FINAL SURPRISE OR MORE TO GO!!

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

So finally.....the much awaited and the most discussed meeting was held this week. The FOMC meet began on 18th September and was over by the 19th. All expectations, rumours, speculations and predictions were finally put to a halt.

Everything was going red for the yellow metal until Wednesday. On Wednesday gold jumped 4.1 per cent (the highest in 15 months) when the Fed made a statement that they would need more evidence and clear signs of US recovery before curbing its $85 billion-a-month of bond buying. No taper! The Fed topped the surprise no-tap vote, by delinking tapering to any “magical number”

Gold hovered near one week highs and was on track for its biggest weekly gain on five weeks after the US Federal Reserve postponed the tapering of its stimulus measures that have long been a supporter for bullion.

Bullion rose 70 percent from December 2008 to June 2011 as the U.S. central bank pumped more than $2 trillion into the financial system by buying debt, increasing concern about currency debasement. Bernanke said there is no fixed schedule for tapering and a statement from the Fed signalled interest rates will stay near zero as long as unemployment remains above 6.5 percent and inflation forecasts don’t exceed 2.5 percent.

Gold slid on Thursday and more so on Friday after positive data release from the US. Spot gold prices were last at $1,352.45/1,353.20 per ounce, down $15.10 or 1.1 percent on the Thursday’s close. Spot Bullion prices for gold fell $25 on Friday morning from Thursday's 7-session high, trading at $1350 per ounce as concerns grew that next month's US "debt limit" deadline could spark panic in financial markets. In the other precious metals, silver prices at $22.53/22.59 per ounce were down sharply on Thursday’s close of $23.12, while platinum prices fell $14 to $1,448/1,453.

Initial jobless claims for the week ending September 14 increased 15,000 to 309,000 but were well below the expected 330,000 and the Philadelphia Fed business outlook index rose to 22.3 in September, much better than the forecast of 10.3 and Augusts' reading of 9.3. Reports released showed sales of previously owned U.S. homes unexpectedly rose in August to the highest in more than six years and manufacturing in the Philadelphia region expanded in September at the fastest pace since March 2011. Apart from the encouraging data, Gold sank more on later part of Friday after Federal Reserve Bank of St. Louis President James Bullard said that the US central bank may move next month to taper its QE and reduce stimulus pending which has acted a booster for precious metals over the years. He simply put it in this way, “Market overeacted with taper expectations”

The next big event is the appointment of a new Fed Chairman. Any tapering that is expected to happen in October will be dependent on data released from the US and speculative interest may remain soft as investors prefer to wait and watch before jumping into the markets.

On the domestic front, the government on Tuesday raised the import duty of Gold Jewellery to 15% from 10% earlier, introducing a 5% tariff differential with raw gold. The move, which underlined the government’s persistent efforts to dampen the demand for Gold imports and stabilize the rupee, will also give some comfort to domestic jewellery industry with a decisive export orientation. The Finance ministry’s decision followed RBI’s tightening norms for Gold Loan non-banking financial companies (NBFCs). 

Usually artisans manufacture gold jewellery factoring in local demand and the process of manufacturing does take time. This move if not had implemented, the absence of duty differential between the imports of plain Gold and jewellery, bulk buyers who didn’t want to wait for purchases started importing. This affected the livelihood of artisans who were dependent on jewellery making.

India's gold shipments came to a virtual halt after the Reserve Bank of India (RBI) told importers on July 22 that a fifth of their purchases would have to be turned around for export and that 80 percent would be available for domestic use. Clearing the air on gold import norms, a government official today said more than 20 per cent of the imported metal can be exported back, a clarification that is likely to help release inbound shipments held up at the customs. 

Domestic jewellers can now breathe a sigh of relief with this clarification, as demand is expected to pick up in the coming months with the arrival of the wedding and festival season, traditional times to give gold. And this year's good monsoon will boost incomes of farmers, who often use gold as an investment.

As far as the trade range for gold is concerned  it is expected to hover between $1270-$1370 and Rs.28,500- Rs.31,000 in the international and domestic markets respectively.

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 -
"Are they really precious?"
http://www.riddisiddhibullionsltd.blogspot.in/2013/09/are-they-really-precious.html

ARE THEY REALLY PRECIOUS?

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

This week a lot has happened with precious metals and in the coming week too a lot is bound to happen with gold, silver and platinum

The bears are in the driving seat in Gold. Gold prices shed 5.6 percent for the week. Gold fell to a five-week low on Friday at $1,304.56, heading for its worst week in more than two months.

For the first time in a month silver traded below $22. It suffered a huge sell off on Thursday. Silver prices fell 5.32 per cent on Thursday, closing at $21.90.

