UKRAINE REIGNS OVER GOLD PRICES!!

                                    - By Mr. Prithviraj Kothari, MD,RSBL

Gold has been showing quite interesting movements lately. 

Last week, gold was lying at a three month low of $1,270 an ounce post the economic recovery and reduced safe haven appeal. This negative sentiment continued this week as Gold rose slightly but remained below $1,300 an ounce on Tuesday as the market focused on the U.S. Federal Reserve's policy meeting and expectations for strong U.S. data, with prices underpinned by uncertainty over Ukraine. The Fed did give a positive and upbeat assessment of the U.S economy and announced another cut in its massive bond buying program.

Following the previous 3 tapers, The US Central Back reduced its monthly asset buying to $45 billion for the fourth time on 30th April. This $10 billion cut has compelled the market players to believe that further reductions in measured steps are likely.

Positive economic growth was visible from the reports released during the week.  Gold further dropped post the release of the payrolls data, which showed that U.S. employers boosted payroll in April by the most in two years. Moreover unemployment rate stands at 6.3% which is much lower as compared to 6.7% last month.

This downtrend was further supported, as outflows from the world biggest  bullion fund resumed after a one and a half week halt. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, fell 0.3 percent to 785.55 metric tons during the week, the lowest level since January 2009, according to data on its website. Outflows totalled 25.1 tons last month, more than offsetting combined gains of 19.9 tons in February and March

Spot gold fell 0.2 percent to $1,289.10 on Thursday, after losing 0.4 percent on Wednesday. Trading was thin as several Asian markets, including China, Hong Kong and Singapore, were closed for the Labour Day holiday.

However, traders remained cautious in expectation of further developments in the Ukrainian crisis and Friday changed the world scenario for gold as increased geo political tensions gave the yellow metal that much needed push. Demand for gold stepped up as the flaring of Ukraine's violence started making markets nervous and pushes the international price of the Gold above $1300.

Ukraine sent armoured vehicles and artillery to retake Slovyansk, a stronghold for pro-separatist forces, defying President Vladimir Putin’s demand to pull back troops with Russia’s army massed across the border. 

Acting President Oleksandr said that  many pro-Russia rebels had been killed, injured and arrested in the eastern city of Slovyansk. In a statement, he said the operation in the rebel-held city was not going as quickly as hoped. Separatists shot down two Ukrainian army helicopters, killing a pilot and a serviceman and further injuring seven.

The UN Security Council met in emergency session at Russia's request. In fact, catastrophic consequences have been signalled by Moscow's ambassador if Kiev's military operation in eastern Ukraine were not stopped.

Investors have now put the Ukraine issue above everything. As the week began gold was seen moving down post the Fed tapering, but rising geopolitical tensions and heavy short-covering helped bullion reverse an initial sharp sell-off. 

2014, witnessed 8.4 percent gain in bullion amidst signs of faltering U.S. economic growth and mounting political crisis in Eastern Europe. Any elevation in the ongoing crisis will give a further push to gold.

After nearly three months of continued strikes over wages, Platinum mines in South Africa are still far away from solution. This is significantly increasing the buying interest and pushing prices to new levels.

What to expect next week:
1. ISM non-manufacturing PMI on Monday
2. Fed's Yellen testify to Join Economic Committee on Wednesday
3. ECB press conference on Thursday. 

The trade range for gold and silver is expected to be as follows-

In the international markets gold and silver are expected to range between $1277 - $1320 and $18.15 - $21.00 respectively. While in the domestic markets gold and silver are expected to move in the range of INR 29,000 - INR 30,500 and INR 41,000 - INR 44,000 respectively.

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

- Previous article- "Gold Gains Momentum, Investors Gain Confidence!"

http://www.riddisiddhibullionsltd.blogspot.in/2014/04/gold-gains-momentum-investors-gain.html

Gold prices off the Route?

