Pages

RSBL Gold Silver Bars/Coins

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

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
 

Monday, 19 September 2016

BULLISH SENTIMENTS FOR GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL







Recently gold has been struggling to climb up due to the recurrent changes in the expectations of an interest rate hike. There is quite a possibility that market players are paying too much heed to the whole interest rate scenario and in turn missing on the bigger picture.
Nonetheless, Gold continues to work lower alongside the rest of precious metals – a resilient dollar and rising US real rates have prompted traders to unwind their long positioning. Investors have become increasingly edgy ahead of the conclusion of the Fed and the BoJ meetings

The spot gold price inched lower during Asian trading hours on Friday amid Mid-Autumn festival holidays in the region.
Spot gold was last at $1,314.66-1,315.00 per ounce, down $1.17 from Thursday’s close.
The spot gold price had tumbled to a week’s low of $1,307.75 on Thursday on selling pressures following a brief spike to $1,328.10 sparked by weak US retail sales data.
In data released Thursday-

  • US retail sales in August undershot at -0.3 percent
  • Core retail sales in August undershot at -0.1 percent.
  • Industrial production month-over-month in August also disappointed at -0.4 percent
  • The US PPI in August was unchanged; a 0.1-percent gain from the previous month has been expected.
  • The core PPI – excluding food and energy costs – was in line at 0.1 percent.
  • The Empire State manufacturing stood at -2.0 missed the expected -0.9
  • The Philly Fed manufacturing index at 12.8 beat the predicted 1.1.
  • Capacity utilization rate in August stood at 75.5 percent, a touch below the 75.8 percent
  • Weekly unemployment claims for September 1-8 in at 260,000 were just below the forecast 262,000 and, more importantly, the psychological 300,000 mark.
  • Lastly, the current account balance in June was in line with consensus at -$120 billion. Business inventories month-over-month was unchanged in July, missing the 0.1 percent forecast.




There was disappointment in the markets when the data was released that showed signs of a softening US economy,.aThe US economy has recently shown signs of softening – data including retail sales, its PPI and industrial production have undershot.
While disappointing numbers have lowered the likelihood of an imminent Fed rate increase - for September was just 12 percent, November was 19.3 percent and December was 46.2 percent. Earlier this week, majority had expected a rate hike in December.

With such soft data coming in from the US, expectations have largely diminished towards the Fed doing anything in September and the market is drifting back towards the view they might do nothing for quite a while.

Some even feel that markets are overeating to a potential rate hike and giving too much attention to it, thus ignoring other crucial factors that have the potential to influence gold prices.
The market is once again divided between the supported of bulls and bears for gold. The ones that are bullish are not worried about gold’s recent downtrend. What is the most important factor for investors is that the gains seen so far are sustainable and that gold has more or less stabilised before it takes that long jump to rally.
They believe Fresh disappointing US data has reinforced our view that the Fed should remain on hold in September, resulting in renewed weakness in the dollar and US real rates and prompting fresh buying in gold.
Moreover, demand for gold from China and India is expected to rise over the months to come which will further boost gold prices higher. The market is  moving towards to a festive season and this period of the year has generally seen demand for gold rising and this rise in demand will make up for the weakness gold has faced over 2016.

Given that gold is heavily influenced by fluctuations in the dollar and US real rates, we are not surprised by the metal continuing to weaken. But the bullish supporters for gold also believe that this weakness is temporary and is currently driven by a stronger dollar and higher US real rates
Our big-picture outlook remains bullish but more profit-taking could easily be triggered if the price action disappoints, as it may be starting to do.




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 STABILISES: RSBL"
 http://riddisiddhibullionsltd.blogspot.in/2016/09/gold-stabilises.html

Monday, 1 August 2016

Gold and Silver prices on RISE: RSBL

                                                                                      - Mr. Prithviraj Kothari, MD RSBL




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

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

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

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

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

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

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

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

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

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

Thank You!

You may follow me on:

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

Previous blog:


Photo courtesy: Google 

Monday, 20 June 2016

BREXIT – Unity of Europe challenged: RSBL


- Prithviraj Kothari, MD RSBL



Clearly FED dominated first quarter of 2016 with respect to price movements in precious metals market and specially Gold. Moving here, there are lot of key events that could be considered game changing for Gold and Silver prices.

The June FOMC left the borrowing rates target unchanged while St. Louis Fed president James Bullard said the U.S. economy might need only one interest rate increase through 2018. The Fed's actual pace of rate increases has been much slower than what was mapped out by the committee in the past. This mismatch between what they are saying and what they are doing is arguably causing distortions in global financial markets, causing unnecessary confusion over future Fed policy, and eroding credibility of the FOMC.

Gold prices endured an extremely volatile session last Friday after Thursdays aggressive wash-out, grinding its way higher throughout the European and U.S. days to close out the week on a positive note (+1.6% higher for the week).

The Bank of Japan also did nothing to reassure the markets with a "shock and awe" monetary ease, impotent to act on the eve of Brexit and the upper house Japanese Diet election.

Everyone has been talking of the Brexit and as to how it will affect Gold prices. Those concerns were echoed by policymakers around the world last week. The Bank of England called the referendum the largest immediate risk facing U.K. financial markets, and possibly also global financial markets. Lets have a look as to what exactly Brexit is and how will it affect the financial markets and more importantly what effect it can have on the yellow metal.

