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Showing posts with label Donald Trump. Show all posts
Showing posts with label Donald Trump. Show all posts

Tuesday, 21 November 2017

Rally vs Regression for Gold

It was a decent week for gold as it was up 0.6 per cent on Friday posting a second straight weekly gain.

Gold rose on Friday as the dollar softened on uncertainty about the progress of what would be the biggest overhaul of U.S. taxes since the 1980s.

The U.S. House of Representatives approved on Thursday a package of tax cuts, while a Senate panel advanced its version of the legislation that has President Donald Trump’s backing. The dollar weakened against a basket of six major currencies and was set for its biggest weekly loss in more than a month.


An exhaustion of the equity market is proving to be supportive for gold in the near future.
Though the week ended on a positive note, Monday blues were creating its effect on gold.Gold drifted lower through the early European session on Monday and eroded part of Friday's strong up-move to one-month tops.

Gold eased on Monday due to a stronger U.S. dollar, but remained near a one-month high hit in the previous session on uncertainty over progress on a potential overhaul of the U.S. tax code.

Currently trading around the $1290 region, testing session lows, a modest pickup in the US Dollar demand seems to have prompted some profit-taking off dollar-denominated commodities - like gold.

However,following factors we seen triggering a fresh wave of risk aversion trade in the market-
Breakdown in German coalition talks- The dollar index, which tracks the greenback against a basket of six rival currencies, gained 0.2 percent as the euro faltered after German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed, raising concerns over political uncertainty in the euro zone’s largest economy.

Sliding US Treasury bond yields- The latest US political jitter from subpoenas on Trump campaign staff and skepticism over the passage of a historic US tax cut legislation might continue to lend support and help limit deeper losses, at least for the time being.

These factors combined have underpinned the precious metal's safe-haven appeal.

Currently gold is once again been pulled between bullish and bearish markets.A little bit of momentum is sneaking in this market and, a little bit of volatility is slinking up in other financial markets.

If we see the ear market for gold , we can support a price drop keeping in mind the US interest rates, higher US interest rates with the target range for the Fed Fund rate likely to be moved up by 0.25% to 1.25%-1.50% at the next Federal Reserve meeting on December 13.  US interest rates are also expected to be hiked another three times next year, adding more downside pressure on gold.

On the other hand, a strong bull market is supported by the fact that Gold is starting to regain its safe-haven shine as political upheaval increases and investors become more risk-averse. Venezuela is on the verge of default after missing payments on sovereign debt and bonds issued by the state-owned oil firm PDVSA, while Zimbabwe is gripped by yet another political crisis after President Robert Mugabe was placed under military custody while the army took control of the streets of Harare.

And in a sign that investors are starting to pare back on risk, investors are shunning high-yield bonds.

In absence of any major market moving economic releases, investors would keep a close eye on the US tax reform developments. Meanwhile, broader market risk sentiment and the USD price dynamics would remain key determinants of the commodity's movement at the start of a new trading week.

Monday, 13 November 2017

Negative atmosphere for gold

Gold prices fell to one week lows on Friday as the dollar gained ground after upbeat U.S. factory orders and service sector data offset the impact of a weaker than expected employment report for October.

The dollarturned positive after the following data release-
U.S. factory orders
ISM non-manufacturing PMI data.
Another report showed that new orders for U.S. made goods rose for the second straight month in September
Orders for core capital goods rose more than expected.




The reports raised the probability of the FederalReserve's rate hike at a faster pace in the coming months. Higher rates tend to make the dollar more attractive to yield seeking investors.The dollar had earlier fallen to its lows on Friday after the release of October U.S. nonfarm payrolls, which came in below expectations.

On Monday, the Federal Reserve Bank of New York confirmed that William Dudley, among the most influential monetary policymakers throughout the financial crisis and its aftermath, expects to retire by mid-2018.

That raised another question over leadership at the central bank, less than a week after Trump chose a new Fed chief.

There are a lot of uncertainties over the Federal Reserve which makes it difficult for the markets to trade and hence most of the focus shifts to the tax reforms.

The dollar slipped to a more than one-week low against the yen on Wednesday, pressured by worries over possible delays to President Donald Trump's tax reform plans.

U.S. House of Representatives Speaker Paul Ryan on Wednesday left the door open to a possible delay in implementing a huge corporate tax cut, following a Washington Post report that his fellow Republicans in the Senate are exploring the option.

Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency, analysts said.

Some investors believe the data was distorted by the effects of recent hurricanes in the U.S. Investors were also focused on the proposed tax overhaul outlined by Republican lawmakers on Thursday.
Gold was higher on Thursday as a weaker dollar pushed prices during the session to a three-week high for the second time in successive days.

Gold had gained momentum till Thursday but lost its shineby the end of the week over a strengthening US dollar.

Gold prices closed lower after early weekly strength failed to gain enough upside momentum to continue the move. Bullish traders didn’t seem to be surprised by the release of the Republican version of U.S. tax reform, the Fed dropping hints of a December rate hike in its November monetary policy statement and President Donald Trump’s nomination of Federal Reserve Governor Jerome Powell to be the next Fed chair.

The market traded high for most of the week, but collapsed on Friday after the U.S. Dollar rose in reaction to the October U.S. Non-Farm Payrolls report.