Platinum was not sparred from the selling pressure, falling 2.31 percent to close at $1,438 and saw some slight recovery to the $1,440 levels now. 

There are various factors responsible for this Sell - off. Let's take a look at them one by one.

SYRIAN EFFECT:

Gold prices rallied above $1,430 an ounce to a three-and-a-half-month high in late August on safe-haven buying, as the United States and its allies looked set to launch military strikes on Syria.

But the metal’s appeal has been dented by diplomatic efforts to place Syria’s chemical weapons under international control, which may avert a US military strike. The risk mood improved with Syria welcoming a Russian plan to surrender their chemical weapons

Obama has threatened to act alone, if necessary, and his administration credits that threat with Russia's surprise proposal last week to have Syria turn over its chemical weapons arsenal to international control. Outside of the United Nations, however, administration officials insisted they would not take the military threat off the table.

As of now gold doesn't seem to be playing much to the tunes of the Middle East tensions as the UN has clearly not given a go ahead for any attack on Syria.

QE TAPERING EFFECT:

The FOMC meeting to be held on 17-18th September and its speculations over the tapering of the quantitative easing program will be one of the biggest events for the movement.

Since the inception of the Fed’s quantitative easing programme in 2008, gold price has more than doubled from about $837 an ounce in 2008 to reach a peak above $1,900 in 2011. 

Since the Ben Bernanke’s Speech on QE3, prices have saw humungous correction and fell to a low of $1,180 in June this year. 

With talks of possible withdrawal of their liquidity injection programme coming up at the FOMC meeting next week, it is no wonder we see such volatility in bullion prices.

DEMAND EFFECT:

Another factor that affected gold prices was the lacklustre physical gold demand, particularly out of India, one of the biggest importers of Gold, where the Government restrictions to import Gold have further dented the supply. The dramatic trend decline in the Indian Rupee against the US dollar has sharply increased the local price of gold with the gold price measured in Rupee up some 20% since late June. 

The Indian jewellery market, which is a major component of global jewellery demand, has tended to be price sensitive. Thus the high local gold price is likely to dampen Indian jewellery demand and pull down gold prices unless the rupee depreciates further

Although physical demand has picked up in Asian Markets over the past two days, it is not nearly as strong as what we have witnessed in at the start of August. The strong physical demand during August had pushed plenty of shorts out of the market (this short covering assisted in pushing gold above $1,400). Should physical demand improve now, there may not be the same level of short covering to help push gold higher again.

MINING EFFECT:

Furthermore, the trend weakening of the South African Rand and the Australian dollar have lowered gold mining cuts in the two countries with the highest production costs which makes production costs less likely. It is also worth noting that the gold labour strikes in South Africa are now over which will may pull gold prices down

Having discussed these factors, I would expect Gold to trade sideways until FOMC meeting with its stimulus plan can lead to a direction.

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 was pulled between two major forces- Syrain attack and the QE tapering"

http://riddisiddhibullionsltd.blogspot.in/2013/09/gold-was-pulled-between-two-major.html

LORD GANESHA ACCESSORIES

Ganesh Chaturti is one of the most widely celebrated festivals in India and brings about prosperity and a spirit of happiness amongst people. RSBL's Sparsh constantly aims at bringing about innovation into its products and offerings. 

Our unique gold plated collection of semi-precious stones studded Ganesha accessories made of silver truly signifies this and reflects the love, affection and devotion of people towards Lord Ganesha. 

GOLD WAS PULLED BETWEEN TWO MAJOR FORCES- SYRIAN ATTACK AND THE QE TAPERING

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

Gold prices started weaker in Friday’s North American session, but reversed course and rose 1.5% following a lower-than-expected U.S. nonfarm payrolls report that increased confusions over when the Federal Reserve will start paring back its massive bind buying. The U.S. Bureau of Labor Statistics said that 169,000 jobs were created in August and the unemployment rate fell one basis point to 7.3%. That’s under the 170,000 to 180,000 expected. 

The better US Non-Manufacturing ISM data sent Gold heavily lower, as a Fed tapering for September seems on the cards now. Gold dropped by nearly 25 USD to a low of 1365 after the data with heavy volumes. Silver traded down to 23.01.

The U.S. August services sector ISM expanded to 58.6 compared to an expectation of 55.0. The ADP showed that 176,000 jobs were added in August while the jobless claims for the week ending 31 August declined 9,000, with the four-week average dropping to the lowest level since October 2007. The U.S. government bond yield surged while the Dollar Index climbed and the gold prices dropped upon the encouraging economic data. The European bond yield has also been rising in reaction to the Fed’s expected bond purchase tapering as well as the recent European growth recovery. The German 10-year government bond yield has surged above two percent on Thursday compared to 1.3 percent at the end of last year. 