                                        - by Mr. Prithviraj Kothari, MD, RSBL

Gold prices have been battered over the week. Starting with a high of $1330 to a low of $1282 and giving a close of $1294 has brought Gold prices back to its major support $1280. ($1280 acts as a strong support for Gold, below which Gold prices could attain new lows).

The week started on a stronger footing carrying the upward trend of the last week.  Gold prices gained to a three week high on Monday on renewed concerns over the escalation of hostilities in Ukraine that prompted its safe haven appeal. Geo political tensions escalated as violence between pro-Russian separatists and Ukrainian government forces grew. Moreover gold prices were further supported over the news that a Russian fighter aircraft made repeated cross range passes near a US ship in the Black Sea. Apart from this SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.80 tonnes to 806.22 tonnes the first inflow since March 24 acted as a positive factor.

But the upward trend was short lived. $1330 proved to be a crucial stage which wasn’t broken and Gold prices plummeted. US economic indicators showed positive signs starting with US retail sales. According to Bloomberg survey, U.S. retail sales probably accelerated in March, boosted by car purchases that indicate demand is recovering from a winter-led slowdown earlier this year.

Other factors that added to Gold and Silver price fall were:

U.S industrial production-
         Above expectations March industrial production data hinted that the US economy was starting to emerge from a weather-induced slowdown suffered over the initial stages of calendar 2014. Adding weight to this belief was the uplift seen in capacity utilization levels over the month.

EU industrial production-
        Euro zone industrial output edged higher in February, official data showed Monday, in line with recent data showing a very modest economic recovery in the single currency bloc.

U.S CPI, U.S housing starts and building permits-
        U.S. Consumer Prices rose slightly higher while the U.S. housing starts rose 2.8% in March to a seasonally adjusted annual pace of 946,000, fueled by growth in single-family homes, the Commerce Department said Wednesday. Starts for February were revised higher to a pace of 920,000 from an initially reported 907,000.

Philly Fed index-
         A reading of manufacturing sentiment in the Philadelphia region improved in April, according to data released Thursday. The Philadelphia Fed’s manufacturing index rose to a reading of 16.6 in April from 9.0 in March, stronger than a Market Watch-compiled economist forecast of 10.0.

Overall, Gold dropped nearly 1.85% this week.

Though the various reports released from US did show signs of a recovering economy, Federal Reserve Chairwoman, Janet Yellen restated that she expected interest rates to remain very low until the recovery is on a more secure footing and the American economy is more fully involving available workers and other resources. The Obama administration told asset managers last week that it was planning additional sanctions against Russia over the conflict in Ukraine. Some of the supporting factors that lead Gold prices recover from its support level of $1280.

Looking at the current market conditions, I feel that western countries are reducing their holding on every rally while the same is being absorbed by the physical demand on Asia. It’s a see saw battle where one reduces and one increases. Geopolitical tensions will act as a strong support for Bullion metal prices apart from the physical demand.

The labour dispute which broke out in January that shut most of the platinum mines in South Africa is extending the longest shortfall in global production since 2005. The strike by more than 70,000 South African workers will continue as long as companies refuse to improve wage offers, Joseph Mathunjwa, president of the Association of Mineworkers and Construction Union, said April 15. The workers want basic monthly pay boosted to 12,500 rand over four years, which the producers say they can’t afford after production costs jumped 18 percent annually in the last five years, as wage and electricity costs rose. Many laborers live in shacks made of iron sheeting. They share toilets, don’t always have water or power, and many spend much of their income servicing debt. The country has a 24 percent unemployment rate.

While the Gold and Silver precious metals group is being thrashed, their counterparts, Platinum and Palladium are looking strong. The biggest producer of these metals i.e. Russia is having tensions with Ukraine while the second biggest producer i.e. South Africa has union problem. Due to these issues, I feel Platinum will look forward to extend its lead over these metals.

My trading range for the upcoming week for Gold in international prices is around $1270 to $1330 and for Silver $19.30 to $20.20. While in Indian rupees, Gold prices will range from INR 27900 to INR 29200 and for Silver the trading range will be INR 41,500 to 44,500.