Supporting the market were concerns over political and geopolitical events. Resistance was being fuelled by rising Treasury yields, a firmer U.S. Dollar and strong appetite for higher- risk assets.

Some traders believe tax reforms could bolster growth which would lead to a stronger growing U.S economy , further creating pressure on the Federal Reserve to raise interest rates and this pushing gold prices down.

Though gold still drew short-term support from uncertainty over the U.S. tax bill, “the overall trend has shifted into a neutral to negative trend.

It’s the current geo political and financialuncertaintythat’s creating a negative atmosphere for gold as the year comes to an end. We hope December gets in some great surprises for gold.

Friday, 10 November 2017

Gold tracks the U.S Currency

Bullion moved up on Wednesday as geopolitical tensions between US& North Korea and in the Middle East prompted investors to flock to safer assets. Gold was positive by almost half a percent and tested high in the international markets.

Gold prices edged higher on Thursday, after marking a near three-week high in the previous session, as the dollar eased.



Spot gold rose 0.2 percent at $1,283.91 per ounce at 0844 GMT. On Wednesday, it rose 0.4 percent and touched it’s highest since Oct. 20 at $1,287.13 an ounce.

Initially what pushed gold prices were factors like geo political uncertainties and safe haven buying. But currently, the severity of these influential factors has subsided and hence gold has been probably tracking the US dollar as its driver for price movement.

The dollar slipped to a more than one-week low against the yen on Wednesday, pressured by worries over possible delays to President Donald Trump's tax reform plans.

Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency.

On Monday, the Federal Reserve Bank of New York confirmed that William Dudley, among the most influential monetary policymakers throughout the financial crisis and its aftermath, expects to retire by mid-2018.

That raised another question over leadership at the central bank, less than a week after Trump chose a new Fed chief.

Currently the markets are in a fix, wondering what exactly to look for while making their trade. It’s difficult for them to trade even the Fed at the moment and hence as of now all eyes will remain focussed on the tax reforms for any further movement in the precious metals market.

Tuesday, 7 November 2017

Winter demand good for gold but prices likely to fall

Gold prices were hovering near multi-week highs for most investors outside the US Dollar and Euro on Thursday, as the Bank of England followed the Federal Reserve's widely expected "no change" decision by raising UK rates off an all-time record low as analysts and traders had forecast.
However in Friday, Spot gold was down 0.2 percent at $1,267.01 per Ounce and touched a one-week low of $1,265.16 over positive economic data and central bank decisions.



The past week was a significant week for central banks. The Bank of England raised interest rates for the first time in ten years, the Federal Reserve indicated that a December rate hike may happen and President Trump named Powell as his choice for leader of the Federal Reserve.

But still uncertainty prevails as there is no surety that how economies will manage when the central bank support is withdrawn. Moreover none of the financial centers have managed to meet inflation targets which they were all so vocal about.

Adding to the uncertainty is the issue that three of the world’s four most important central bank chiefs are nearing the end of their terms and may be well replaced. The rally in the gold price and fall in the dollar is just the first indication with how markets feel about such changes.

Gold held steady on Monday, but hovered near a one-week low hit in the previous session, as largely upbeat U.S. economic data reinforced the prospects of another rate hike by the Federal Reserve next month.

U.S. jobs growth accelerated in October, although wage growth was tepid, adding to the Fed’s assessment last week that “the labor market has continued to strengthen”, with the sluggish wage data doing little to change expectations.

JP Morgan Chase & Co on Friday raised its forecast on the number of U.S. interest rate increases by the Federal Reserve next year to four from three as the October payrolls data reinforced the view of a tightening domestic labor market.

Markets are increasingly confident the Fed will hike interest rates in December, which has weighed on the precious metals complex,

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

The Federal Reserve looks likely to raise interest rates, and that should bring up the value of the US dollar in general. If that’s the case, then gold could roll over a bit. Ultimately, this is a market that will continue to be just as mixed up as many others are right now, as we do not know with any type of certainty that the Federal Reserve is going to do one thing or the other.

Analysts said the yellow metal could also find support after U.S. President Donald Trump, who kicked off a 12-day Asia trip, looked to present a united front with Japan against North Korea.
Moreoverdemand for gold is likely to rise not only in the domestic market butinternationally too.
While we see the onset of the wedding season in India, normally winter is also a good time for gold globally with men buying their significant others jewellery for Christmas and lots of New Year’s Day marriage proposals

This rise in demand is expected tousher in renewed interest for bullion in coming week.

Tuesday, 24 October 2017

Gold Expected to Drift Lower by Year End

Firstly, wishing everyone a very Happy Diwali and a Prosperous year ahead.

And indeed it was a Happy Diwali for domestic jewellers, as the slump in gold demand had finally gained momentum this October.

Demand for gold jumped in India this week on account of Dhanteras and Diwali, but high prices took some sheen off the yellow metal's lure during the key festival period this year.

Demand in the world's second largest gold consumer generally rises during the final quarter as the country welcome the festive and wedding seasons, where buying bullion is considered auspicious and propitious.

Though a lull was witnessed in gold demand during Dussehra, it significantly improved during Dhanteras and Diwali.


Gold prices spurted by Rs 290 to 3-week high of Rs 31,000 per 10 grams on the eve of Diwali at the bullion market on increased buying by local jewellers to meet festive demand.