Increase of jobs could push the Fed heavily in favour of tapering stimulus before the end of September, but a disappointing level of growth could sway the central bank to wait at least another month. 

Despite Friday's rally, gold ended the week 0.5 per cent lower for a second consecutive weekly loss as its safe haven appeal dropped on lack of progress about possible US military strikes against Syria.

Gold prices could rise next week as market awaits Fed tapering, moreover, there are some other factors underpinning gold, including decent physical demand in Asia and the likelihood of more Indian purchases ahead of the holidays there.

Another factor for gold is a potential military strike on Syria by the U.S., following reports that the government there allegedly used chemical weapons against its citizens. As President Obama persuades the Congress to vote and looks for the international backing for war in the G20 meeting, the delay in the Syrian strike has put a damper on gold prices

Gold traders are watching the Syrian conflict, but so far the saber-rattling has done little to impact markets. Several analysts said going into next week that Syria might take on added significance and the conflict will likely at least add support to prices.

The gold market has another week and half to mull what the Fed might do, as the Federal Open Market Committee meeting is Sept. 17-18, and there’s a debate over whether the Fed would taper its QE program or not. 

Monetary stimulus has been a major driver of gold's rally for recent years as the metal's stats as a hedge against inflation and economic uncertainty benefitted from increased money printing by central banks in low interest rate environment.

Gold rose to a record high of $1920.30 on 6th September - exactly two years ago. Year-to-date, the metal is down nearly 16 per cent.

Meanwhile, India welcomed the new RBI governor - Mr. Raghuram Rajan with open arms. And this was clearly visible in the market movements once he took his post. Equities were up, rupee appreciated and the sentiment became positive.

In a seven-page statement read out at a press conference after markets closed, Dr.Rajan set out a bold, reformist vision for his tenure at the central bank. Included in it are measures to deepen securities markets, improve financial inclusion including for SMEs, support and push for the rupee as an international currency and a warning for corporate defaulters of loans. Declaring that he would “preserve the value of the currency”, Dr. Rajan said India is a fundamentally sound economy with a bright future. 

On Tuesday, The Reserve Bank of India (RBI) has said gold supplied to units in Special Economic Zones (SEZs) and export units and to star/premier trading houses will not be treated as gold supplied to exporters under the 80/20 scheme — the allowing of import with the condition that a fifth must be supplied to exporters. With RBI’s new clarification, exports might be higher but gold supplied to exporters from a Domestic Tariff Area (any place outside an SEZ or other units outside a Customs-bonded one), other than export zones and by export houses, will be considered as part of the 20 per cent policy. Such exports last year were estimated at 55 tons and this year could be higher, with improved demand. An exporter will have to show a proof of export, including proof of inward remittance. Since the latter takes 270 days, waiting till then will mean the next export will be delayed. 

Now Indians have eyed their entire hopes on this new governor, who promises to deliver.

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 -

"It's Syria v/s Global Economy for gold"

http://riddisiddhibullionsltd.blogspot.in/2013/08/its-syria-vs-global-economy-for-gold.html

IT'S SYRIA V/S GLOBAL ECONOMY FOR GOLD!!!

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

Gold prices rallied above $1,430 an ounce to 3-1/2 month highs on Wednesday as rising tensions over Syria sparked safe-haven demand and a scramble among investors to cut their bets on falling prices

The metal hit a peak of $1,433.31 an ounce, its highest since May 14, as the United States and its allies geared up for a probable military strike against Syria in response to an apparent gas attack that killed hundreds of civilians in a rebel-held suburbs of Damascus. 

Gold was on track for a 5.40 percent gain on the month and its second straight monthly increase. It briefly trimmed its decline in the afternoon as U.S. Secretary of State John Kerry made a case for a "limited" strike against Syria, but prices fell back to pre-speech levels before he finished his televised address.

Till then, gold was dancing to the moves of the data released by US. Gold fell on Thursday, snapping a five-day rally as a U.S.-led military strike on Syria appeared not to be imminent and investors turned their attention to strong U.S. economic growth and the Federal Reserve's plans to rein in its stimulus program.

Gold prices in the international market declined as US economy grew by 2.5 percent annualized rate in Q2 up from previous quarters' 1.7%. Economists widely expected the GDP to grow by 2.2% and the trumping of expectations along with the dip in initial jobless claims by 6000 last week ensured a dip in gold futures. Gold slid below $1,400 an ounce on Friday as the dollar rallied to a four-week high, with investors squaring positions at the end of the month and cashing in on a recent run-up ahead of a long U.S. holiday weekend

I feel the correction in Gold prices came mostly from month-end position squaring and profit-taking after prices on Wednesday reached their highest levels since mid-May. I pray for all the souls who have lost their lives in Syria and may peace usher in the nation.

