HIGHER GOLD PRICES FOR THE DOMESTIC MARKET: RSBL

  By Mr. Prithviraj Kothari, MD, RSBL

Firstly I would like to congratulate all the Rio Olympic representatives of India who worked so hard and attained commendable feats for our country. While we saw Indian achieving remarkable feats, at the same time gold prices in the domestic market were shining in spite of a global downtrend.

Where on one hand gold in the global markets was down 0.34 percent at $1,347 per ounce, on the other hand the yellow metal in the national capital, gold of 99.9 and 99.5 per cent purity commenced the week higher at Rs. 31,130 and Rs. 30,980 and advanced to closed at Rs. 31,250 and Rs. 31,100 per 10 gram respectively, showing a rise of Rs. 175 each.

Markets remained closed on Monday for 'Independence Day' and Thursday for 'Raksha Bandhan'. Bullion traders said increased buying by jewellers to meet festive season demand from retailers amid a firm global trend mainly kept precious metal prices higher.
While Makar Sankrant marks a pause to festive celebrations, on the other hand Raksha Bandhan marks the onset of the festive season in India. 

Gold has seen a sharp upsurge in demand on a sudden jump in Japanese yen against the dollar. Crude oil prices have also increased over the last few months. With the investment buying continues, gold is seen touching $1400 an oz in global markets translating thereby setting a new record in near future.

Coming to international markets, analysts hold the dovish July policy meeting minutes issued this week responsible for the decline in prices.

Interest rate expectations are the driving force behind the recent moves in both the dollar and gold. Expectations of higher interest rates here in the U.S. support a stronger dollar while they weigh on the price of precious metals.

Interest Rate Hike- Gold prices slipped on Friday, weighed down by a strengthening dollar after two Federal Reserve officials' comments that increased expectations for an interest-rate increase this year.


Gold is sensitive to higher rates which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The week has seen a run of mixed signals from Federal Reserve policymakers.


San Francisco Fed President John Williams on Thursday joined a growing chorus of his colleagues signalling support for a U.S. interest rate hike in coming months. New York Fed President William Dudley reinforced his confidence in a possible rate hike for a second time in the week.  Dallas Fed President Robert Kaplan, however, saw limited room to manoeuvre on rates.

US Dollar- The dollar against a basket of six major currencies was up about 0.27 percent at 94.414. The current ‘ultra low’ interest rate environment has sent global investors on a search for yield.  Hence any prospect of an interest-rate increase in the U.S. makes U.S. dollar investments more attractive to international investors, leading to an increase in the value of the U.S. dollar vs. other currencies across the globe.
The U.S. dollar, after tapping a seven-week low this week, strengthened Friday, cutting demand for precious metals, which are priced in the currency.

SDPR- Among exchange-traded funds, the SPDR Gold Trust GLD, -0.88% was 0.7% lower. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% to 955.99 metric tons in the week through Thursday, according to Bloomberg data.
ECB- Meanwhile, European Central Bank rate setters agreed not to discuss any policy change at their July meeting and to keep market hopes for more stimuli in check, minutes showed on Thursday.

U.S. Jobs report- Reports showed the number of Americans filing for unemployment benefits fell more than expected last week, while manufacturing activity in the U.S. Mid-Atlantic region saw a mild improvement this month. Members of the Fed's rate-setting Federal Open Market Committee were generally upbeat about the U.S. economy and labour market, but several said any slowdown in future hiring would augur against a near-term rate hike. U.S. economic data will continue to offer clues on the Fed’s next move. Fed Chairwoman Janet Yellen will also speak at a conference in Jackson Hole, Wyo. next Friday. Admittedly, a very strong U.S. labour market report in early September could already be enough to prompt the Fed to hike interest rates next month.

Still range bound, gold looks to break through USD $1,360 as the possibility of a September rate rise tempers.

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:

"Indian Gold Bullion Market- Issues, Challenges, Opportunities and the way forward: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/08/indian-gold-bullion-market-issues_13.html 

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.

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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" 

http://riddisiddhibullionsltd.blogspot.in/2016/03/rsbl-why-gold-is-still-cheap.html 

MARKETS REMAIN CALM FOR GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

Gold showed wave like movements this week. Beginning with a positive tick on Monday, then lowering by the middle of the week and again picking up pace on Friday, it seemed like a see saw trend for gold.

Though gold was up on Monday, it continued to remain under pressure from a Federal Reserve policy meeting that was due on 15-16 December weeks, when the US central bank was expected to raise interest rates for the first time in nearly a decade. In its last policy meeting of the year on December 15-16, the Fed was seen raising rates by a quarter of a percentage point. 

Gold has already slid 9 percent for the year, its third straight annual decline, in anticipation of a rate hike.

Gold dipped on Thursday morning in the US, with the start of US monetary policy normalization spurring the dollar.

The Federal Open Market Committee (FOMC) decided to start to normalize US monetary policy after seven years of near-zero interest rates, lifting the federal funds rate to 0.5 percent from 0.25 percent. The policy board still sees the long-run rate at 3.5 percent and finishing next year around 1.375 percent.

After markets halted to examine the impact of the rise, the dollar gained against other major currencies and pressured the precious metals lower – the greenback was last 0.7 percent stronger at 1.0844 against the euro.

Post the FOMC meet, gold was expected to come under increased downside pressure from a stronger dollar.

Investors will now focus on the pace of future rate rises, which will be affected by the general strength of the economy and underlying inflation data.

