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Showing posts with label Gold price. Show all posts
Showing posts with label Gold price. Show all posts

Monday 5 December 2016

The Most Awaited Fed Meet Of The Year Keeps Markets Alert

Gold had rebounded somewhat last week although it remained below its psychologically important level of $1,200 per oz, suggesting that sentiment has not materially improved.

Gold came off its earlier lows but remained weak during Friday morning trading on December 2 – the near-certainty of a US interest-rate rise this month and an exodus of ETF investors put downward pressure on the market.


The spot gold price was seen trading at $1,176.45/1,176.65 per oz, up $3.35 on Thursday’s close. The metal fell on Thursday to its cheapest since February this year at $1,160.80 per oz.

Market was mainly focused on the US jobs reports, numbers of which would be an important deciding factor for the rate hike. The report was expected to show that 177,000 new non-farming jobs were added in November and unemployment rate forecasted at 4.9%.
Once the number Swere out gold came under pressure. Let’s have a look at the important data released-

  • On Thursday, US final manufacturing PMI in November bested economic consensus at 54.1 – 53.9 was called for. 
  • ISM manufacturing prices and PMI for November both topped projections at 54.5 and 53.2, respectively.
  • October construction spending, however, came in at 0.5% month-on-month, a touch below the 0.6% prediction, while weekly unemployment claims were at 268,000 last week, which was above consensus of 252,000.
  • On Friday non-farm payroll numbers showed that the USA added 178,000 jobs in November, against earlier expectations of around 165,000 and from October’s figure of just 161,000. In addition, unemployment dropped to 4.6% and wages climbed by 2.5%.


The recent spate of positive data is expected to produce higher rates when the US Federal Open Market Committee (FOMC) meets on December 13-14 – market participants see a 95% chance of a rate hike during the meeting, according to the CME FedWatch Tool.

The Asian physical market has picked up a little thanks to favorable seasonality and a fall in domestic prices. This should limit the downward pressure on international gold prices

This week, gold looks a little stronger because macro drivers have become slightly more favorable for precious metals from a weaker dollar and lower US real rates.
The gold price glided lower during Monday December 5 trading as its earlier push higher failed to hold and it slipped into negative territory.

The yellow metal had found support from its safe haven status after Italian Prime Minister Matteo Renzi was defeated in Sunday’s referendum.

The US Federal Open Market Committee (FOMC) will meet on December 14 – many participants expect an interest-rate rise to be announced, particularly after a run of positive data from the USA.

As of now, gold remains vulnerable ahead of the Fed meeting on December 13-14. Any stronger-than-expected US data is likely to raise the probability that the Fed lifts rates soon, pushing the dollar and US real rates higher, and in turn exerting downward pressure on the gold price.

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.

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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.

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Monday 25 July 2016

Consolidation phase for Gold and Silver Prices: RSBL

                                                                           - Mr. Prithviraj Kothari, MD RSBL


BREXIT, FED, Dollar and many other key influential factors have proved to be beneficial for Gold and Silver prices in 2016. Last week too we saw many such factors influencing bullion prices but in the downward side. Let’s take a close look on the key highlights:

  • The S&P (US Stock exchange) posted a fresh all-time closing high and the major U.S. stock averages 2,163.24 locked in a fourth successive winning week following the Brexit vote.
  • At the weekends G20 summit in China, the world's biggest economies noted they will work to support global growth and share the benefits of trade, in a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism. Philip Hammond, Britain's new finance minister, said the uncertainty about Brexit would begin to abate once Britain laid out a vision for a future relationship with Europe, which could become clearer later this year.
  • On Thursday, 21st July , in Frankfurt, the European Central Bank (ECB) and President Mario Draghi decided to leave rates unchanged after the Brexit-induced market shockwaves have faded somewhat. Draghi and his fellow central bankers gave no indication that the current 1.7 trillion-euro quantitative-easing plan needed to be increased following the UK vote to leave the single market. The council doesn’t meet again till September, but investors aren’t anticipating any adjustment to the bond-buying programme in the near-term thus leaving the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.
Though bullion has benefited from the loose policy decisions coming in from central banks of Europe and Japan, but on the other side the dollar has gained on strong U.S. data, boosting bets the Fed will raise U.S. rates by year-end.

Globally, gold nearly fell to $1,312 and silver to USD 19.46. Traders attributed the fall in gold prices to a weak global trend where the precious metal headed for its first back-to-back weekly decline since May as gains in equities and the dollar ate into demand for the metal as a storage value. Few other important indicators that contributed to the downfall:

  • Data released from the U.S. showed that U.S home resale’s hit their highest in nearly 9 and a half years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.     
  • Adding to the down trend in prices were the figures released by SPDR. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22 percent to 963.14 tonnes on Thursday.