Demand was expected to be even better, if global prices had shown similar movements. However in Asia and other international markets, gold prices were seen falling down.

CHINA - Elsewhere in Asia, there was a slight uptick in demand for physical gold, with benchmark spot gold rates headed for a weekly decline after touching a one-week low of $1,276.22 an ounce on Thursday, pressured by a firmer dollar.

However, investors remained cautious, awaiting direction on economic policy and market reforms during the 19th Communist Party Congress in China which kicked off on Wednesday and were also focused on the upcoming elections in Japan.

In top consumer China, premiums charged ranged between $8 and $12 per ounce over the benchmark this week, compared with $9-$14 a week earlier

JAPAN - Gold hit its lowest in more than two weeks on Monday as expectations that Japan’s ultra-loose monetary policy would stay in place after Shinzo Abe’s election victory at the weekend lifted the dollar to a three-month high versus the yen.

Japanese Prime Minister Abe’s win also fed into positive sentiment in equity markets that were buoyed last week by fresh optimism about tax cuts in the United States, curbing interest in gold as an alternative asset.

U.S. DOLLAR & U.S. ECONOMY- Gold prices touched the lowest in more than one week on Thursday, as the dollar stood firm on rising U.S. Treasury yields, with investors focusing on who would replace Janet Yellen as the next chair of the Federal Reserve.

Financial markets are now awaiting guidance on who will succeed Federal Reserve chair Janet Yellen, whose term expires in February.

U.S. President Donald Trump is considering nominating Fed Governor Jerome Powell and Stanford University economist John Taylor for the central bank’s top two jobs. Powell is considered less hawkish than Taylor, who is seen advocating higher interest rates.

Moreover, the economy expanded at a modest to moderate pace in September through early October, despite the impact of hurricanes on some regions, the Fed said its latest snapshot of the U.S. economy thus hinting markets that the US economy is doing well which will further create a downward pressure on gold.

The dollar had already posted its biggest one-day gain in a month on Friday after the U.S. Senate approved a budget blueprint for the 2018 financial year, allowing Republicans to pursue a tax-cut package without Democratic support.

The dollar hit its highest in about two weeks versus the yen, supported by this week's rise in U.S. bond yields, with U.S. President Donald Trump set to make a decision in the "coming days" on Yellen, who is also one of the five candidates being considered for the job.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

Tensions on the Korean peninsula, however, continue to weigh upon gold and the metal could drift down towards the $1,250 level by early December weighed down by the prospect of a further increase to U.S. interest rates in December.


Thursday, 21 September 2017

FOMC Meet breaks down gold

It is rather remarkable to think that less than a month ago, gold shot up on the back of a missile firing in North Korea and the assorted baggage that came with that. The market was scared and gold was the major beneficiary. Now here we are, with the price of gold almost fifty dollars lower, but nothing has really changed. Trump is threatening total annihilation of North Korea, to which I am sure Kim Jong Un will have something to say or do. And now in addition to that, the US President is picking another fight, this time with Iran, with inflammatory comments at the UN yesterday. It does indeed seem that the markets have very, very short memories. But among all this, this week’s focus shifted to the much awaited FOMC meet, its concluding statement and what the Fed would say about balance sheet reduction.





On Nov 25, 2008 The Fed announced it would begin buying assets for its own account to save the world. In Oct 2014, The Fed ended its QE3 buying program but continued to reinvest the proceeds to maintain its $4.4 trillion balance sheet. Today, Janet Yellen announced the balance sheet will be allowed to normalize, with reinvestment slowed/stopped starting in October.

Let take a quick look at the key highlights over the Feds statements of the meet:

  • Hurricanes are unlikely to change economy’s course medium term
  • Economic activity has risen moderately and job market has strengthened
  • Rates kept unchanged as Fed plans balance sheet runoff in October
  • Fed signals another hike in 2017 and 3 more in 2018


As expected, the Fed announced it will begin reducing bond reinvestment's, starting by $10 billion per month and growing to $50 billion.

Gold prices settled higher Wednesday but slipped in electronic trading after the U.S. Federal Reserve's decision to keep interest rates unchanged

The price of spot gold has cracked back below the $1300 on the run up in the dollar after the FOMC decision. The precious metal is trading at the lowest level since August 28th.

In electronic trading after the Fed statement, prices traded lower at $1,310.70. The central bank said it will taper its $4.5 trillion balance sheet by $10 billion per month, the first reduction in nine years. Meanwhile, the Fed's interest rate projections, known as the dot plot, suggested a rate hike in December and three more in 2018.

A spill over effect of this meeting was clearly seen on gold as it broke the important trading level of $1300.

Saturday, 9 September 2017

Gold steady ahead of Sept. FOMC Meet

After rising for 3 days, gold prices weakened globally and on the domestic front too on weak global cues and easing demand by local jewellers.

Trump reached a surprise deal with Democrats on Wednesday to raise the short-term US debt ceiling, reducing concerns over a potential government shutdown and denting safe-haven demand.


President Donald Trump on Wednesday warned that the US would no longer tolerate North Korea's actions but said the use of military force against Pyongyang will not be his "first choice".

