for gold. Nonetheless as we approach towards the last quarter of 2016 we all hope that it ends on a similar note as its beginning.




The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.
Previous blog:
"Volatile Markets: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/10/volatile-markets-rsbl.html

Tuesday, 27 September 2016

GOLD- BUY AND HOLD: RSBL



 by Mr. Prithviraj Kothari, MD, RSBL


Bullion has rallied 26 percent in 2016, recovering from three years of losses, as low or negative interest rates have strengthened demand. Political uncertainty has also played a part, with the U.K.’s vote to quit the European Union spurring haven demand. Forecasters including Singapore-based DBS Group Holdings Ltd. have said that the U.S. contest may buttress prices amid concern about the possible implications of a Trump presidency.

Gold may be in for a bumpy ride in the final quarter as Republican candidate Donald Trump now has a 40 percent chance of winning the presidential election and investors will be preparing for the possibility of higher U.S. interest rates, according to Citigroup Inc. A probable victory of Donald Trump increases the chances of a single U.S. hike by the end of 2016.

But if it happens otherwise, then gold prices are likely to steady during 25-29 September after the US Federal Reserve decided to leave interest rates unchanged, according to analysts. 

Bullion has been provoked from inertia after Fed rate concerns had helped wipe out gains for the quarter.
There is once again an inflow of capital in the market as low borrowing costs in the U.S. and economic stimulus by central banks from Japan to Europe drive demand for the precious metal as a store of value.

Over the previous week, gold achieved the best performance since July 2016 with a 2.4% rise, while the US dollar index recoded the worst performance, reaching 95.472 against a basket of currencies.

The precious metal is heading for the biggest weekly advance since July after U.S. central bankers opted to leave interest rates unchanged while reining in their outlook for future increases.
Gold prices edged lower on Friday, but notched the strongest weekly advance in almost two months after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.

This has once again pushed gold prices upwards and traders are no into the buy-and-hold mode for gold.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Meanwhile, investors will be focusing on a series of important events lined up this week that play a pivotal role in influencing gold prices.

  • A pair of speeches from European Central Bank President Mario Draghi is to testify before the Committee on Economic and Monetary Affairs of European Parliament, in Brussels.
  • For fresh hints on whether the ECB will step up monetary stimulus in the coming months to boost inflation and prop up the economy.
  • Speech by Bank of Japan Governor Haruhiko Kuroda will be eyed in wake of last week's decision by the BOJ to modify its policy framework
  • Focus will also be maintained on the first U.S. presidential debate on Monday between Democratic nominee Hillary Clinton and Republican hopeful Donald Trump
  • Other speeches to be given by
                -Swiss National Bank Chairman Thomas Jordan
                -Bank of Canada Governor Stephen Poloz
                -Federal Reserve Vice Chair Stanley Fischer
                -BoJ Governor Haruhiko Kuroda is to speak in Tokyo.


  • U.S. is to release data on new home sales, private sector data on consumer confidence, publish data on durable goods orders, to publish final figures on second quarter growth
  • Fed Chair Janet Yellen is scheduled to testify before the House Financial Services Committee on regulation and supervision, while St. Louis Fed chief James Bullard is to speak in St. Louis.
  • The Bank of Japan's big policy review is likely to see more QE and negative rates in the long run.
  • Germany is to publish preliminary inflation data and a report on unemployment change.
  • Japan is to release data on inflation and household spending.
  • China is to publish its Caixin manufacturing index.
  • Germany is to release data on retail sales.
  • The U.K. is to report on the current account and publish revised data on second quarter growth.
  • The euro zone is to release preliminary data on consumer inflation.
  • Canada is to publish data on economic growth.
  • The U.S. is to round up the week with data on personal income and spending, a report on business activity in the Chicago region and revised data on consumer sentiment.
Now  that series of events are scheduled for the week we expects markets player to be alert and markets to be volatile.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.
Previous blog:
"BULLISH SENTIMENTS FOR GOLD: RSBL
http://riddisiddhibullionsltd.blogspot.in/2016/09/bullish-sentiments-for-gold-rsbl.html
 

Thursday, 15 September 2016

GOLD STABILISES: RSBL

By Mr. Prithviraj Kothari, MD, RSBL










Though gold slipped consecutively for 3 days, past week ended on a positive note and stayed on track for a second successive weekly gain driven by diminishing expectations of a looming hike in U.S. interest rates.
The metal was up 0.7 percent during the week, holding on to nearly half the sharp gains it made on last Tuesday after a weak U.S. data instigated talks that the Federal Reserve will hold off raising rates at its September policy meeting.
Spot gold was down 0.25 percent at $1,334.60 an ounce at 1152 GMT on 9th September, while it peaked $1,352.65 an ounce after rallying 1.8 percent on Tuesday.