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

- Previous article- "OUR LOVE FOR GOLD"

http://www.riddisiddhibullionsltd.blogspot.in/2014/04/our-love-for-gold.html

(Source: http://www.bloomberg.com/news/2014-04-17/platinum-strike-widens-output-deficit-seen-lasting-years.html)

OUR LOVE FOR GOLD

                                                     - by Mr. Prithviraj Kothari, MD, RSBL

Gold is the world's favourite metal and being an Indian, I have always been brought up with the principle that gold is one such metal the "HAS" to be a part of regular investments.

Gold in one such unique asset in its class, that  enjoys a diverse set of loyal buyers. In fact, I wouldn't be wrong, if I Say that gold has a huge fan following.

• In the west, investors want to spread their risk.
• In 2013, demand for gold from India hit record levels. and the crash in April saw humongous number of buyers stepping into the market to take advantage of this crash. The situation went so out of control that the government brought down the shutters, hiking import duty to 10% and imposing the “80/20 rule” which forces dealers to re-export 20% of any new shipment before taking delivery.
• Meanwhile, China’s gold demand meantime rose faster, finally overtaking the world No.1 and swallowing well over 1,160 tonnes of imports, even while topping the league table of gold mining nations with a further 440 tonnes.

Though the gold fan club is always widening, last year it saw many betrayers.

• It was in April, 2013 that gold had crashed following Cyprus bailout.
• It had been downgraded by many and abandoned too, last year.
• Gold that has always stood proud in its category, for the first time in 13 years; it gave negative returns in 2013. Moreover, it headed for an annual drop of 30 percent. Since reaching a record high at $1,910 an ounce in 2011, it collapsed to a low of $1195 nearly 37% of its value.

And its April 2014, that gold has performed exceptionally well compared to its counterpart. Gold held around 2-1/2-week highs on Friday, heading for its biggest weekly gain in a month on sagging risk appetite and increasing hopes the U.S. Federal Reserve will hold off on raising interest rates as soon as early next year.

Meanwhile, US Secretary of State John Kerry’s commented that if Russia would intervene further in Ukraine then it would target Russia's energy, banking and mining industry. I feel Ukraine story is far from done!

The highly anticipated FOMC minutes were released and markets seemed to be looking for a hint that would have confirmed Janet Yellen’s latest comment from after the March FED meeting, when she made clear that “a considerable time” means about 6 months and that means a rate hike could come as soon as early 2015. But that statement was missing in the minutes. US yields traded lower, stocks jumped up, the US Dollar lost against the board and metal prices continued to rise.

In spite of Janet Yellen making it clear time and again that; decisions will be based on economic reading, I find it crazy that traders are still reacting to potential changes in QE taper and interest rate increases.

Gold continues to roll along in an uncertain market with no clear direction in which assets are moving: US equities, US dollar and the possibility of interest rate hike this year.

Some of the remarkable figures coming in from Asia and other countries were-

DUBAI

In 2013, the value of physical gold traded through Dubai surged to $75 billion compared to $6 billion in 2003, and $70 billion in 2012.  volumes accounted for 40 per cent of the total worldwide trade in 2013. This reinforced Dubai's position as the global gold and precious metals trade hub as stated by Ahmed bin Sulayem, Executive Chairman of Dubai Multi Commodities Centre (DMCC),

CHINA

China saw its gold output increase by 10.6% year on year to 63.2 tons in the first two months of this year, according to statistics released by China Ministry of Industry and Information Technology. In the first two months of this year, gold mines in the country produced 51.7 tons of gold, 10.4% more than in the same period of 2013

INDIA

Gold imports in India are on a recovery mode now, as March imports have been mooted to have doubled to 50t m/m. The decision to permit 5 more private banks to import gold led to this recovery. In fact as the auspicious occasion of Akshaya Tritya is approaching, we see the demand to surge even higher and thus the import figures are expected to rise too.