I do feel that the Price action will likely be skewed to the downside and expect to test the post-Brexit low around USD $1,305 and below this USD $1,300 should global equities continue their upward trajectory.

The Jackson Hole Symposium Aug. 25-27, where Yellen is scheduled to speak is where we will most likely get more relevant information about coming Fed policy and the next direction.
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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.

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Wednesday 20 July 2016

Gold prices to go up: RSBL

                                                                 - Mr. Prithviraj Kothari, MD RSBL




While financial uncertainties were influencing gold prices, we have lately seen geo political uncertainties giving the yellow metal's safe haven appeal a further support if not permanent a temporary one.  The failed military coup in Turkey did manage to shake the markets.

Spot gold prices turned higher, reversing earlier losses in late trade on Friday in New York after Turkish Prime Minister Binali Yildirim said a group within the country's military has attempted to overthrow the government. For several hours overnight on Friday violence shook Turkey's two main cities, as the armed faction which tried to seize power blocked a bridge in Istanbul and strafed the headquarters of Turkish intelligence and parliament in Ankara. But the coup attempt crumbled as Erdogan rushed back to Istanbul from a Mediterranean holiday and urged people to take to the streets to support his government against plotters he accused of trying to kill him. The government declared the situation under control, saying 2,839 people had been rounded up, from foot soldiers to senior officers, including those who formed "the backbone" of the rebellion.

Earlier on Thursday, spot gold price crashed down to a two-week low of $1,320.45 after the Bank of England’s (BOE), contrary to expectations, kept interest rates unchanged in its Thursday meeting. In a somewhat surprising move, the Bank of England (BoE) decided to keep rates steady despite fear over the health of the UK economy following the Brexit vote.

Holdings in Global Gold ETF’s rose on Friday but lost about 10 tons in total over the week to 2002 tons, which was the biggest decline since March/April this year.

Gold continues to trade range bound between USD $1,320 - $1,340, however participants are still looking to play on the long side and we are likely to see moves lower well supported.

I largely see the spot gold price supported at the $1,300 level due to a post-Brexit global economic uncertainty and possibly lower US interest rates and given this critical situation at Turkey, precious metals prices are expected to move higher as they have always been influenced by geopolitical uncertainties.

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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.

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Monday 11 July 2016

Bullish direction of Gold and Silver prices: RSBL

                                                                       - Mr. Prithviraj Kothari, MD RSBL


Gold has once again proved its worth and claims to be the best performing asset of 2016, emerging from a three-year bear market. The yellow metal has gained almost 26% since 1 January, the best half-year performance since 1980, Bloomberg data showed. Silver, following gold, rose 30% in the first six months, leaving other assets such as the US and German bonds, Japanese yen and the US dollar far behind.

The flight to safe haven assets triggered by global political and economic uncertainty has made bullion the year’s most preferred investment, with gold and silver beating other asset classes by a mile.

The past four sessions following the Brexit vote saw gold prices spike about 6%, while silver advanced about 5%. Gold has definitely benefited from the Brexit incident, but there have been reasons more than one that this yellow metal has once again has got into limelight.

Global economic uncertainty, slower growth in China, accommodative monetary policy of the major central banks and weakness in dollar earlier this year had prompted investments into safe haven assets like gold and silver.

Global Uncertainty:
The market continues to benefit from safe-haven investment flows in the wake of the UK vote to exit the EU, which has led to heightened uncertainty over global economic prospects and increased risk aversion.

Dollar:
Strength in the US dollar was the major contributor to weakness in gold and commodity prices for the past few years. However, increasing uncertainty about economic and political developments, low-to-negative interest rate environment as well as doubts over global economic recovery post the collapse of Lehman Brothers in 2008 have led to demand for precious metals, analysts said.

China:
Economic slowdown of the Chinese economy has raised questions over the global growth and development. These concerns have put an upward pressure on gold. 

Monetary Policy:
The current economic backdrop, along with fading prospects of an interest rate hike by the US Fed at least till December validates further march of bullion on the upwards trajectory over medium-term.

Contradicting these prospects, the Jobs report released pulled gold prices down but not significantly. The report stated that in June, 287,000 Americans entered the labour market, far exceeding expectations of 174,000 while average hourly earnings period ticked up 0.1 percent, below the forecast 0.2 percent.