In US data, weekly unemployment claims for were in line with forecasts at 271,000 and were below the psychologically important 300,000 mark.

The Philly Fed manufacturing index for December at -5.9 missed the predicted 2.1 while the current account for September at -$124 billion was largely as expected.

While the Fed does not expect to reach its inflation target of two percent until 2018, Chairwoman Janet Yellen said in the following press conference that current transitory factors stem from low oil prices.

After Thursdays decline, the markers expected gold to drop further. But Gold prices jumped in morning trades Friday after the dollar weakened against other currencies and as investors bought back oversold position after prices slumped to over four-month low on Thursday.

Gold prices finally found some support in the weakening dollar index following profit booking and buying at lower level. Prices of the bullion were down as dollar index weakened against other currencies, boosting investors' appetite for dollar-denominated commodities.

Gold was in positive territory on Friday morning in London after the dollar eased slightly amid growing expectations that the path to higher interest rates in the US will be a slow one.

The spot gold price was last at $1,054.9/1,055.2 per ounce, up $2.20 on Thursday’s close. Trade has ranged from $1,051.2 to $1,058.1 so far. In the previous session, the yellow metal dipped below $1,050.

Gold (and silver) rose on Friday, taking back about half of Thursday’s loss of approximately 2.00%.

Reasons behind the price rise were-

• The anxiety in equities restricting from the despair in crude prices
• A changed deliberation of a longer-term view that gold is “due” to rise because of weakening dollar strength
• Hurry to grasp snips.

In the coming days and weeks, the downside in precious metal prices may be limited due to low activity as a result of Christmas and New Year, volatility is expected to remain calm. But the year could start on a negative note for gold. Chairwoman Janet Yellen said future rate increases will be gradual and the policy could be reversed if the US economy begins to slow

In the interim, volumes are expected to shrink while market participants head to the sidelines during the holiday period, possibly resulting in choppy conditions.

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 -
"Tricky Week For Gold : RSBL"
http://riddisiddhibullionsltd.blogspot.in/2015/12/tricky-week-for-gold-rsbl.html 

TRICKY WEEK FOR GOLD: RSBL

By Mr. Prithviraj Kothari, MD, RSBL

Following a 3 year trend, gold is once again on a decline, losing 9.8 percent of its value this year.

Gold, which touched a five-year low last week, was little changed during the start of the week, Prices fell on Thursday as a stronger dollar reduced the appeal of the metal as an alternative asset.

Gold futures remained lower on Thursday, after data showed the number of people who filed for unemployment assistance in the U.S. rose to the highest level in five months last week, but remained in territory usually associated with a firming labor market.

The U.S. Department of Labor Said the number of individuals filing for initial jobless benefits increased by 13,000 last week to 282,000. Analysts expected jobless claims to hold steady at 269,000 last week.

The dollar index, which measures the greenback’s strength against a trade weighted basket of six major currencies, was up 0.4% to 97.72. Dollar priced commodities become more expensive to investors holding other currencies when the greenback gains.

On Wednesday, gold eased up $1.20, or 0.11%, in familiar trading range, as market players braced for the first U.S. rate hike since 2006 next week. While investors widely expect the Federal Reserve to raise interest rates at its December 15-16 meeting, they anticipate the pace of increases to be gradual amid concerns over tepid growth overseas and divergent monetary policies between the U.S. and other nations.

Gold declined further on Friday and was headed for the seventh weekly drop in eight weeks as investors positioned for a looming U.S. rate hike.

If the Fed raises rates, gold will witness immense volatility. A robust dollar was limiting interest in gold. The greenback rose for a second session on Friday, extending a rebound from a one-month low on expectations of a rate hike.

A higher dollar makes greenback-denominated gold more expensive for holders of other currencies.  Weakness in oil was also hurting bullion. A slide in oil could trigger fears of deflation, a bearish factor for gold, which is often used as a hedge against oil-led inflation.

 A strong U.S. nonfarm payrolls report last week cemented expectations of a rate hike at the Federal Reserve’s policy meeting on Dec. 15-16.

Traders have been restrained to stride into the market before the Federal Open Market Committee (FOMC) convenes next Tuesday and Wednesday.

Gold has witnessed obstinate gusts, as dollar, real rates; commodity prices and volatility have all not motivated investors to increase their exposure to the yellow metal.

The approaching Fed rate hike, has been one of the most influential factors that has put a block in the price rise of gold. And if any such hike is announced then gold prices might fall to $950 in the near future.

Recently hawkish Fed member statements have essentially turned the meeting into a guaranteed launch of the US policy normalization.

Industry watchers are largely expecting the US Federal Reserve to lift its federal fund rate next week for the first time in almost a decade after positive US payrolls data in the recent months.

The first hike in nearly a decade is expected to dent demand for gold, a non-interest paying asset.

Gold is going nowhere as investors expect trading within tight ranges before next week’s Federal Reserve meeting, where policy makers are forecast to raise interest rates for the first time since 2006.

Traders are expecting that borrowing costs will be increased at the Federal Open Market Committee gathering on Dec. 15-16, a decision that would dank the appeal of bullion because it doesn’t pay interest. Gold has swung between gains and losses the last two weeks as Fed Chair Janet Yellen, along with Fed Bank of St. Louis President James Bullard, have said the pace of tightening will be gradual.

Now the market waits impatiently for the Fed with one week to go.

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 Bounces Back: RSBL"

http://riddisiddhibullionsltd.blogspot.in/2015/12/gold-bounces-back-rsbl.html