Reasons being the same- Fed Hike, US data, US dollar and ECB. These factors have been repeatedly influencing gold prices since quite some time. Yes I know that we have discussed these points time and again, and we all know that they  keep influencing gold prices but thee way and the extent to which they influence does change every week and hence we once again throw light on this week’s gold’s behaviour-

ECB- On Thursday, the European Central Bank (ECB) decided to maintain its current bond-buying programme and kept interest rates unchanged, surprising investors who had expected another round of quantitative easing in the wake of the UK’s vote to leave the single market.

The ECB’s unexpected stance led to a broad-based selloff in the commodities sector, while also fuelling a dollar rally – last trading at 95.45 on the dollar index, the highest point in a week.
Analysts and traders believe that The ECB’s decision would also increase the likelihood of the US Federal Reserve implementing a rate hike before the year end.

Global Data- Meanwhile in a slow data day, US wholesale inventories for July were unchanged, missing expectations of a 0.1 percent rise.
Overnight, China’s August CPI came in at 1.3 percent, below July’s reading of 1.8 percent and market forecast of 1.7 percent.
The Chinese August PPI fell 0.8 percent, improving from a drop of 1.7 percent in July and better than consensus of a one-percent drop. August, however, marked the 54th straight month of decline.
Weak global data pushed gold prices high over the week.


US Dollar- Prices have largely moved in concert with the dollar – against a basket of currencies it recently hit a multi-week low and was last trading at 94.56.  But investment demand in gold and its potential upside remain capped
The combative rhetoric – along with employment claims coming in better-than-expected at 259,000 – led to a minor dollar revival earlier during US trading hours.

Gold has rebounded strongly but have seem too stabilised between $1,355 and $1,375.25 and analysts believe to remain more or less in this trading range. But with the dollar looking weaker, we would not be surprised if gold prices work higher. The rest of the precious metals would follow suit.
Fed Hike- Richmond Fed President Jeffery Lacker said on Wednesday the case for a September hike was going to be “strong” and echoed his colleague Esther George who said that she too saw the US labour market approaching full employment.
Market participants currently see a 21 percent change of a US rate hike in September, with majority expecting it to happen in December, according to the CME FedWatch Tool.
Gold prices will trend higher still in near term, largely driven by lower Fed tightening expectations.  Gold prices are expected to boost further, given that the Fed is unlikely to move in September and the current probability of a September move is likely to ease further.


The Federal Reserve will meet on September 20-21 and again on November 1-2 before the country goes to the polls on November 8. Given the looming presidential election and the forecast-missing jobs report for August, the US central bank is widely expected to hold off on raising rates until next year at the earliest despite increasing hawkish rhetoric from FOMC members.


Federal Reserve Bank of Boston President Eric Rosengren, who shifted his stand in recent months in favour of monetary tightening, warned Friday that waiting too long to raise interest rates risks overheating the economy. Higher rates make bullion less competitive against interest-bearing assets. The comments come a day after the European Central Bank played down the prospect of an increase in asset purchases.

In the two-week run-up to the Fed’s next policy meeting, additional US economic data releases will further inform the market’s view of rate hike probabilities. At the current time, the greater likelihood is that there will be no September rate hike. If this continues to be the case, gold could potentially break out above the noted downtrend line and $1350 resistance level. In this event, the next major upside targets are at the mentioned $1375 high, followed by the key $1425 resistance objective.




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:
"BULLION MARKET HIGHLIGHTS- DECEMBER 2015- AUGUST 2016: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/09/bullion-market-highlights-december-2015.html


Wednesday, 20 July 2016

Gold prices to go up: RSBL

                                                                 - Mr. Prithviraj Kothari, MD RSBL




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

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

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

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

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

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

Thank You!


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

Previous blog:


Photo courtesy: Google