Keeping the current market trends and price drivers in mind, gold is expected to trade in the range of $1293-$1350 an ounce in the international market and Rs.29,000- Rs.31000 per 10 gram in the domestic market.

On the other hand silver is expected to move in the range of $19.50-$20.55 and Rs.42,000- Rs.46,000 per kg in the international and domestic markets respectively.

Reiterating, I feel buying physical Gold, Silver and Platinum should be on cost averaging basis. It has been a successful strategy since the bull year began, though it would be a bit strange for the investors who started investing in the last couple of years.  I am sure Gold or for that matter any precious metal investments would always give best returns if considered as long term investment options and something that you can bank on in financial instabilities.

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

- Previous article-

"Bad News Proves to Be Good For Gold"

http://www.riddisiddhibullionsltd.blogspot.in/2014/04/bad-news-proves-to-be-good-for-gold.html

LET'S GET GOLD !!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Look in to the past- it was Feb 2013....Look in to the present- it is Feb 2014- Gold has risen 11 % since the beginning of the year....

Gold has shown some remarkable performances Since Jan-

1) Gold is up over 10 per cent since the 2013 closing lows

2)Gold crossed the $1300 mark for first time in over a year

3) The $1300 mark cross over has made gold reach a three month high in the week

4) this three month high posted its biggest weekly gains since October 2013.

Just "a" particular cause cannot be held responsible for this-

- Weak US economic data

- Deteriorating weather conditions in the US

- Political uncertainty in the Euro Zone

- SDPR posting its biggest inflow since December 2013

- Rising demand for gold from China

All of the above mentioned reasons are somewhere, directly or indirectly responsible for the rally in gold prices.

By the end of the week gold received a good booster by the weak US economic data release. The report shows that U.S. retail sales fell unpredictably in January. U.S*retail sales fell 0.4% in January*

Adding to it, more Americans filed for jobless benefits last week. Initial weekly jobless claims rose by 8,000 to 339,000, missing forecasts for a decline to 330,000.

The ICE dollar index, which tracks the greenback against six other currencies,declined to 80.308 from 80.718 late Wednesday. 

In all, the entire scenario gave a good push to gold prices. This weak economic development has once again raised questions over whether the world's biggest economy can sustain growth and made some investors hope the Fed would take a slower approach to tapering its bond purchases.

The disappointing U.S retail sales data weighed on the dollar, increasing the appeal for bullion, prices of which were sustained by the weak data releases from US as it reinforced the investors that Fed will take a slower approach to tapering its bond purchases.

Furthermore, extremely cold and unfavourable and unseasonable snowy conditions in US have hit the retails sales which has always been considered as a parameter to determine consumer spending. deteriorating conditions have also been a reason for a drop in sales.

Large parts of the United States have been gripped by freezing temperatures and snow storms, which caused investors to largely discount both the day's and other recent weak data that suggested the economy started the year on weaker footing.

shares in Europe dipped, as Italy was affected by the prevailing uncertainty  that raised worries about efforts to turn around Italy's sputtering economy.

However hopes once again prevailed as the way was left open for center left leader Matteo Renzi to take over, once Italian Prime Minister Enrico Letta would tender his resignation.

Additionally, SPDR- world's largest gold backed exchange traded fund, posted its biggest inflow since late December 2013. Holdings rose 7.50 tonnes to 806.35 tonnes on Thursday,

 This further strengthened investors sentiments.

While in China, consumer demand has always been rising and it has now overtaken India as the largest bullion consumer as it topped 1000 tonnes for the first time in 2013.

In the physical markets, bullion was also underpinned after India's trade ministry said it has recommended easing curbs on gold imports, after a 77 percent drop in imports for January that helped narrow the country's trade deficit.

During times of economic turmoil, gold has always enjoyed the status of a safe haven asset and has always had an inverse relation with equities.