Gold stabilised early on Thursday, sustained by a weaker dollar and enduring concerns over North Korea, as markets awaited the outcome of a European Central Bank (ECB) policy meeting.

Spot gold was little changed at $1,334.06 per ounce during Thursdays trading hours, after easing 0.3 per cent in the previous session.

The dollar edged down against the yen on Wednesday, pushed back toward a recent 4-1/2-month low by the simmering tensions over North Korea and by comments from a Federal Reserve official about subdued US inflation.

Following suit, the dollar remained submissive on Thursday and the euro stood firm ahead of the ECB meeting where President Mario Draghi is expected to start laying the groundwork to withdraw monetary stimulus.

Currently, the escalating geopolitical tensions are bringing a rally in gold prices and the chances of the unrest rising further are high. If North Korea does another missile test, it will trigger risk-off trade thus proving to be of further help to gold.

The market is likely to continue focusing on geopolitical tensions, but it will start to shift focus to the Federal Reserve meeting in September, looking for details on reducing the balance sheet.

The two-day Federal Open Market Committee meeting (FOMC) is due to begin on Sept. 19 and the US central bank is widely expected to leave rates unchanged.

This could create some plunging pressure on gold starting next week and a rebound in the dollar for a short term.

Wednesday, 6 September 2017

Bullish sentiments for gold

Gold for the week ended with a good sign, as it posted gains in the Friday session, continuing the upward movement we saw on Thursday.

In the North American session, gold was seen trading at $1323.74, up 0.18% on the day. This rise was seen post the release of the labor report told prices have enjoyed a strong week, gaining 1.9%.
The metal showed some strong gains earlier on Friday, as the metal touched a daily high of $1329.05, its highest level since November 2016. These gains were triggered by the disappointing non farm payrolls and wage growth reports for August, both of which missed their estimates.

On the release front, US job numbers were unexpectedly soft. Non farm payrolls slowed to 156 thousand, well below the estimate of 180 thousand. Wage growth also disappointed, as Average Hourly Earnings posted a small gain of 0.1%, shy of the estimate of 0.2%.


Although the US labor market remains tight, investors are fretting about the lack of wage growth, which has contributed to the low inflation which continues to hamper the US economy.

The Federal Reserve will also be perturbed by small wage growth, as a December rate hike is very much in doubt due to inflation levels which obstinately remain well below the Fed's inflation target of 2.0%. Currently, the likelihood of a December rate hike stands at just 36%

Gold is traditionally considered a safe-haven asset, and often benefits when investors get jittery and lose their risk appetite. Such was the case last week, as renewed tensions between the US and North Korea early in the week propelled the metal above the symbolic $1300 level.

On Tuesday, North Korea fired a missile over Japanese territory, drawing sharp condemnations from Japan and the US, with President Trump declaring that "all options remain on the table"

In times of uncertainty or crisis, investors typically take refuge in “safe” options like the Swiss franc, gold or the US dollar, but under President Donald Trump the greenback has lost its lustre, especially to the euro.

Although, tensions have since eased somewhat, if North Korea decides to fire another missile towards Japan or the US military base on Guam, gold prices will likely move higher. As well, as the markets digest the disappointing job numbers, we could see risk appetite continue to wane early next week, which could extend the current gold rally.

The reaction to the lackluster U.S. Non-Farm Payrolls (NFP) report suggests gold will continue to exhibit a bullish behavior ahead of the Federal Open Market Committee (FOMC) interest rate decision on September 20 as mixed data prints coming out of the economy sap bets for another rate-hike in 2017. Even though ‘the Committee expects to begin implementing its balance sheet normalization program relatively soon,’ the fresh forecasts from Chair Janet Yellen and Co. may ultimately heighten the appeal of gold if central bank officials attempt to buy more time and project a more shallow path for the Fed Funds rate.

In turn, U.S. Treasury Yields may stay depressed throughout the remainder of the year, and the precious metal may continue to retrace the decline from 2016 amid the shift in trader behaviour.
Weak U.S. economic data has effectively removed the Fed’s prospective rate rise scenario from the gold price equation – at least for a couple of months although may have an impact in November as speculation will reign over whether the Fed will implement another small rise in December, or kick the can down the road again.  The U.S. dollar is looking weak and a weak dollar tends to see the dollar gold price rise. And it is the dollar gold price which the market judges to be the most important indicator, even though the gold price in other currencies, like the euro or the yen, should perhaps be more relevant.

The seemingly increasing threat of war between North Korea and the USA, will likely give the gold price a huge boost in the days and months ahead with safe haven demand escalating worldwide – and particularly in Asia and the U.S. itself.

Wednesday, 31 May 2017

GOLD EXPECTED TO SHINE IN THE SECOND HALF OF 2017

It was strong opening for gold this week as gold neared its highest in a month on Monday amongst holiday thinned trade. A soft dollar and a pullback in equities helped this rise in gold prices.

Gold hit its highest level since May 1 on Friday at$1,269.50 an ounce, as nervousness over U.S. President Donald Trump's negotiations with other world leaders at the G7 summit prompted investors to buy bullion as an alternative to nominally higher-risk assets such as shares.



Spot gold settled at $1,266.67 an ounce, little changed from $1,266.66 late on Friday.
Though there is not much rise expected in gold prices, but the news from G7 meeting pushed gold prices up.