  

Meanwhile, In South Africa there was an atmosphere of unrest. The National Union of Mineworkers (NUM) has given 48 hours’ notice of a strike at South Africa’s gold producers, the country’s Chamber of Mines said on Friday.

The Chamber, which collectively bargains on behalf of South African gold miners AngloGold Ashanti, Gold Fields, Rand Uranium, Harmony Gold, Evander Gold Mine, Sibanye Gold and Village Main Reef, expects the strike to take effect from the night shift on September 3.

This too will affect gold prices.

While in the domestic market, the Indian rupee slipped for third consecutive day in a row on Wednesday to close at a fresh record low of 68.80 per dollar, as uncertainty over a possible US-led military strike against Syria knocked down Asian equity markets and currencies. This is the biggest ever single-day fall for the currency since 1995.

Apart from global factor, India suffers higher current account deficit fuelling worries that foreign investors will continue to sell out of a country facing stiff economic challenges.

The currency has plunged over 13 per cent so far in the month of August alone to mark its worst monthly fall since the year 1993.

Rupee has plunged nearly 25 per cent so far in the year 2013. A plunging rupee has affected bullion prices too taking gold to a life time high of in the Indian markets.

Risk of supply disruptions for platinum remains at large, I feel the sustainability of a price rally above $1,500 is likely to reduce as the jewellery demand will fade above $1,500. China is the dominant player in the platinum jewellery market, accounting for nearly 60% of the world platinum jewellery demand.  

With respect to Silver’s rally over the past few weeks, I believe the metal’s underlying fundamentals remain weak. I feel short covering was the major support that leads the metal prices to reach higher levels. I do believe for the time being the metal will also find support on dips (taking its lead from gold). 

The trade range for gold for the coming week is expected to be $1375-$1423 an ounce in the international markets, and in the domestic market it is expected to range between Rs.30,000- Rs.33,500 per 10 gram

“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 -

"Will Gold cross the $1400 mark?"

http://riddisiddhibullionsltd.blogspot.in/2013/08/will-gold-cross-1400-mark.html

WILL GOLD CROSS THE $1400 MARK

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

Is something wrong with market? Yes that's exactly what traders and investors were discussing. Gold has just touched $1400 which was once seen an untrue level after the fall. Will it be able to cross it and reach new highs is what the below given factors can forecast.

The main highlight for this week was the depreciating rupee. Initially the markets expected rupee to return from the level of 62. Then they claimed 64. But the rupee made new low of 65 against the dollar. Now it is expected to depreciate further to 70. However, by Friday evening rupee returned to the levels of 63.90

The economy is facing a slump. Inflation is at a high, growth has hampered and equities have shattered.

Although the government has been trying its level best to intervene at all critical levels and control the rupee, nothing seems to be helping.

This drop in the rupee pushed gold and silver upwards.

Strong US Dollar and rise in treasury yields were seen pressuring the commodity movement to certain extent. In the United States, ten-year treasury yields climbed to 2.92%, the highest since July 2011 after FOMC minutes were failed to give any further details on tapering monetary stimulus. Investors hope that the Central Bank may start tapering its monetary stimulus later this year.

Gold prices in the global market edged up on Friday after weekly US unemployment claims recorded an upward movement. However, concerns over the withdrawal of US monetary stimulus were seen pressuring the yellow metal prices to certain extent.

Gold jumped to a 11-week high, topping $1,400 an ounce in spot trading, as sales of new U.S. homes fell more than forecast, boosting speculation that the Federal Reserve will maintain economic stimulus. Sales of newly built homes in July plunged more than 13 percent, the most in more than three years, government data showed today. The 394,000 annualised pace compared with a drop to 487,000 forecast by analysts in a Bloomberg survey. Fed policy makers said they are “broadly comfortable” in scaling back debt purchase if the economy strengthens.

By Friday evening gold was seen trading at 1397$ up by 21$ and silver was up by 95 cents, trading at 24.07$

In the physical markets, renewed labour unrest in South Africa sent platinum and palladium higher on Thursday, and this too, provided an element of support to both gold and silver.

By Friday evening, in the domestic markets too we saw gold and silver rocketing. Gold climbed by INR 750 trading approximately at INR 31,900 per 10 gram and silver was up INR 2200 reaching a high of INR 53,400 per kg.