But an interesting fact to be noted was that as gold performed well, equities too were on a rise.

Indeed the recovery in the gold price has coincided with a 0.5-percentage-point increase in the U.S. equity risk premium and a decline in U.S. real yields. This has been a favourable atmosphere for gold prices to rise.

Other precious metals are on the rise with Palladium up for the 8th day in a row (the longest streak since July), Platinum up 6 days in a row (long since July) and Silver up 10 days in a row breaking $20.50.

Gold’s gains in 2014 have been helped by soft U.S. economic data and emerging-market stress, but the metal’s strength may not last once economic data improve again.

The underlying notion that central banks are slowing down their quantitative easing is boosting gold's appeal as an inflation hedge and alternative currency. 

    

Speculation that the Fed might hold off further reduction of stimulus had strongly supported gold by keeping interest rates at rock bottom while stoking inflation fears. 

There is no surety of how well and for how long will these gold prices be sustained. A we head towards March, weather conditions in US tend to improve and can once again boos consumer spending. the rapid rebound in the S&P 500 over the past week would suggest that the sources of support for the gold price from a rising equity risk premium may be coming to an end. 

Now we wait for March or rather lets march towards March !!

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -  "Is the golden egg about to hatch??"

http://riddisiddhibullionsltd.blogspot.in/2014/02/is-golden-egg-about-to-hatch.html

IS THE GOLDEN EGG ABOUT TO HATCH?

- By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

This week gold was up almost two per cent - giving it the largest weekly gain in five weeks. Initially gold was almost unchanged for the week,  until the jobs report was out. Post the US Jobs data, gold rose on Friday, after they stated that job creation slowed  over the past two months. This created waves of speculation in the market that the Federal Reserve will not taper its current stimulus. 

Last week the Fed had released a statement that they will further taper its monetary stimulus program but given the slowing economic momentum, investors believe that this tapering will not take place in the near future.

Despite the slight fall in unemployment, the market's reaction to the low employment numbers was enough to pull up the prices of gold and silver. Other commodities prices and the major stock markets also rally.

Following gold, silver too was up nearly 5 per cent this week. This is the biggest weekly gain since mid-August.

Platinum also posted small gain for the week on supply worries due to a possible strike in south Africa. However, latest news about government-brokered talks between the world 3 largest platinum producers and the mine union AMCU (Association of Mineworkers and Construction Union). The talks were to end a two week wage strike. Speculations regarding the strike caused the upward movement of platinum prices. Platinum was trading up 0.5 per cent at $1,378.50 an ounce.

For gold, following were the factors responsible for the gains-

1) Tumbling world currencies

2) Tumbling assets in emerging markets

3) Disappointing US Jobs data- Data showed U.S. employers hired far fewer workers than expected last month—nonfarm payrolls rose by 113,000, well below the consensus of 185,000—although the unemployment rate hit a five-year low of 6.6 percent.*

'

4) World Stocks- European stocks bounced back after an immediate negative reaction to the data, which is seen as a key gauge of the U.S. labour market

5) High demand for gold from China on account of the Lunar year

China returned to the physical gold markets strongly on 7 February, after a week-long break, as banks and retailers moved to replenish stock following solid sales during the Lunar New Year holiday. An increase in premiums and trading volumes on The Shanghai Gold Exchange, indicated that jewellery and bullion sales during the new year holiday were robust in the world's biggest gold consumer.

Shanghai premiums for 99.99% purity gold climbed to $11 an ounce over London prices. They hovered at about $4 on 30 January just before China went on holiday. Trading volumes hit their highest in a month.

While in India, premiums fell to between $70 and $75 an ounce on 7th February, compared to $80 last week, owing to the higher availability of imported jewellery and smuggled goods.

Premiums across the rest of Asia remained largely stable.

Gold is expected to range between Rs.29,000- Rs.31,000 in the domestic market and $1231 to $1278 in the international market whereas silver is expected to range between Rs.43,000 to Rs.46,000 and $19.30 and $21.00 in the domestic and international markets respectively.