Still, the unemployment rate rose to 4.9 percent from 4.8 percent after the May figure was revised down to 11,000 jobs from what was already a multi-year low of 38,000. The June employment figure had gained greater significance following the disappointing May report, which suggested the US recovery was beginning to slow after seven years of expansion.

It was a session marked by extreme volatility on Friday with gold experiencing a $35 range and silver $1.00, with NFP's driving price action. The prices send a solid signal for the Gold price to move beyond $1400 in short to medium term.

Further supporting gold was the Chinese gold reserves figures. It stated that China's gold reserves stood at 58.62 million fine troy ounces at the end of June, up from 58.14 million at the end of May, the central bank said on Thursday. Such a stock up already appears to be in motion for the gold stocks.

Given these supporting factors for safe haven metals, investors have engaged themselves into purchases of gold and silver and this is further giving and upward thrust to precious metals.

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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.

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Tuesday 28 June 2016

UK Departs, GOLD prices shine: RSBL


                                                              - Prithviraj Kothari, MD RSBL




The most talked about and the most awaited trend changer of the year after the FED rate hike is finally out: UK has exited EURO after 43 years and BREXIT has been implemented. UK themselves have got divided during the results of the referendum where England and Wales voting strongly for leave, while Scotland and Northern Ireland backed staying in the EU. 

Undoubtedly, along with me almost everyone was caught by surprise. There were possibilities but a result like this is a bit hard to digest. Simply because it creates fractions in Euro group where countries like France, Netherlands could also take up a similar decision. It sent shock waves across the financial markets, with all the risky asset classes such as equities heavily down and safe-haven vehicles such as government bonds, gold and silver steeply higher. The volatility, uncertainty, fluctuation went beyond expectations. Gold saw investor favour resume on safe-haven Brexit buying. Let’s pick each market individually and see the effect Brexit had them.

GOLD:
Gold soared as much as 8 percent to its highest in more than two years on Friday after the UK referendum results, sending investors rushing for protection. Gold prices surged to its highest level in more than two years, at $1,359 since March 17, 2014, sending shock waves across markets. Gold is currently trading around $1316 a $40 lower from the high.

Major Indices:
All the major indices across the world were nearly 3% down while European indices fell to the tune of 5%. The indices have shown some resilience as the news item fades, but the uncertainty in the markets have reached to unprecedented level, calling in government, state heads to provide clarity on the future map ahead.

India:
Even before the final numbers were out, India’s benchmark Sensex index opened over 700 points or 2.85% lower in the early trading hours When the trading ended for the day at 3:30 PM, the Sensex closed at 605 points lower, marking a decent recovery. Though BREXIT pushed Indian equity prices down, the governments has been very confident in their message and do not see a much long term impact on the Indian economy.

Currency - Pound versus others:
The British pound fell more than 10% against the US dollar, lowest since the 1980s. In morning trade, the rupee fell to 68.22 a dollar, the lowest level since March 1. Weaker pound will reduce burden on children studying in UK but it might get partially offset by a rise in cost of living. The dollar index shot higher on safe-haven buying, last at 96.10, the euro had dropped to 1.0912, the Aussie dollar had fallen to 0.7335, but the yen has had a massive rally to 99. In emerging market currencies, the Yuan has fallen to 6.6295 and most others had a knee-jerk reaction to the downside as the dollar has strengthened and as risk-off has hit the markets.

ETF:
ETF investors are expected to boost their physical holdings following the vote. According to market estimates, they have just accumulated 7.3 tonnes of gold so far this week after buying 25 tonnes in the previous week.

For investors:
      Do not lay your investments in one asset class only. Returns on Gold have surpassed most of the indices returns in the current year. A whopping $100 movement and thereafter settling at around $1330, showcases the metal's safe haven appeal strength.

Investors currently see gold as a currency – it is rising alongside other safe-haven currencies such as the dollar and the yen. Gold’s upside potential will be dependent on the degree of uncertainty and instability stemming from the Brexit as well as the ability of central banks to provide a co-ordinated solution to calm the storm in the financial markets.

Gold set a fresh 2016 high although the rally was quicker and stronger than expected given that the UK would remain in the EU. Brexit helped it to be a white Friday for gold after the vote against markets expectation of it turning to be a black one. Gold has done what’s its best at- acting as a safe haven for its investor, giving protection against uncertainties and volatility.  Such environment is expected to persist for a few days until the central banks provide a co-ordinated package of measures to calm the financial markets, in turn triggering some profit-taking in gold.

Thank You!

You may follow me on:
The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

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Photo courtesy: https://twitter.com/trade_24