The fact that gold managed to reverse its losses and close modestly higher on the day was quite impressive and likely had something to do with the fact that better-than-expected Chinese data which suggests that the economy is stabilizing, potentially a positive in terms of future Chinese gold demand

Another report that caught attention was the World old Council's gold consumer demand report. The impressive thing to note was that Gold consumer demand rose by more than half in the second quarter of this year thanks to strong demand in China and India, the World Gold Council (WGC) said.

In India, the Gold Trade holds steady in spite of the government imposing import tax hikes on gold in an attempt to reduce the country’s current account deficit. In fact, according to the WGC, gold jewellery, bar and coin demand in India alone was 70 percent stronger in the second quarter of 2013 compared to the same quarter last year.

Consumer demand in China continued to show strong growth, totalling 276t in the second quarter, a rise of 87% compared to the same quarter last year, as investors used the lower gold price to buy in advance of expected future price rises. Jewellery demand in the quarter was 153t, up 54% on the same quarter last year, while bar and coin investment was 123t, up 157% on Q2 2012.

Recent falls in the gold price have boosted demand significantly – it rose 53 percent in the April-June period from the same three months of last year, the WGC said in a report on Thursday.

Looking at the good monsoons of India and the festive season closing by, the domestic prices for precious metals need to be watched closely. Whether supply will be able to meet the demand will be the question that every Indian attached to precious metals will be having in their mind. 

“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 -

"Precious Metals on the Run"

http://riddisiddhibullionsltd.blogspot.in/2013/08/precious-metals-on-run.html

PRECIOUS METALS ON THE RUN

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

Gold, Silver and Platinum all of them have found a new life after they broke their technical resistances, strongly.

 Gold rose nearly 1 percent to a two-month high on Friday, and bullion posted its biggest weekly gain of almost 5% in many weeks.

Silver rose 1.5 per cent for an eighth consecutive daily gain. The grey metal has sharply outperformed gold and was up 14 per cent this week for its biggest weekly rise in almost five years. The Gold/Silver ratio has corrected 50% of its move since end November last year and given that the 200 day moving average should provide some support too at 58.08, we might cool down in Silver versus Gold and digest the strong recent out performance.

Platinum is trading above $1,500—hitching its star to gold’s wagon.

Gold's and Silver’s rally came as U.S. stock indexes were lower on Friday and on track for their biggest weekly declines in months. The rally in gold towards $1,372 is perhaps even more impressive because the price rise came despite the 10-year US government bond yield breaking above 2.75% yesterday. Rising bond yields have been negatively correlated with the gold price over the past few months – but not yesterday. Adding more support is that we are not seeing any major slowdown in physical gold demand yet despite the rally in the gold price. Rallies like we experienced yesterday would typically see physical demand fall away until the price volatility settles once again. The SGE premium has not fallen below $22/oz the past few days.

Even the greenback pared its early gains against its peers on Friday as release of weaker-than-expected U.S. University of Michigan consumer confidence fueled expectations that the Federal Reserve will keep its stimulus measures by the end of this year. 

The Bureau of Labor Statistics published its recent report of the U.S CPI for July 2013. Based on the latest update, the consumer price index rose again for the third consecutive month; in annual terms the US CPI increased by 2%. Despite the moderate rise in the CPI, it is still very low and remains lower than the inflation target of the Federal Reserve. The low inflation could suggest the U.S economy isn’t heating up, which could raise the odds of the Fed leaving its policy unchanged and keeping the current asset purchase program unchanged. This news may have contributed to the rally of gold and silver prices.

Last but not least, the largest increase in SPDR GLD holdings turned out to be by Goldman Sachs Group, who added 3.7 Mio.

In the domestic market, a record low in the rupee lifted Indian gold futures above the closely watched 30,000-rupee mark. Dealers said the high local price of gold in the world's largest gold buyer is expected to weigh down on demand. This week gold was more of a game of demand and rupee depreciation. 

This week, Government of India increased the import duty on Gold by 2%, Silver by 4% and Platinum by 2% to new 10%. The festive season had given tremendous rise to the demand for gold. The yellow metal witnessed a sharp climb as stockists weighed supply constraints in view of the ensuing festival and marriage seasons in the midst of incessant duty hikes from the government and RBI measures. Besides other extreme steps, like abolishing the purchase of property abroad for Indians, or reducing heavily the amount Indian companies can invest abroad, they also abolished the import of gold coins and medallions. Imports of coins and medallions; however should not have a big impact on thets total import number, as most of the imports are in form of bars and not coins. These new regulations that come up now almost on a daily basis without being too clear have brought imports to a standstill and we still wait for more details on how exactly to conduct imports in the coming days ahead.