Under pressure from the G7, Trump on Saturday backed a pledge to fight protectionism but refused to endorse a global accord on climate change, saying he needed more time to decide.

Apart from this, market players await next month’s FOMC meeting to get clearer picture on the U.S. Federal Reserve's stance on interest rate increases.Gold is highly sensitive to rising U.S. rates, which
Increase the opportunity cost of holding non-yielding bullion, While boosting the dollar, in which it is priced.

Meanwhile this week, market participants will stay focused on the labor market report in the US slated to release during the week. If the data turn out to be positive, there is probably nothing to prevent the (Fed) implementing its next rate hike in mid-June.

The latest FOMC minutes suggest that the Fed may start decreasing its balance sheet later this year.
It is true that the first two rounds of quantitative easing were positive for the gold market. However, the third one was a disaster for the yellow metal, as the confidence in the U.S. economy came back and the safe-haven demand for gold declined. Therefore, the impact of the unwinding of the Fed’s balance sheet on the gold market is not easy to determine – a lot will depend on the broad macroeconomic picture.

On the one hand, the Fed’s shrinking balance sheet would imply rising long-term real interest rates, which would be negative for gold prices. On the other hand, there may be some turmoil in the financial markets, which would support the gold market. Moreover, it may be the case that the U.S. dollar rally which started in 2014 was caused by the rising expectations about the Fed’s upcoming tightening.

If this is true and investors really bought the rumor and sell the fact, then the greenback may start depreciating, which would likely send the price of gold higher. Gold’s response to the current Fed’s tightening cycle suggests that it is not impossible scenario. However, the whole process is likely to be conducted in a very conservative and cautious way to minimize market volatility and disruption. Hence, investors should not bet on doom scenarios and expect that the price of gold will necessarily skyrocket.

Though gold was not preferred in an investor’s portfolio during 2016, it gold regained investor confidence during 2017, as doubts about the Trump’s administration’s ability to see through their policy agenda and political difficulties have emerged. Moreover, there has also been a number of geopolitical events such as European elections – the results in France and Netherlands have somewhat assuaged financial markets – and the flash point in the Korean peninsula.”

These geopolitical tensions and uncertainties have influenced gold prices.

The spot price of gold jumped nearly 2% on the 17th of May, the most significant daily increase since the Brexit vote on May 2016. Political developments will be closely watched by the market, and could be a potential driver of additional uplift in gold prices going forward.

Comments by St. Louis Fed President, James Bullard, that inflation remains subdued, and the Fed’s interest rate expectations might be too aggressive, have also been supportive of gold.

Gold is expected to hover around USD 1250 an ounce and is further expected to range between USD $1245 to USD $1300 over 2017-18.

Monday, 10 April 2017

Gold being pulled between uncertainities and rate hike

Gold is often used as a hedge against political and financial uncertainty and security risks. And that’s exactly what’s happening with gold currently.

Gold hit a five-month high on Friday after U.S. jobs data dampened expectations that the U.S. Federal Reserve will raise interest rates, but the metal gave up most gains as the dollar rose and safe haven demand ebbed.



Spot gold rose 1.2 percent to $1,265.95 an ounce by during trading hours on Friday, after touching its highest since Nov. 10 at $1,270.46,putting it on track for a fourth consecutive week of gains. U.S. gold futures climbed 1.1 percent to $1,267.60 an ounce. This is the most supportive environment we have seen for gold in some time given that there is geopolitical tension and disappointing U.S. payrolls number.

Data released showed that U.S. employers added the fewest number of workers in 10 months in March, boosting gold, which is most attractive to investors in a low interest rate environment.
Gold was also underpinned by investors looking for safety after the United States fired cruise missiles at a Syrian air base, escalating tensions with Russia and Iran.

Russia, a staunch ally of Syria, said relations between Washington and Moscow had been seriously damaged by the strike, which was in retaliation for a deadly chemical attack on a rebel-held area of Syria.

The precious metal hit a 5-month high as investors sought safe-haven assets after the United States launched cruise missiles against a Syrian air base, potentially escalating tensions with Syrian allies Russia and Iran. U.S. President Donald Trump unleashed the military strikes in response to a deadly chemical attack on a rebel-held area, a U.S. official said on Thursday.

Later in the session, however, safe haven demand faded and the dollar index. DXY climbed to three-week highs which further rose questions that unless the geopolitical risk continues; will the sentiment remain positive for gold?

Investors were cautious ahead of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping, but Trump said on Friday he had made progress in talks and expected them to overcome many problems. Investors had already been on edge as Trump met Chinese leader Xi Jinping on Thursday for talks over flash points such as North Korea and China's huge trade surplus with the United States.      

Gold is often used as a hedge against political and financial uncertainty and security risks. It has benefited alongside other assets considered safe, such as the yen and U.S. Treasury bonds.
Though geo political uncertainties are creating room for gold to rise, we shouldn’t ignore the key influential factor for gold i.e. U.S. interest rate hike.

Increases in U.S. interest rates will prove too much of a headwind for gold prices. As such, we think that the price of gold is likely to fall from about $1,265 today to $1,050 by the end of the year if there is any news coming in from the Fed regarding hike in interest rates.

Clearly this raises the stakes and we expect to see gold prices continuing to push higher in the short-term, at least until there is some clarity around whether this is a one-off or develops into something more.

