Pages

RSBL Gold Silver Bars/Coins

Showing posts with label GDP. Show all posts
Showing posts with label GDP. Show all posts

Tuesday, 1 August 2017

Green back gives backing to gold

It was a quiet Monday for gold on 24th July followed by a little change in gold and silver prices on Tuesday. Spot gold prices were at $1,255.60 per oz and silver at $16.46 per oz, while the PGMs were looking stronger with gains of 0.6%.

Gold’s rebound has found new vigor on the combination of the weaker dollar and the less hawkish US Federal Reserve stance. Dollar weakness has stemmed from the weak political scene in Washington which has resulted in a push in gold prices. Gold is sensitive to moves higher in both U.S. rates and the dollar. Weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.


Gold prices held steady on Friday as investors locked in profits from the precious metal's rally to six-week highs on Thursday and as markets awaited the release of U.S. second-quarter growth data due later in the day.

U.S. 2Q GDP figures released on Friday showed the economy grew at an annualized pace of 2.6% q/q, slightly missing consensus, with the Core Personal Consumption Expenditure (PCE) topping expectations with a print of 0.9% q/q. The data did little to shift expectations for a December interest rate hike with markets still pricing a roughly 50/50 chance the Fed will hike again this year.

Gold prices rallied for the third consecutive week with the precious metal rallying 1.9% to trade at 1268 ahead of the New York close on Friday. The advance comes alongside continued weakness in the greenback.

The dollar remained under pressure after the Fed said on Wednesday that inflation remains below its 2% target even as near-term risks to the economic outlook appear "roughly balanced". In the past, the Fed judged that weakness in inflation was transitory. The central bank's cautious tone on inflation sparked fresh uncertainty over the possibility of a third rate hike this year.

The greenback was also weakened by data on Thursday showing that initial jobless claims rose by 10,000 to 244,000 last week. Analysts expected jobless claims to rise by 7,000 to 241,000 last week.
Gold prices have done well, especially with equity markets setting fresh highs, but the weaker dollar of late has no doubt helped fuel the rally and it may be that as equities are setting fresh highs, more investors are expecting a correction so may be putting more into havens. Silver has been following gold, platinum prices have struggled to follow gold and palladium is still consolidating after the strong run in May/June. For now we expect the dollar to be the main driver in gold prices.

This week began with a positive note for gold as it Monday held around its highest price in nearly seven weeks as tensions on the Korean peninsula boosted safe-haven demand for the metal and as the U.S. dollar hovered close to multi-month lows.

News that North Korea has conducted yet another missile test spurred a late-week push higher in gold prices which stretched into near-term resistance just ahead of the European close.

The United States flew two supersonic B-1B bombers over the Korean peninsula in a show of force on Sunday and the U.S. ambassador to the United Nations said China, Japan and South Korea needed to do more after Pyongyang's latest missile tests.

Though a weaker dollar is the main driver for gold prices, currently deepening political turmoil in Washington and North Korea's progress on ballistic missiles will all ensure the uncertainty premium continues to support gold's price.

Looking ahead to next week, markets will be closely eyeing central bank interest rate decisions from the Reserve Bank of Australia (RBA) & the Bank of England (BOE) with the highly anticipated U.S. Non-Farm Payroll report slated for Friday. While the broader outlook for bullion remains constructive, prices are eyeing near-term resistance heading into the close of the month and could limit the topside near-term.

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.

Tuesday, 31 January 2017

Impact on Demonetization? Bullion Speculators project FY18 economic growth between 6.75-7.5%

Economic Survey 2017: India’s economy will grow in the range of for the current financial year 2016-2017, says the Economic Survey that was tabled in the Parliament today. The survey projected growth for FY18 in the range of 6.75-7.5%.

Managing Director of RiddiSiddhi Bullion Ltd, Mr. Prithviraj Kothari has said that the cash ban move (demonetisation) can serve to be a risk to the growth forecast. The survey also cautions that a rise in oil prices would also be a risk to the growth forecast. The GDP growth rate at constant market prices for the current year i.e. 2016-17 has been placed at 7.1 per cent.