Silver also reflected the shiny metal’s surge and zoomed to hit a four-month high owing to heavy speculation.

A sharp fall in Sensex and rupee against dollar and strong global cues also contributed to the upsurge in gold price, which posted the biggest single-day gain after August 19, 2011. Interestingly, the metal had shot up by INR 1,310 on August 19, 2011 as well.

But for Indians who want to invest in gold, you may have a host of restrictions. The big ones are a trade deficit, a current account deficit and a collapsing currency. The rupee is down 28% over the last two years. That's the biggest fall since 1991.

For the weeks to come there is lot of uncertainty prevailing over precious metal prices.

The trade range for golf for the coming week is 1340$- 1420$ and in the domestic market it is expected to trade between Rs.29,000- Rs. 32,000 per 10 gram.

“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 -

"Dollar makes gold look attractive"

http://riddisiddhibullionsltd.blogspot.in/2013/08/dollar-makes-gold-look-attractive.html

DOLLAR MAKES GOLD LOOK ATTRACTIVE!

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

Yes indeed, dollars helped in making gold look attractive.

This week gold prices benefited from the U.S. dollar's fall to a seven week low against a basket of currencies. Broad USD weakness was the theme of the day yesterday; leaving most of the people puzzled about the negative performance of late and force some to throw in the towel on their long positions.

Precious metals edge higher on modest demand in early Asia, but worries about the Federal Reserve starting to withdraw its stimulus program with an improvement in economic growth is likely to weigh on prices. The Fed's stimulus program has been supportive for gold prices as it triggers demand for the metal considered a hedge against inflation.

Bullion has traded as low as $ 1,180 an ounce in late June on fears of massive fund selling as the Fed looked set to cut its bond buying stimulus as early as September.

While western investors focus on Federal Reserve’s quantitative easing tapering timelines, the bigger gold story is taking place in China. The negative sentiment currently attributable to the gold price masks the accumulation of gold by the Chinese who are set to overtake India this year as the world’s top gold consumer. This is a startling turnaround given the Chinese embargo on gold ownership was only lifted as recently as 2003.

Chinese exports rose 5.1% from a year earlier, rebounding after from June's 3.1% fall, the customs agency said. However, the medium-term economic outlook remains volatile with a broader range of outcomes now possible. China gold production reached 156 tons during 5M2013, up 11% YoY (7.5% in May and 8.6% in 2012), according to China Gold Association.

In 2012, China’s gold consumption reached 776 tons, the world’s largest, up 8% YoY, representing import reliance of 49%, down from 53% in 2011. However, note that gold accounted for only 1.2% of China’s total foreign reserves according to the World Gold Council, compared to 69.8% in US. This prompts China to consider further accumulation of gold to diversify the reserve mix.

Silver and platinum group metals also rallied after data showed Chinese imports of industrial commodities and raw materials rose in July and the world's second-largest economy showed signs of stabilizing after more than two years of slow growth. Moreover the good economic figures out of Germany, which shows that despite fears to the contrary, exports are picking up from manufacturing economies. This coupled with the fact that the markets were running short and the very thin volumes, created the spike. In the past, I have always recommended that Platinum is a buy on Dips. The way it has rallied, it is all thanks to the improving economic scenario.

While in India, though the Dollar weakness and a mostly supportive movement in global equities pushed up the yellow metal today but gains in Indian Rupee ensured that the rise in local futures is tepid

India's gold demand has remained moderate over last few weeks after a spike in April when prices slumped towards INR 25000 per 10 grams in the major local markets. However, World Gold Council is upbeat about the demand for jewellery picking up momentum in the coming quarters in the country and even projected demand for gold touching 865-965 tonnes in 2013, thus exceeding 2012's record.

Currently, most of the Indian companies dealing with Gold related products are facing a severe crunch to get metal. With the government rules and regulations, it has been really hard for the importers. I do expect that Government could shed some more light on the recently announced measures to curb Gold imports.

Gold support is at $1,290 and $1,270. Resistance is at $1,320 and $1,349. $1300 should be the support zone and given the current mood of hunting stops, we are left flipping a coin on which direction the stop hunters could take.


Silver support is at $20.00 and $19.75, resistance is at $20.40 and $20.70.

“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: "WAVES OF DISAPPOINTMENT FOR THE MARKET":

http://riddisiddhibullionsltd.blogspot.in/2013/08/waves-of-disappointment-for-market.html

WAVES OF DISAPPOINTMENT FOR THE MARKET

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

As we discussed last week that this week had a bundle of surprises for gold of which the US employment data was the biggest surprise. There were mixed sentiments in the market post the data release. Investors believed that the jobless claims would be much high compared to June.