 Recent data covering the speculative positioning by hedge funds still points towards short covering as one of the main driver behind the current strength, but until a sustained break emerges, many traders will still be viewing higher prices as good entry levels for selling the market. 

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog - "Pause - Gold Price Rally"
http://riddisiddhibullionsltd.blogspot.in/2014/02/pause-gold-price-rally.html


*source-tradingnrg.com

THE YELLOW METAL IS ALL GOING GREEN

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

In 2008, when the financial crisis rattled economies, investors inevitably resorted to the perceived safety of gold - and its price escalated from $800 to $1900 an ounce. This, in turn, accelerated the exploration for yet more gold. And gold became the most sought after metal. But in 2013, gold plunged 28 percent, the most since 1981, amid a U.S. equity rally to a record and speculation that the Federal Reserve will scale back monetary stimulus.

There were quite a many investors who abandoned gold and wrote it off. They declared that gold was ready for a bear market and that it has lost all its glitter. But the ones who are still loyal to gold hold a strong belief that gold will shoot up this year and perform well. I think gold is all set to prove this true.

This month, gold has jumped 5.2 percent. The losses in equities market has once again shifted focus from financial markets to bullions. This week gold saw a 5 per cent gain- thanks to equities. 

A global fight from emerging markets and declines in equities increased gold status as a safe haven asset and it rose to a two month high on Friday.

Fluctuations in the currency markets led by  plummeting Argentina peso and Turkish Lira prompted investors to buy gold.

This was not the sole reason behind the yellow metal prices going green.

- The options market expires next Tuesday, on 28th January. Buying sentiment behind this expiry has pushed gold prices higher.

- Also, the market has seen a big inflow for the so-called gold spider ETF. Recent inflows are also encouraging. Gold ETFs on Friday scored their biggest daily inflow since October 2012.

- The Chinese lunar new year is also playing its part for physical metal demand, as customers are rushing in to grab the metal at a cheaper price. The Lunar Year holiday will start next Friday (31st January) but gold dealers in China have made their purchases well in advance. Increasing demand for coins, bars and jewellery has pushed up gold prices.

- There are talks in the market that the government may relax certain import restrictions. Gold shot up and after murmurings that the punitive taxes on gold in India may be reduced. Congress party chief Sonia Gandhi has asked the government to review tough import restrictions on gold, which include a record 10% import duty.This will result in higher demand for gold and may push prices further.

- Also we see many investors shuffling their portfolios in January after what they have witnessed the year before. In Jan 2014 we saw that the equity market has not given satisfactory returns hence many investors are again allocating major chunk to gold and other precious metals.

- The world has a picture that banks have been selling off gold. But what came as a shock to the market that Germany failed to get its gold back. On January 16, 2013 Germany’s central bank, the Bundesbank, said it will ship back home all 374 tonnes it had stored with the Banque de France in Paris, as well as 300 tonnes held in Manhattan by the US Federal Reserve, by 2020. the Germans have managed to bring home a paltry 37 tonnes of gold.

And a mere 5 tonnes of that came from the US, the rest from Paris. The Fed holds 45% of the total 3,396 tonnes German gold. Now what conspiracy lies behind this pull back is certainly unclear.

Meanwhile, A quiet Monday, following Martin Luther King day in the US saw most interest in Platinum trading, which was driven to a high of 1473 USD per ounce by the AMCU calling also for strikes at Impala. - First day of the week. A strike at South African platinum mines paralyzed the world’s three biggest producers of the metal for a second day as talks to resolve the dispute over pay broke up until Jan. 27. Nearly 70,000 employees downed tools at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc mines, where 70% of global platinum is produced. Hence, Platinum is 6% higher this month. 

While the yellow metal may take a back seat to other asset classes this year, but strong physical demand will sustain elevated average price this year. 