The Economic Survey is the Finance Ministry’s ‘health report card’ for the economy in the current financial year. Prepared by the Chief Economic Advisor, Arvind Subramanian, the economic survey gives an insight on the economy’s growth prospects, external factors that impact GDP growth, and the way ahead for policy focus. The Economic Survey comes a day ahead of the Budget 2017, which will be presented by Finance Minister Arun Jaitley.


This time, in a first, the Budget will be presented on February 1, as against the last date of the month. Also, this time Railway Budget will be presented as a part of the main Budget, added Kothari thereby hoping that an hefty investment shall be made by the Government towards Gold mining along with reducing the corporate taxes.

Thursday, 29 December 2016

Gold stabilises around $1130

The Federal Open Market Committee (FOMC) on Wednesday December 14 raised interest rates to a range of 0.5-0.75% from 0.25-0.5%, which was widely anticipated and was largely priced in by commodities and equities.

Modestly analysts believe that higher interest rates in the USA are not expected to have much of an impact on metal markets unless it reaches 2%.

And while higher rates could cause issues if they are raised too quickly or too high, this is not an immediate threat.

The markets have somewhat calmed down with gold hovering near $1130 an ounce.



Gold was trading calm in London on Thursday December 22 – where prices are stuck around $1,130 per oz while many investors are side-lined as the end of the year approaches.

It’smore of a holiday mood where US and Chinese markets willremain shut for Christmas. And hence business and liquidity is expected to dry up till New Year.

The spot gold price was recently indicated at $1,130.25/1,130.45 per oz, down $0.60 on Wednesday’s close.

Later on, prices fluctuated in a nominal range following important data realised during the week.

This week’s highlights were as follows-
  • The US final third quarter GDP growth was revised upwards to 3.5% from 3.2% and
  • Core durable goods orders increased 0.5% month-on-month in November, which was better than the forecast of 0.2%.
  • Durable goods orders fell 4.6% month-on-month in November, still better than expectations of a 4.9% drop.
  • Weekly unemployment claims, however, came in at 275,000 above consensus of 255,000.
  • The November core PCE price index was flat against the forecast of 0.1%
  • Personal spending was at 0.2% below expectations of 0.4%.
  • CB leading index and personal income were both unchanged in November, and below their forecast of 0.2% and 0.3%, respectively.
  • The US government bond market strengthened slightly on Wednesday, with the 10-year US bond yield closing at 2.53%, down from a recent peak of 2.60% last week.
The latest [US] data which has both positive and negative reflects the state of the current US economy. Taking into consideration the outlook for the US economy, future US economic data should trend towards improvement. This could provide some downward pressure for gold and silver.

Recent strong US macroeconomic data and sanguinity over president-elect Donald Trump’s prospective infrastructure spending plans have raised expectations of more interest rate increases in the USA next year. This has also enhanced the US dollar and increased appeal of risk assets like equities, while decreasing the attractiveness of haven assets like gold.

However, he gold price was a touch higher on the morning of Friday December 23 in London, finding some support from bargain hunting before the year-end holidays but lacking sufficient momentum for a marked breakthrough.

The spot gold price managed slight gains during Asian trading hours on Friday December 23 following the release of a range of US data on Thursday.
The momentum for precious metals has slowed but broadermarkets remain tough and positivity for 2017 remains high,

This reflected a moderate decrease in risk appetite on the back of growing political tensions between the US and China after President-elect Trump picked Peter Navarro, a China hawk, to run the US National Trade Council.

Precious metals are expeted to shine next year . Investors may continue to remove their bullish bets to take advantage of positive global risk sentiment and lower volatility across risk asset classes. But the level of contentment in the financial markets may take some participants by surprise early next year, which may trigger a strong rebound across the complex.


Monday, 1 August 2016

Gold and Silver prices on RISE: RSBL

                                                                                      - Mr. Prithviraj Kothari, MD RSBL




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

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

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

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

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

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

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

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

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

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

Thank You!

You may follow me on:

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

Previous blog:


Photo courtesy: Google 

Saturday, 31 October 2015

Sovereign Gold Bonds Scheme by India & FED Rate Hike - Timing Matters: RSBL!