Moreover Fed Chairman Bernanke's statement over the stimulus plan created even further confusion.

There was mystification in the market as the jobless claims were 326,000, below the forecast of 346,000 while the private sector ADP change in non- farm payroll came in at 200,000 well above the forecast 179,000.

A weaker-than-expected U.S. July jobs report and a fall in the dollar helped gold rebound from a drop of more than $25 an ounce during Friday’s session, but prices still marked the first weekly loss in four week.

Gold initially fell to a two week low at $1280 an ounce as encouraging US gross domestic product and factory activity data earlier in the week reduced the metal's appeal as an investment hedge.

It jumped about  2 percent from its session low after government data showed U.S. employers slowed their pace of hiring in July but the jobless rate fell anyway, easing fears that the U.S. central bank might imminently reduce its $85 billion monthly bond buy back stimulus.

Gold’s hard times have come from the view that easy money, which has weighed on the dollar and lifted gold in recent years, is going bye-bye sooner or later.

US jobs data is vital to the gold market after the US Federal Open Market Committee indicated that quantitative easing may continue until the unemployment rate falls to 6.5 percent. The Fed remains committed to purchasing $85 billion in new debt per month in an open-ended programme (QE3). Accommodative measures from the US central bank are supportive of commodity prices because extra liquidity tends to debase the dollar and create future inflationary risk.

I am optimistic over the long-term time frame. Targeting inflation, the Federal Reserve's inability to taper, and underlying problems in Europe will make sure precious metals will outperform down the stretch. The nonfarm payrolls data usually brings volatility to gold, but the metals just haven't had enough upside momentum to constitute a breakout, so till that time it will be wait and watch.

In other gold market news, China’s thirst for physical metal remains strong. Imports from Hong Kong at 105 tonnes in June were down slightly from 114 tonnes in May but this was still the fourth-biggest month on record, according to Macquarie, citing Hong Kong export data. Apparent demand from China at 835 tonnes is up more than 50 percent on last year, the broker estimates.

However demand from India has not picked up pace as there are no clarification over the RBI policies for gold and the government is trying to curb g0ld imports to rectify the CAD.

As far as the international markets are concerned, it’s going to be a light week for U.S. economic news, but globally, next week will include a few more central bank meetings including the Reserve Bank of Australia, which is expected to cut rates. The Bank of Japan is also meeting, but is not expected to make changes to monetary policy.  Chinese data slated for release include industrial production, retail sales, export data and inflation report.

Gold support is at $1,280 and $1,260. Resistance is at $1,320 and $1,340. Silver support is at $19.20 and $19.05, resistance is at $20.20 and $20.40.

In the domestic market gold is expected to move in the range of Rs.26,000 to Rs. 29,500 in the coming week.

“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 -

"Bundle of surprises for gold"

http://riddisiddhibullionsltd.blogspot.in/2013/07/bundle-of-surprises-for-gold.html

INDIA'S FIRST EVER GOLD PLATED BIKE LAUNCHED BY RSBL DIA JEWELS!

Presenting to you India's first ever gold plated bike.

This bike is India's first fully Gold Plated bike and decorated aesthetically with diamonds. The gorgeous Huma Qureshi herself was present at the inaugration and unleashed the bike.

This bike is available for display at the Times Glamour Exhibition at Hotel Shangri- La, Lower Parel,  from 26th- 28th July from 10am - 7pm ( Stall no 18.)


“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 -
"Bundle of surprises for gold"
http://riddisiddhibullionsltd.blogspot.in/2013/07/bundle-of-surprises-for-gold.html

BUNDLE OF SURPRISES FOR GOLD!

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

Currently the entire market is in a confused state of mind as far as gold is concerned.
The market has split in two parts. Some say gold will rise while the others take an opposite stand.

This week we came across some interesting figures in gold:

1. On Friday, gold was trading at $1340 - almost $160 higher than the three year low of 1179$ that it hit on June 28
2. Gold has risen consecutively for the third week until Friday and also its first three weeks rise since March.
3. On the other hand, in terms of value gold has also lost a fifth of its value as investors lost faith in gold.

Many buyers also indulged in profit-taking by cashing in from gold's Friday session high of 1340$.

Initially, Fed chairman Bernanke has stated that the Fed may scale back its $85 billion monthly bond purchases. But now there is no clarity on the timeline for this activity as he further states that scaling back of the stimulus program depends on the recovery of the US economy.

The market now digests news that Russia, Ukraine and Azerbaijan were among eight countries that increased their gold holdings in June, data from the International Monetary Fund showed, while Turkey, Germany and seven other countries shed some of their bullion.