Wednesday, 1 March 2017

Effect of Presidential Election and BREXIT on Bullion Market

So Far, bullion has witnessed a 9.6 percent rise in prices mainly due to the prevailing political uncertainty over Trump’s unorthodoxy, European elections and Brexit ruffle confidence.
The yellow metal reached near a four month high last week amid intensified political uncertainty in the U.S. and the EU.

All precious metals have made gains, gold, silver, platinum and palladium, as both the euro and the dollar weakened over the week. Let's take a look as to what factors contributed to the rise and how far an important role will they play in the near future.

US uncertainty- Gold prices have hit a four month high to reaching their highest level since Donald Trump won the election.


The metal is considered as a safe haven asset for money and values rise when markets are in turmoil or in times of uncertainty. This sentiment has raised the demand for gold especially from investors thus pushing  its prices higher.

As markets await a major speech by US president Donald Trump, we saw equates retreating and dollar hesitating thus strengthening gold prices and shaking off most of the losses incurred following the surprise election result, as markets continue to unwind Trump trade.

Fed Rate Hike- Last Wednesday's release of minutes from the last FOMC meeting on January 31 – February 1 struck a slightly more hawkish tone as Fed members discussed the appropriateness of another rate hike 'fairly soon.' concerns over the risks and uncertainties surrounding the Trump Administration's fiscal stimulus plans as well as a strengthening US dollar tempered that hawkish stance. In the end, markets were once again left with continued ambiguity regarding the pace of monetary policy tightening in the coming months. Indeed, the Fed Fund futures market still saw a low percentage probability of a March rate hike – in the high-teens to low-20's – a day after release of the FOMC minutes. This sustained policy uncertainty helped weigh on the dollar while boosting the price of gold further. Reduced expectations of a US rate hike in March following the release of the minutes from the US Federal Reserve's last meeting are also helping gold.

EU elections- Despite the virtually relentless rally in US and global equity markets, geopolitical risks continued to abound, particularly in Europe. Article 50, which officially begins the process of separation between the UK and European Union ('Brexit'), is slated to be triggered no later than in March. A former European Commission official has recently stated that the triggering of Article 50 could lead to a 'complete breakdown' of UK/EU relations.

Additionally, France's far-right, anti-EU presidential candidate, Marine Le Pen, is leading in polls for the first round of the upcoming French elections. Although she is not currently favored to win against frontrunner Emmanuel Macron, any surprise victory by the populist/nationalist Le Pen will undoubtedly lead to serious questions about the future of the EU.

Geopolitical worries and political concerns in the EU continue which is leading a flight to safety bid in gold futures market and gold exchange traded funds (ETFs) and demand for safe haven gold bullion.

Dollar- The dollar looks vulnerable due to the uncertainty about US President Donald Trump and the new U.S. administration's policies. Overnight Trump attacked China and accused the Chinese of being ‘grand champions’ of currency manipulation.

This alone is quite bullish for gold. It does not create confidence about trade relations between the world's two biggest economies and it suggests that we may be about to embark on the next phase of the global currency wars.

The US president is to deliver his first speech to US Congress next week, after US Secretary of the Treasury Steven Mnuchin on Thursday said the impact of fiscal stimulus this year on the economy might be limited.

Amid these uncertainties in Europe as well as those in the US under the Trump Administration's still-hazy policy trajectory and the Fed's murky monetary policy, gold has continued to extend its sharp uptrend that began after price bottomed out around the $1125 support area in late December.

Tuesday, 7 February 2017

Push vs Pull for GOLD

Last week, gold clocked its largest weekly gain in some seven months. The move came higher as investors flocked to gold, which is often viewed as a safe-haven investment in times of uncertainty.
Last Thursday, markets kept a close watch in the Jobs report that was due on Friday. Apart from the Job report there were many other highlighted events in the week-

Jobs Data- U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, but wages barely rose, handing the administration under President Donald Trump, both a head start and a challenge as it seeks to boost the economy.


This report pushed gold prices higher and the sentiments have been continued for this week too.
The gold price climbed on Monday to its highest in nearly three months with investor interest in bullion improving thanks to a subdued dollar and political worries about the US and Europe.
Spot gold was up 0.6% at $1,226.91 during trading hours, having earlier touched $1,230.14, a level last reached on November 17.

Political Uncertainty- Majorly, the current uncertainty prevailing in the US is being driven further by President Donald Trump’s policies, the most controversial of which is a temporary ban on immigrants from seven Muslim countries.

Moreover, Data on Friday showed U.S. wage growth slowed, reducing the odds of Federal Reserve rate increases this year and sending bullion to the biggest weekly gain since June. Uncertainty about Trump’s fiscal-stimulus policies and his administration’s spats with traditional allies helped push hedge funds’ bullish bets on gold to the most in almost two months.

Dollar - The dollar’s value against a basket of currencies has fallen nearly 4% since January 3. That was partly on expectations that the US central bank will wait to see what happens on the political and economic fronts after Friday’s monthly jobs report showed that wages barely rose. "Gold’s solid showing so far this year ... is mostly attributable to a weaker dollar and last week’s standoffish Federal Reserve statement with regard to when it would next move on rates. Trump has also criticized the strength of the dollar, which has pushed the greenback lower. A weaker dollar is good for gold as gold is denominated in U.S. dollars.