But investors have to be “cautious and quick” in taking profits because if the FED announces further tapering of its bond-buying program at its meeting next week, the dollar could soar, which could be a bearish sign for gold.

Nonetheless, momentum is still pointing up for now.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Up Down- Gold Price trend Unclear"

http://www.riddisiddhibullionsltd.blogspot.in/2014/01/up-down-up-gold-prices-trend-unclear.html

UP DOWN UP- GOLD PRICE TREND UNCLEAR

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

So far...so good...it has been a decent start for gold. In the first fortnight of 2014, gold scaled up by 3.7 per cent. As we all know that 2013 has been one of the worst performing years for gold and it was down almost 28 per cent. It even ended a 12 year bull run for gold. All this may sound very repetitive as I have mentioned this time and again in all my articles lately.

But this has cropped up again as at this point where some believe that gold is making a comeback it is very important to know that is actually where gold is headed. 

Throughout the week, there were not one but many factors that played a pivotal role for gold's price movement:

• Strengthening of US dollar
• Federal Budget Balance
• Beige book
• Fed Chairman Ben Bernanke’s speech.
• Core CPI m/m
• Building permits
• German Buba President Weidmann’s speech

The recent disappointment in non-farm payroll report may have lowered the chances of FOMC reducing its stimulus program in the near future. But that does not mean that we can expect Gold to begin a new rally? There are various reasons for it. One of the major concerns is the demand for leading precious metals’ ETF including iShares Gold Trust (IAU) and SPDR Gold (GLD) continued to diminish. During January, SPDR Gold’s holdings declined by 1%. 

But the upper trend did continue during the start of this week too. Gold rose to its highest level in a month on Tuesday at $1,255.00 an ounce due to a drop in equities and uncertainty over the U.S. growth outlook after a disappointing jobs report last week.  But later in the day, gold lowered. It fell nearly 1 per cent as a rally in U.S. equities that was sparked by encouraging December retail sales data dampened buying sentiment among bullion investors. 

On Wednesday too, gold fell as the dollar rallied over producer prices data released in US. It showed that the price has risen sharply in December, even though there were few signs of sustained price pressures.

Supporting investor appetite for riskier assets like equities, the Federal Reserve said in its Beige Book published late on Wednesday; the U.S. economy continued to grow at a moderate pace from late November to the end of 2013, with some regions of the country expecting a pick-up in growth.

Thursday followed suit, as a developing global economy bettered the market scenario for equities and gold lost its appeal as an alternative investment and made it vulnerable to further losses.

Gold rallied towards the $1,255 level but it failed to go through it because there is no investor interest, and there may be a push towards the $1,210/$1,200 area.

Gold now relies on macroeconomic events that are coming up for the month of Jan:

1) The FOMC meeting: 

The next meeting of the Fed's FOMC (Federal Open Market Committee) is on Jan. 28-29, while the next major U.S. data figure is the U.S. weekly jobless claims report, scheduled for release

2) Physical Demand from China:

In China, the biggest physical market for gold, demand has picked up since the beginning of the month in the build-up to the Lunar New Year, when the metal is bought for good fortune and given as gift. 

China has become the third-largest holder of gold, according to a Bloomberg Industries report. Gold holdings were nearly 2,710 metric tons, compared with the last reported holdings of 1,054 tons in April 2009, according to the report. Italy’s holdings are 2,451.8 tons, and France owns 2,435.4 tons, according to the World Gold Council data. The US is the biggest holder with 8,133.5 tons. The PBOC reported in April 2009 that its official gold reserves stood at 1,054 tons – and it has not reported any increase in official gold reserves since that announcement nearly five years ago,

China will continue to add its official gold holdings in a bid to raise the status of its currency, the Yuan and strengthen it.

So now all eyes on the upcoming FOMC meeting and wait for the best to happen

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Gold rolling around payroll"

http://riddisiddhibullionsltd.blogspot.in/2014/01/gold-rolling-around-pay-roll.html