- Mr. Prithviraj Kothari, Managing Director, RSBL




Rather than talking about International Bullion, I am glad to put forward the decision of Government of India, in consultation with Reserve Bank of India (RBI), to issue Sovereign Gold Bonds. A welcome move by Government of India, after their announcement during the Budget. The best part of this is:
  1. The investors will be compensated at a fixed rate of 2.75% per annum payable semi-annually on the initial value of investment. This a good interest rate that their offering as compared to the policy that they issued a decade back. For Indians who purchase Gold with a traditional respect can now get a chance to earn a fixed interest rate along with the benefit of Price appreciation.
  2. Minimum permissible investment will be 2 units (i.e. 2 grams of gold. With already a wave of new bank accounts being opened due to Jan Dhan Yojna, this minimum permissible investment gives an added advantage to reach the masses who can invest as low as 2 grams.

My personal feeling is that the scheme would be a huge success with the financial, safety implications that have been covered in alternative to holding physical gold at home.

I am sure Sovereign Gold Bonds shall raise a new chapter in Indian Bullion Industry.

As mentioned in my previous Blogs, Gold is still a sell on rallies. The physiological level s US$1200 is yet to be broken convincingly if we talk about it on a technical front. Fundamentally, lower the price the better the buying opportunity.

The data dependent week for gold finished in the prices in red as investor sentiment eroded due to uncertainty in US monetary policy.

On Wednesday, the Federal Open Market Committee (FOMC) chose not to increase the federal funds rate but it did remove the prior concern over global growth and volatility. This was largely interpreted in the market as hawkish, signaling higher rates from the Federal Open Market Committee’s December 15-16 meeting.

I do feel that you would be a bit confused that if FED is not increasing the interest rates, it is good signs for Bullion as the safe heaven appeal rises due to uncertainties in economy. But the December meeting is the most anticipated one. There has been growth in US economy and as the FED says it has been moderately paced. But they cannot go on throughout their time with negative interest rates. The timing is crucial and that is where the whole delay is. So the rates increase has already priced in Gold poor show. The spot gold price was last at $1,1141.40/1,141.90 per ounce, down $5.70 on Thursday’s close. Silver prices followed the Gold fall where the last recorded price was $15.57/15.62.

RSBL SPOT Gold Price

Some of the important data released this week weren’t meeting the expectation of FED:
  1. A Negative Advance GDP q/q print of 1.5% instead of 1.6% was a small hiccup for US economy.
  2. CB consumer confidence in US showed a gloomy picture of 97.6 instead of 102.5
  3. Core Durable Goods Orders m/m for US posted a negative performance too of -0.4% instead of 0.0%

US data releases between now and mid-December will be viewed as crucial but a major obstacle for the US central bank’ policy-setting board will be a key few who believe inflation should reach – or at least approach – the Fed’s target of two percent before a lift-off. Though a part of the FOMC wants to hold off until 2016, Fed chair Janet Yellen has said repeatedly she would prefer to rise the federal funds rate this year despite poor inflation and the tepid US economic recovery.

A rate hike this December would weigh on gold and given the recent gains in positioning could mean a deeper correction than would have been otherwise. A drop in gold prices would mean a good buying opportunity for physical buyers in China who need to stock up for the Lunar New Year festivities. Though the festival falls in the second half of February, people might advance their purchases if a dip in gold prices is witnessed.

Investors will now, desperately, await the December meeting for a potential normalization of monetary policy. Expectations in financial markets about a possible rate hike by the Fed this year are low, but a Fed rate hike is not completely priced out yet.

US data releases between now and the December 16 FOMC meeting will likely be very important as market participants try to gauge the health of the economy and whether or not a potential move in December would be justified. The Fed is ‘data dependent’ and there shall be a great deal of new information that shall be released between now and the December meeting, much of which shall have to turn for the better if the Fed is going to act

Technical Range for Gold price and Silver price next week:

METAL
International price range
Domestic price range
Gold
$1126 - $1177 per ounce
INR 26100 – INR 27000 per 10gm
Silver
$14.47 - $16.20 per ounce
INR 35200 – INR 38500 per Kg






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