French politics - Elections in the Netherlands, France and Germany this year are also adding to jitters. Apart from the Trump presidency euphoria, investors are also watching French politics, where conservative presidential candidate Francois Fillon on Monday vowed to fight on for the presidency despite a damaging scandal involving taxpayer-funded payments to his wife for work which a newspaper alleges she did not do. French pollster Opinion way published a survey on Monday that showed independent Emannual Macron resoundingly winning a presidential election runoff against far-right leader Marine LePen.

Interest rate hike - The Fed raised rates for only the second time since the financial crisis in December and most Fed policymakers agree with Harker that three more rate hikes this year would be appropriate. Wall Street banks and interest-rate futures traders are betting the Fed will only lift borrowing costs twice this year, starting in June.

Currently there is basket of positive and negative factors that might respectively push or pull gold prices further. Of course the positive factors for gold could indeed be overturned by a significant improvement In US employment statistics, or advances in GDP, thus strengthening the Fed’s hand, but if the dollar continues to fall (President Trump appears to think it is too high) and real interest rates remain negative, gold could yet have a good way to run this year, particularly given the global geopolitical uncertainties noted above.

Thursday, 12 January 2017

2017 - SURPRISES TO UNFOLD FOR GOLD : RSBL

Until Wednesday last week, gold was trading in positive territory continuing the rally from the previous session.

The spot gold price was quoted at $1,164.85/1,165.15 per oz, up $8.05 on the previous close.


There were many supporting factors for gold’s rally-

  • Mainly all the uncertainty that lies ahead with the changeover in the US administration 
  • Brexit 
  • The weakening trend in the yuan. 
On Friday last week, gold slipped following the release of strong US employment data which was as follows-
  • The USA added 156,000 jobs in December, compared with 204,000 in November, while wages grew 2.9% year-on-year to reach a seven-year high.
  • German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected. 
  • The non-farm employment change for December showed 156,000 Americans entered the workforce, a slight miss from the 175,000 forecast.
  • However, the figure for the previous month was revised up 19,000 jobs and the headline unemployment figure came in as expected at 4.7%.
  • The big surprise was that average hourly earnings grew by 0.4% month-on-month, bringing total wage growth to 2.9% for the year and the highest level since before the recession.


Gold prices were in positive territory in London on the morning of Monday January 9, recovering slightly from last week’s drop.

The spot gold price was recently quoted at $1,176.20/1,176.50 per oz, up $3.40 on the previous close. Trade has ranged from $1,172.50 to $1,178.75. Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve.

US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the economy for stronger growth and the prospect of further interest rate increases this year.

Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.

Evans and other regional Fed presidents are scheduled to speak this week, and the outlook for U.S. rates may become even clearer when Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.

Expectations of US interest rate hikes lowers demand for the non-interest-paying bullion.
Apart from a rate hike the most discussed r rather the most awaited topic currently is the fiscal stimulus that Trump is promising and, of course, inflation.

Despite the rebound in the dollar, gold prices are holding up well – all thanks to the safe haven move by investors, just ahead of the shift in US administration.

By the end of 2016 or rather post the 2016 US election, confidence in the global markets was running high thus propelling gold to lose its safe haven appeal. But 2017 has lot of uncertainties and surprises to unfold for gold which will once again get into the investors basket keeping in the mind its appeal as a safe haven asset in times of global uncertainties.

In the week ahead, investors will be looking ahead to US economic reports, particularly Friday’s retail sales figures for December. Investors will also be watching an appearance by Fed Chair Janet Yellen on Thursday and speeches by a handful of other Fed officials during the week, as well as President-elect Donald Trump on Wednesday for a press conference.

Now investors await the upcoming inauguration of President-elect Donald Trump to see what the volatile leader will implement once in office.

Tuesday, 29 November 2016

Roller Coaster Gold ride edges lower as US dollar regains strength

Gold has been witnessing downward pressure since the past two weeks. But in the last week this pressure became so austere that we saw gold dipping to its nine month low below the important$1200 level. At $1180 gold hit its lowest level since early February. Furthermore, Good US economic data, which caused the US dollar to appreciate, had fuelled the next wave of selling on last Thursday noon.

The US dollar index climbed to its highest level since March 2003. Furthermore, US stock 
Markets continued to rise, which suggests on-going high levels of risk appetite among market 
Participants, while yields on ten-year US Treasuries climbed above the 2.4% mark again for 
the first time since July 2015.

The US dollar index has continued to strengthen amid positive US economic data while putting pressure on the gold price. The index had reached as high as 102.05 on Thursday, the highest since March 2003.



In addition, gold ETF’s witnessed massive outflow, thus reducing their holding by 13.7 tonne putting them at a five-month low of only a little over 1,900 tons. This was already the tenth consecutive daily outflow.

During this period, ETFs have had their holdings cut by a total of 101 tons. 

Although gold in euro terms is faring somewhat better thanks to the firm US dollar, at €1,122 per troy ounce it nonetheless fell to its lowest level since early October. 

The spot gold price eased during Asian trading hours on Friday November 25 as a strong US dollar continued to weigh on the yellow metal.