As far as the Asian markets are considered, China's gold demand could hit a record 1,000 tonnes this year, the World Gold Council said on Thursday, which means it would overtake India as the world's biggest bullion consumer.

But investors still have a mixed basket of feelings for gold. The appetite to carry large positions overnight may decline ahead of the next crucial week of data.

The U.S. Federal Reserve will announce its policy decision on Wednesday, as will the European Central Bank and Bank of England on Thursday — and on Friday, the U.S. Labour Department will release its widely watched monthly jobs report.

Now what we have to wait and see is that whether these vital reports will pull down gold or push it up.

Demand from India has taken a setback but is now expected to rise. Monsoons play a key role for demand coming in from rural areas. Also August marks the onset of the festive and marriage season. But since the government has taken measures to curb imports, in spite of physical demand there isn’t much gold available in the market to meet the demand. 

Gold support is at $1,321 and $1,307. Resistance is at $1,340 and $1,355. Silver support is at $20.78 and $19.40, resistance is at $20.70 and $20.90.


“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 Has Found A Support"
 http://riddisiddhibullionsltd.blogspot.in/2013/07/gold-has-found-support.html

INVITATION FOR TIMES GLAMOUR EXHIBITION BY RSBL DIA JEWELS

GOLD HAS FOUND A SUPPORT!!!

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

I am sure every single reader who follows Bullion market will agree when I say; this week belonged to Ben Bernanke’s statements. Bullion has slipped more than 22% this year on the Fed's hints that its monthly bond-buying program may end altogether by mid-2014.

Fed Chairman Ben Bernanke eased some market nerves by telling the U.S. Congress this week that the central bank's plans to scale back asset purchases later this year were not set in stone and depended on the strength of the economy.

He further stated that the U.S. central bank still expects to start scaling back bond purchases later in the year, but left open the option of changing that plan if needed. These statements were enough to support bullion prices and gold gained strength, even when the data flowing out of US has been considerably positive for the growth of economy. In July, jobless claims sharply fell by 24k thus reaching 334k. The US Philly Fed Index rose again from 12.5 in June to 19.8 in July. 

The recovery of the US economy is bound to pull down demand for gold and silver as safe haven investment option, which will then affect its prices.

I have a different perspective for the Gold price. Because of the lower gold prices now prevailing, which make many operating gold mines and projects uneconomic, we are already seeing fallout among producers with cutbacks, shutdowns and postponements.  As a result global gold production is likely to decline until there is a major pickup in the metal price.  

The lower price also discourages scrap sales which have thus been diminishing too.  Meanwhile the huge demand for physical gold seems to be continuing a pace. Russia has been the biggest gold buyer in the official sector in the past decade. A shift by central banks from major sellers of bullion to net buyers has been a major support to the gold market in recent years.

Gold took a stab at the $1,300/oz level earlier in the week, although it encountered strong resistance on approach of this level and has since sunk back lower. Gold has been receiving strong support in recent weeks from physical buying (especially from Chinese buyers); however, this physical buying is waning, and becomes especially thin on approach of $1,300/oz.

Physical demand for gold from the top consumer India remains dull due to stiff measures taken by the RBI to curb imports with a view to tackle the widening current account deficit. End of peak marriage season and weak domestic currency is also restricting buyers to be active but enduring good monsoon may provide firm support to prices later. 

According to the Indian Meteorological Department, the present state of the monsoon was 16% above a 50-year average during the June 1- July 16 period. A good monsoon brings strong harvests and given the fact that 70% of India’s Gold demand is from rural areas, should keep imports on a firm note going into year end.

Market participants were now awaiting a G20 meeting in Moscow over the weekend, which will likely focus on recent financial market volatility. Attention will then turn towards a series of crucial U.S. economic data, which analysts said will give more clues about the timing of the Fed's stimulus tapering.

Many traders and investors in Europe and North America are gearing up for their summer holidays, which could made for generally quieter, summer doldrums-type trading conditions until after the U.S. Labour Day holiday in early September.

Gold support is at $1,274 and $1,265. Resistance is at $1,305 and $1,320. Silver support is at $19.20 and $19.05, resistance is at $19.70 and $20.20. Platinum support is at $1,405 and $1,390. Resistance is at $1,418 and $1,437

In the domestic market the trade range for gold for the coming is between Rs. 26,000 to Rs. 28000 per 10 gram and for silver between Rs. 39000 to Rs. 40000 per kg.

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

~ Previous Blog: 
"Hold on to your Gold" 
 http://www.riddisiddhibullionsltd.blogspot.in/2013/07/hold-on-to-your-gold.html