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Showing posts with label European Central Bank. Show all posts
Showing posts with label European Central Bank. Show all posts

Sunday 8 May 2016

HAPPY AKSHAYA TRITIYA: RSBL

                                                    By Mr. Prithviraj Kothari, MD, RSBL






Firstly wishing everyone a very Happy Akshaya Tritiya. May this year be filled with wealth and prosperity.

We have seen many stories being revolved around this auspicious occasion. Our mythology and scriptures are filled with many interesting stories that relate to Akshaya Tritiya. Out of those, the tale if friendship between Lord Krishna and Sudama is relevant not only to understand the importance of this day, but also to emphasize on the need of having a true friend.

Sudama, also known as Kuchela, was one of Krishna’s childhood friends and the two share an equation so strong that it has become a legend of sorts. According to Hindu mythology, while Krishna went on to rule Dwarka, Sudama led a simple life and could hardly make ends meet. He needed all the financial assistance he could to led a normal life. Sudama led a life of poverty. 

One day, his wife could not bear to see their children hungry and said “can’t you ask Lord Krishna for help?” Sudama agreed but decided that he would not ask Krishna for anything. Then Sudama's wife borrowed some puffed rice from a neighbor and gave it to Sudama as a gift for Krishna. When Sudama came to Dwarka, Krishna was overjoyed! Then, he saw his pouch and snatched it fro
m his hand. “Puffed Rice! My favorite dish!” said Krishna and he ate a handful of rice greedily. 

Before he could take a second handful, Rukmini, stopped him, saying “One mouthful will give him all that he needs my Lord!”/ The next morning, Sudama left Dwarka. As he approached his house he saw a grand mansion. His wife and children came out wearing jewels and fine clothes. Sudama was filled with joy and happiness as his friend had given him more than he ever needed. The day when Krishna blessed Sudama with abundant wealth was marked as Akshaya Tritiya. 


This is one of the reasons why this day is celebrated as a day of material gain and wealth. Hence the custom of buying gold, silver, real estate etc has been followed.

Once again, it’s that time of the year where everyone is talking about investing in gold! Buying gold funds, jewelry and coins on Akshaya Tritiya is considered the best way to invest your wealth on this auspicious day. Though nowadays people look for other avenues like real estate, gadgets but nothing can replace gold.

 As the history of our country has it, after Dhanteras, maximum purchase of Gold, Silver and Platinum happen on this day.
People this year are full of mixed feelings-anxiety, excitement, nervousness as a lot is been happening around gold since the past few weeks.

Generally we also witness a price rise few days ahead of Akshaya Tritiya due to the rise in demand for the yellow metal.

In fact demand for gold this year is expected to be better than last year because-

Monsoons- A good monsoon will lead to rise in demand for gold prices this year which will ultimately boos prices. Those who expect further rise in gold prices may advance their purchases.



Strike- the jewelers went on strike after the announcement of excise levy. The industry is gearing up to meet the pent-up demand, which will be witnessed during this Akshaya Tritiya. There were many players who couldn’t make their purchases during the strike and will now enter the market to buy gold on this auspicious day


Gold rally- Recent rally in gold prices due to global influential factors have propelled investors and traders to anticipate further price rise which has pre-poned their purchases of the yellow metal.
As we all know this quarter has been the best quarter for gold in the past three decades. Prices have ranged between Rs.24, 910 to Rs.30, 300 per 10 gram. On one side where we see sales dampening due to this high volatility, on the other hand we also expect the demand for gold to rise given the global and domestic factors that have been influencing gold.


Traders also anticipate that in terms of volume, consumer demand might witness a negative growth of about 10%, but in value terms, it is likely to be at par with last year’s sales.
Above all demand for gold this year is expected to be comparatively better that the past 2 years.