WHAT IS BREXIT:
 International policymakers are ramping up their warnings on the dangers of a British exit - popularly known as "Brexit" — from the political and economic alliance that has united Europe for the past four decades. Voters in Britain will decide whether to leave or remain in the European Union in a referendum on Thursday, but financial market volatility has already spiked as polls show a growing desire to abandon the partnership. 

HOW WILL IT AFFECT UK:
The International Monetary Fund on Friday issued one of the direst forecasts to date, calling the impact of Britain's departure from the European Union "negative and substantial." The fund predicted that a Brexit could reduce economic growth by up to 5.6 percent over the next three years in its worst-case scenario. The gloomy outlook is driven by an expected sharp decline in the pound and severe disruptions in trade as the nation is forced to renegotiate deals with countries across the continent, potentially on worse terms.

HOW IT WILL AFFECT GOLD:
Gold is the obvious beneficiary of a dovish Fed, negative interest rates in Germany and Japan and the safe-haven bid to hedge Brexit risk.If Brexit happens then we may see gold trade at $1350 an ounce in the days to come. If Britain does not vote to leave the EU, gold prices could fall to $1220 as an immediate liquidation move.

If Britain leaves EU, the other states would also look for this option and the idea of unified Europe would fail. The challenges are coming at an already weak moment for Europe's economy — and the world's. Europe is still recovering from the series of financial crises that have been roiling countries such as Greece and Italy along with others across the continent. Waves of refugees from the Middle East are spurring political and cultural unrest.

In short, A Brexit would be bad for the U.K., it would be bad for Europe, and it would be bad for the world, and will further add to the current global uncertainties thus sending shockwaves through all financial markets but a positive for safe haven status of Gold.

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 –

Sunday, 24 April 2016

BEST QUARTER FOR BULLION SINCE THREE DECADES: RSBL

By Mr. Prithviraj Kothari, MD, RSBL


Gold, one of this year’s best performing assets, has room to extend its advance, according to top-ranked forecasters, even as the rebound shows signs of losing steam.
While we see gold being one the best performing asset in its class in 2016, we also this year to be one of the best performing years for gold in the past 3-4 years.

Bullion had its best quarter in almost three decades through March after the metal regained its haven status amid volatile financial markets, the spread of negative interest rates and as the Fed pared back expectations of further rate increases. Holdings in exchange-traded funds have climbed about 20% this year and there appears to be a return of confidence.

While gold has strengthened since the start of the week, putting an end to last week’s selling pressure, it has underperformed the rest of the precious metals as speculative positioning is overstretched on the long side

When markets are volatile and sentiments are confusing, we see more than ne factor influencing the prices. The same has happened with gold. This week there was more than one factor that as responsible for the ups and downs in gold. Let’s have look at each of these individually.

ETF- In paper holdings, gold ETF’s tracked by Fast Markets remain near their 2016 high – stood at 1,806 tonnes as of April 21. Investors poured $13.6 billion this year into exchange-traded products tracking precious metals, data compiled by Bloomberg show. That’s almost 80% of the total inflows into commodity ETFs in 2016. This gave a boost to gold prices.

ECB- On Thursday, the outcome of the European Central Bank meeting was as expected when it kept its current monetary programme unchanged.
The gold price was relatively flat during Asian trading hours on Friday after the European Central Bank (ECB) kept its monetary policy unchanged at its Thursday meeting as expected.
Spot gold was last at $1,250.00-1,250.20 per ounce on Friday, up just $0.50 from Thursday’s close.

But ECB president Mario Draghi warned that deflationary signals remained despite negative interest rates and billions of euros in asset purchases, while economic growth stays “tilted to the downside”.
In March, the central bank lowered nominal interest rates further into the zero-bound, citing concerns of deflationary pressure and a divergence between the northern and southern economies.

Dollar- Gold held its ground despite a stronger US dollar following the unexpected fall in US unemployment figures. With ECB policymakers holding interest rates unchanged, there was little to excite investors,” said ANZ Research on Friday morning.
The US dollar index had recovered to a three-day high of 94.70 on Thursday, but slipped 0.15 percent to 94.49 so far on Friday
Gold futures dipped Friday morning in the US, with a strengthened dollar and increased risk tolerance combining to weigh on prices.

US Report- in US data released Thursday, weekly unemployment claims between 7-14 April came in at 247,000 below the forecast of 265,000 and the lowest since November 1973.
The Philly Fed manufacturing index, however, was at 1.6, a stark divergence from the 8.1 estimate. The CB leading index month-over-month in March slipped to -0.2 percent, off the estimate of a 0.4 percent uptick.

Other markets- demand concerns in China and emerging markets weighed on global growth.
Earlier, Japan’s reading came in at 48, below the previous figure of 49.1, while PMIs from across the Eurozone were mixed.
Turning to International markets, Germany’s DAX and France’s CAC-40 were down 0.6 percent and 0.5 percent respectively, while the dollar strengthened 0.4 percent to $1.1253 against the euro.

While the current risk-on environment – evident in stronger equities and lower volatility – is exerting downward pressure on safe-haven demand, bullish factors like a weaker dollar and stronger oil price continue to prevail.



      Facebook: https://www.facebook.com/prithviraj.kothari

         Twitter: https://twitter.com/prithvirajrsbl
        Website: http://www.rsbl.co.in/
        YouTube: https://www.youtube.com/user/PrithvirajKothari
       Google+: http://www.google.com/+PrithvirajKothari




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 -
"Why Gold Is Sill Cheap"