The US was closed for Thanksgiving holiday on Friday which resulted in quieter trading leading into the weekend.

Gold recovered from an earlier nine-month low and moved into positive territory on the morning of Friday November 25 in London, reflecting a pause in the dollar’s rally.

This sentiment continued for this week, giving gold a positive opening on Monday.

Gold was in positive territory on the morning of Monday November 28 in London, with a slightly weaker dollar generally underpinning precious metals prices.

The dollar index was recently at 101.05, having been as high as 102.05 in the previous week, it’s highest since March 2003.

The spot gold price was recently quoted at $1,192.00/1,192.30 per oz, up $8.20 on the previous close. Trade has ranged from $1,187.05 to $1,197.70 so far.

The spot gold price edged lower during Asian trading hours on Tuesday November 29 as the US dollar regained strength.

Growing sense of ‘opportunity cost’ among investors could be behind a surprise fall in the value of gold, after the precious metal failed to live up to its status as an inflation hedge and safe asset.

Softer spot prices may encourage physical demand while the holiday seasons in both Asia and Europe approach.

Before the UD election, gold was expected to trade unpredictably but now that prices have more or lessstabilised, market for gold is expected to be bullish. Moreover, Mr. President has been talking tough on trade which further raises uncertainty and create nervousness in the market thus keeping the bullish trend alive for the yellow metal.

Gold should provide a good hedge against fallout from what political policy changes lay ahead, as well as from any correction in super-charged markets.

The commodity, traditionally regarded as a safe haven for skittish investors, was among those assets viewed as a potential winner in a year marked by significant market shocks and rising inflation expectations – which many now predict during a stimulus-happy Donald Trump presidency.

This sentiment, however, is yet to be borne out by the price of the precious metal. While other hedges such as inflation-linked bonds have performed relatively well, gold has been trending downwards, both in the months leading up to the US election and its aftermath.

Wednesday, 23 November 2016

Gold logs modest rebound from 6-months low


While we saw palladium diverged last week, gold prices remained weak. The strong dollar has been weighing on the yellow metal, but a stronger oil prices may well give it some support if stronger oil prices encourages investors back into commodity baskets.

Last week gold was on the negative side as its prices tracked lower in London on the morning of Friday November 18, with continued strength in the dollar pushing it to six-month lows.

The spot gold price was recently quoted at $1,208.45/1,208.70 per oz, down $6.55 on Thursday’s close. And reached $1203 earlier in the day -it’s lowest since May.

The dollar index was recently at 101.35, up 0.35% – it is holding around its highest for 14 years amid expectations that the US Federal Reserve will raise interest rates next month.

The US dollar has strengthened alongside increasing expectations of a US rate hike in December.

Fed officials who spoke last Friday had indicated that rates should go up next month and that the Fed could adjust its outlook as and when more details of president-elect Donald Trump’s policies become visible,.

“The market is almost fully priced for a rate hike in December at 98%.

Bullion has fallen 5.4 percent this month as of Friday's close, pressured by nerves around the U.S. election and speculation over the timing of an interest rate hike by the Federal Reserve.

The overnight Fed comments gave the dollar the support required to continue its stunning run higher and it is hard to see gold being able to rally the support required to break away from $1,200 as we head toward the December FOMC meeting.

US Federal Reserve chair Janet Yellen said that US interest rates could rise “relatively soon” due to an improving domestic labour market and stronger growth.

Should the US dollar continue to rally, gold is likely to remain under pressure.

These low prices have induced some interest in the physical market this increasing the demand for gold. Russia purchased the most gold in 18 years in October – central bank holdings rose to 50.9 million ounces from 49.6 million ounces, ANZ said in a note.

Gold prices rose in Asian trade on Monday, snapping a 3-session losing streak, buoyed by physical buying after the metal slid to a 5-1/2- month low on Friday.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Hence any positive development over the interest rate hike immediately puts pressure on gold this pushing its prices down

Meanwhile, gold premiums in India, the second largest consumer of the precious metal, jumped to two-year highs in the week to Nov. 18 as jewellers ramped up purchases on fears the government might curb imports after withdrawing higher-denomination notes from Circulation.

Spot gold seems to have found a support at $1,204 per ounce; it may hover above this level for one day or bounce moderately.

Gold moth continue to struggle against a backdrop of a firmer U.S. stock market, a stronger dollar and rising global rates and there are chances for prices to weaken below $1,200 in the next few weeks leading into the Federal Open Market Committee.

But ETF investors are continuing to pull out – holdings have dropped by 54 tonnes or 2.5% to 2,109 tonnes as of November 18 after rising 33 tonnes in October, 27 tonnes in September and 16 tonnes in August.

With US markets set to close later this week for Thanksgiving holidays, volatility is likely to be pronounced into the end of the month, Commerzbank noted.

Tuesday, 8 November 2016

US PRESIDENTIAL ELECTION EFFECT ON GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.
We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House. 
Gold markets thrive on uncertainty, it usually does before US elections. But this time around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $


A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies  show that as the dust settles, the year following the elections could be bad for gold prices.   

US PRESIDENTIAL ELECTION EFFECT ON GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.
We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House. 
Gold markets thrive on uncertainty, it usually does before US elections. But this time around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $


A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies  show that as the dust settles, the year following the elections could be bad for gold prices.