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
"RSBL: Gold & Silver Price Rise"
http://riddisiddhibullionsltd.blogspot.in/2016/05/rsbl-gold-silver-prices-rise.html

Sunday 14 February 2016

GOLD GLITTERS ALL THE WAY: RSBL


By Mr. Prithviraj Kothari, MD, RSBL 








As I mentioned last week in my blog that gold is regaining its safe haven appeal, this week we saw this sentiment strengthening further.
Gold was like literally all over the world this week as we saw the yellow metal gaining its safe haven appeal in its true sense after a long wait. Sentiment in the gold market remained sturdy after prices hit a one-year high in a figurative move.
This was the third consecutive week that gold witnessed positive gains, with increasing more than 5.3%- the biggest weekly percentage gain since late October 2011.

Analysts have noted that the yellow metal’s push back above $1,200 an ounce generated a lot of focus and positive sentiment among appalling investors looking for a safe-haven.
Many analysts are bullish on gold, expecting sentiment to continue to grow as prices have broken through key technical barriers, culminating in a weekly high at $1,263.90 an ounce.
Spot gold was last at $1,240.50/1,241.20 per ounce, having rallied around 22 percent since the start of the year.
The gold price rallied to a high on Thursday of $1,263.30 per ounce, up five percent and it’s strongest since February 6 last year when it peaked at $1,268.90.





Since this rally came in suddenly, there were many investors that missed on to bank on the gains. The speed of the rally and its strength suggest many would-be investors have been chasing prices, having not been able to take advantage earlier in the rally – they had lost faith in gold as a safe-haven given the four-year bear market.
This volatility was influenced by more than one factor. It was a combined effort of the following-
Dollar- Sentiment towards gold has changed dramatically, and gold has even moved up on some days in the face of a dollar rally. With a change in sentiment, those underweight or waiting on the sidelines started buying gold which furtherer fuelled gold prices.
The precious metal benefitted from a softer dollar, which had failed to attract safe-haven demand despite the global instability – the currency was last trading at a four-month low at $1.1349 against the euro.
A softer dollar is making gold more affordable for holders of other currencies – it has fallen around four percent this month, having already rallied strongly over the past 14 months – the dollar index climbed to 100.50 in December from around 70 in January last year and was last at 95.58.
Fed- As part of a two-day congressional hearing, Federal Reserve Chairwoman Janet Yellen attempted to reassure markets that US growth was steady and the labor market was improving.
Yellen and her fellow colleagues are being criticized for exacerbating the instability after raising rates in December – rates were static around 0 percent since December 2008.
And the US Federal Reserve, having raised rates in December for the first time in nine years, has not ruled out a push into negative territory. The chances of further rises this year have receded significantly, according to market consensus.
Because gold has no yield, it loses some of its luster when interest rates are rising. But negative interest rates negate this disadvantage while highlighting economic weakness against which gold is historically seen as a hedge and preferred as one of the safest modes of investments compared to its counterpart.

China- since the Chinese markets remained closed for the Lunar Celebration, there was nil reaction from that side and hence gold prices shot up one side.
With China absent from the market for its New Year holidays this week, the market now waits to see the reaction of Chinese investors upon their return on Monday, particularly as the US will be absent on this day for Presidents day.
All eyes will be glued to the return of the Chinese markets as investors are eager to see what they actually bring to the surface post this week’s volatile developments.

Equity- The gold price benefited from the meltdown in equity markets, as the yellow metal continued to hold around one-year highs. Weak equity markets have spooked investors and they promptly dumped risky assets and rushed to gold, which is seen as a safe-haven.

Other Economies-
Uncertainty about global growth and a mass sell-off in global equity markets unsettled investors, burnishing gold’s safe-haven qualities, while Japan, Switzerland, Sweden and Denmark have adopted negative interest rates.
European Central Bank (ECB) president Mario Draghi is expected to follow suit at the bank’s March meeting, citing inconsistent growth concerns and non-existent price increases.
Since the decision, Japan lowered deposit rates into negative territory and European Central Bank President Mario Draghi is expected to implement the same policy as soon as March.
Both economic regions are struggling with poor economic growth and non-existent inflation despite billions in easy money and years of near-zero interest rates.
Negative interest rates are generally good for gold as the improbability and agony linked with negative rates tends to surge interest in gold, but the more distinct shift of monetary policy in this direction by central banks is encouraging even greater flows into bullion.


Although it is a shortened week with markets closed Monday for Presidents Day, the U.S. economic calendar will be busy with the release of regional manufacturing reports, housing sector data, and the release of the Consumer Price Index for January.


While analysts are positive on the gold market, they are not ruling out some weakness at the start of the week.


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 Regaining Its Safe Haven Appeal: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/02/gold-regaining-its-safe-haven-appeal.html 


Monday 7 December 2015

GOLD BOUNCES BACK: RSBL

 By Mr. Prithviraj Kothari,MD, RSBL






Christmas seems to have come in early for gold as it finished the week on a strong note, ending a six-week losing streak and bouncing off a fresh 5 and-a-half year low.
After hitting a 5.5-year low earlier this week, Gold prices prepared to end Friday's session on a very upbeat note, with the metal up 2% during the day.

The magic move happened despite a relatively in-line November jobs report that all strengthened the expectations that the Federal Reserve will raise rates after its monetary policy meeting December 16.

Gold’s rally started in earnest Friday, following the release of November’s nonfarm payrolls report, which was relatively in line with expectations.

Because expectations of a rate hike are close to fully priced into the markets, many investors and traders are starting to doubt whether the U.S. dollar can move higher under current market conditions, prompting them to take profits in their long U.S. dollar positions.
Good news for gold also came in when the Euro rebounded over the announcement of a minimum cut in its deposit rate over the disappointing market by the European Central. The central bank eased its monetary policy, dropping its deposit rate to negative 0.30% from negative 0.20% on Thursday.

The rebound in the euro, following the ECB’s monetary easing that was less than expected, pushed the dollar index down to 97.59, last at 98.30 and that seems to be helping to underpin the metals.

Markets eagerly awaited the US employment report that is likely to be the next directional influence on the dollar and markets generally. 

The gold prices recovered after falling to fresh five-and-a-half year lows during Thursday morning trading after Asian participants reacted to the strong US job data from the previous session.  
Spot gold was indicated $1,053.20/1,053.50 per ounce, down $0.80 from Wednesday and off its session low of $1,046.40, its lowest since February 2010 – market participants largely expect the US FOMC to increase interest rates this month. 

The Bureau of Labor Statistics, on Friday,  said 211,000 jobs were created in November, down from October’s upwardly revised number of 298,000; September's employment report was also revised higher to 145,000, from the previous report of 137,000. The report noted that 35,000 more jobs were added in the previous two months as a result of the revisions.
According to consensus estimates, economists were expecting to see job gains of 200,000.
Over the past 3 months, job gains have averaged 218,000 per month. As expected the unemployment rate held steady at 5.0% last month; at the same time the participation rate was little changed at 62.5%.

As anticipated the U.S. labor market cooled off a little in November after seeing immense gains in the previous month; however, the job growth still managed to slightly beat outlooks, according to the latest employment data from the Labor Department.

It was one of last few data releases before the Federal Reserve meets in two weeks to decide whether to raise interest rates and these reports will play a significant role for the same.

This raises expectation that the Fed has a go ahead signal to increase interest rates on December 16 as long as other things remain steady globally over the next few weeks.

Yellen has been adamant about raising rates before the year concludes, citing concerns over an expedited tightening cycle if the policy-board waits until 2016.

With another two weeks to go before the Federal Open Market Committee meets to discuss raising rates for the first time since 2006 the market remains focused on the expected positive impact such a move might have on the dollar together with the subsequent negative gold impact. Taking a look at the past four rate hikes we actually find that instead of rising, the dollar has weakened in the weeks and months following the first announcement. 

While this time round may be different considering the expected diverging trajectories of the ECB and FOMC it nevertheless raises the risk of a correction both on dollar longs and gold shorts. Not least considering the big jump in positioning seen in both markets during November.  

The primary purpose of this blog by Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings in the Bullion world.

- Previous blog -
"Critical Week For Gold: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2015/11/critical-week-for-gold-rsbl.html 


Sunday 29 November 2015

CRITICAL WEEK FOR GOLD : RSBL

By Mr. Prithviraj Kothari, MD, RSBL




Recently, gold is being pulled apart by two significant forces. On one side where the escalating tensions in the Middle East are igniting gold prices a December rate hike is pulling them down on the other side.

Off late, there has been some excitement regarding gold as tensions escalate in Middle East. Turkey had downed a Russian Military Jet, accusing violation of air space, which Russia denied. Russia warned Turkey over serious retaliation and now sending an advanced air defense system to protect its air crafts. NATO members are scratching their heads over how Russia might retaliate.

Gold made some gains overnight on a slight softening in the dollar and heightened geopolitical tensions after Turkey shot down a Russian warplane but these proved short-lived.

Gold prices edged lower on Wednesday morning in London on growing expectations of a December interest-rate rise by the US Federal Reserve, which continued to weigh on sentiment.
The spot gold price traded at $1,073.70/1,074 per ounce, down $1.50 on Tuesday’s close. 

Markets were focused on the economic data that was released in the US ahead of the Thanksgiving holidays on Thursday. The reports included the core durable goods orders, unemployment claims, the core PCE price index, durable goods orders, personal spending and new home sales.

In spite of the release of these reports, market volatility had been low on Thursday due to Thanksgiving holiday in the US.

The metal is trading at its lowest levels since February 2010 as investors weigh the prospects of higher US interest rates after data pointed to a strengthening economy. With gold typically seen as a haven asset, demand for the metal is falling on the prospect of higher returns in US securities.

Moreover gold will lose its appeal post a rate hike. Raising rates “increases the opportunity cost of holding gold. Gold has zero yields — it actually costs you money to hold it — so there’s more incentive to put your money into a yield-earning dollar investment and hence the demand for gold will decline.

Currently market participants currently see a 78 percent chance of a US rate lift-off by year-end, according to the CME Group Fed Watch – a tool to gauge the market’s view of an interest rate hike. 

If the rate hike expectations are met, the US dollar is likely to gain further. Gold tends to move inversely to the greenback. A stronger dollar pressures all commodities since it makes them more expensive in other currencies, plus some investors are less likely to buy gold as an alternative currency when the greenback is muscular.


Thanksgiving may be over in the U.S., but traders will still have a full plate next week.

Fed Meeting- The US Federal Reserve will meet on December 15-16 to decide if will lift interest rates from near-zero levels for the first time in almost a decade.

Moreover, markers will watch Yellen’s comments to see if she offers any further clues on what to expect in the way of monetary policy when the Federal Open Market Committee meets. Yellen is scheduled to appear before the Economic Club of Washington on Wednesday.

Major reports- Other major U.S. reports next week include :-


  • The Chicago Purchasing Managers Index on Monday
  • Institute for Supply Management manufacturing PMI Tuesday  
  • The ADP private-sector jobs and Fed Beige Book report Wednesday 
  • Non-manufacturing index and weekly jobless claims on Thursday.
The robustness of the November employemnt  report may put the final nail in the rate raise coffin, one way or another. Employment will have to be very weak for the Fed not to go ahead with rate liftoff.


ECB- the European Central Bank will meet next Thursday and expectations are for it to expand its asset purchase program and cutting its deposit rate. ECB will announce further loosening of monetary policy while the Fed starts tightening. The ECB holds a monetary-policy meeting. Expectations have been growing for the central bank to increase its asset-purchase program known as quantitative easing, particularly after ECB President Mario Draghi said last week that “we will do what we must” to raise inflation to an acceptable level.

ECB monetary policy and US NFP report for November scheduled next week is happening close to a key support area and is very critical for gold.  As a result, traders will be on the lookout for the November report next Friday.


The primary purpose of this blog by Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings in the Bullion world.

- Previous blog -
" GOLD FAILS TO ATTRACT SAFE HAVEN BUYING : RSBL"
http://riddisiddhibullionsltd.blogspot.in/2015/11/gold-fails-to-attract-safe-haven-buying.html