GOLD ON A SEE SAW

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

The year began on a positive note for gold after a terribly weak performance in 2013. By 2014, Mid February gold was once again enjoying the status of the most sought after metal, as we saw the yellow metal moving on the road of recovery.

Now gold is being pulled between bullish and bearish factors. Gold prices peaked in march, but the pull back and consolidation is now lasting a bit too long to be considered healthy. Moreover, ETF redemptions are on the rise and this has given rise to the bearish pull for gold. Gold is now sitting on a see saw and is caught between US recovery on one side and the rising Geo-political tensions on the other.

Russian crisis brings along with it a strong bullish background for gold. But at the same time the global economic development, has shifted investors focus from gold to equities and pushed gold into the bear market. In addition, other markets are doing better and you need look no further than the fact that US equities are setting fresh record highs and corporate confidence seems to be picking up, as there has been a revival in M&A activity. Strong equities are therefore raising the opportunity cost of holding Gold.

Last year gold did disappoint many investors but still it has not been pushed out of the market. It's a temporary phase and key market players still believe that gold will soon begin to rally.

As such, we think the market could quickly get interested in Gold again if other markets start to correct, especially as Gold prices are much closer to their lows than highs. A relaxation in India’s import restrictions could be a bullish development, as could a pick-up in geopolitical tension. Nearly 70% reduction in Gold imports as compared to last year will surely please the new government with the reduction in CAD woes.

It's always stated that gold enjoys the status of a safe haven asset during times of uncertainty. Ukraine tensions have been behind much of gold's 7 percent rise this year. Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war. The decision, which contradicted the conciliatory tone set by Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart. While on Saturday, tensions were running at fever pitch in eastern Ukraine on the eve of an independence referendum, as rebels briefly held several Red Cross staff on suspicion of espionage. These rebels voted for self rule. Ukraine's acting President Oleksander Turchinov sad that those stand for self rule do not understand that it would mean complete destruction of the economy , social programme and life in general for the majority of the population in these regions.

But, many traders fear the gains would dissipate quickly once the situation is resolved. Many gold analysts have said that the precious metal has remained resilient the past few weeks as fundamentals remain negative for the asset, such as the Fed's commitment to continue to scale back economic stimulus.

Data released on Thursday stated that the number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating the labour market was strengthening despite a run-up in applications in prior weeks.

Overall, Gold posted second straight weekly decline as more strong U.S. data showed that the world's largest economy was recovering well, supportive of the Federal Reserve's stance to keep trimming monetary stimulus. Moreover, the European Central Bank stayed committed over leaving its main interest rates unchanged. Physical demand has also been muted despite the drop in prices, with many hoping that a stabilization in prices would bring back buyers.

Last year, Chinese demand for gold surged as many buyers entered the market at dips. That, along with strength in retail demand in Western markets, helped drive a 35 percent surge in physical investment last year to 47.1 million ounces and Jewellery consumption also rose 22 percent to 81.7 million ounces.

The Fed’s ongoing reduction in its bond purchases, easing concerns about fiscal situations on both sides of the Atlantic and low inflation are all headwinds for the yellow metal for the rest of 2014. This brief detention underscored jitters in the two regions of east Ukraine ahead of the disputed referendum likely to result in a new spike of Geo-political tensions.

We cannot then, underestimate gold. 

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 $1270 -$1310 and $18.20 - $20.50 respectively. While in the SPOT (delivery based) domestic markets Gold and Silver are expected in the range of INR 28,300 to 29,700 and INR 40,500 - 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 blog -

"Ukraine Reigns Over Gold Prices"

http://riddisiddhibullionsltd.blogspot.in/2014/05/ukraine-reigns-over-gold-prices.html

Gold Gains Momentum, Investors Gain Confidence!

- By Mr. Prithviraj Kothari, MD, RSBL

While gold gained momentum, investors gained confidence in gold. Gold spurred the longest price rally in six months. Initially gold was on low, but prices got pushed higher by the end of the week.

On Monday, gold fell to nearly a three week low as we witnessed outflows from the worlds biggest bullion backed Exchange Traded Fund (ETF). Moreover, a lack of a further increase in geopolitical tension also prompted selling in gold. Last week, the fund's outflows totalled 9.3 tonnes, erasing all the gains made in the year.  

Gold fell to its lowest since mid-February on Tuesday after U.S. housing data beat expectations, boosting confidence in the U.S. economic recovery and lifting stock markets, which hurt gold's appeal as an alternative investment. 

On Wednesday, gold had firmed its position above a two and a half month low of $1,268.24 due to firmer equities and a weaker technical picture that had triggered strong selling,

However, the tables turned on Thursday as rising geopolitical tensions and options related buying helped gold in moving in the opposite direction and reverse the early sharp losses

Bullion prices mounted after Ukrainian forces killed up to five pro-Moscow rebels as they closed in on the separatists' military stronghold in the east. 

In March, bullion Prices reached a 6 month high after Russia took over Crimea. But then it fell almost 9 percent on signs that peace would return. But once again Hostilities this week are bringing back the gold bulls. Tensions between Moscow and Western powers over Ukraine are lending gold support, but it remains in a somewhat fragile situation as interest from long-term investors is still absent.

Though on the basis of the economic indicators of the US economy, there were signs of recovery, the conflict between Russia and Ukraine spurred traders to unwind bets on a drop. The metal has risen 8.2 percent in 2014 even though economic recovery has pushed the Federal Reserve to reduce its monetary easing. This tapering was responsible behind the 28 per cent drop in gold in 2013 because if the Fed would scale back its bond purchase then gold would lose its appeal of being an inflation hedge tool.

Apart from the Ukraine crisis, another big news that made rounds in the market was that major international banks were jettisoning their commodities business.*

Around 20 US based investors have filed antitrust claims against major leading banks over the past two months.  These investors have accused Barclay, Deutsche Bank, HSBC, Bank of Nova Scotia and Societe Generale of colluding to manipulate the gold price.

The court cases are complicating negotiations that Deutsche Bank had started with potential buyers after it announced in January that it was putting its seat at the fix up for sale, a source with knowledge of the matter said. In case any such decision is taking of discontinuing the commodity trading wings business then this will definitely calm down the price volatility of bullion prices.

Another fact the will play a major role in determining the gold prices is the worldwide demand from gold. CHINA- Chinese demand for gold is set to increase from the current level of 1,132 tonnes a year to 1,350 by 2017, cementing its place as the world’s largest gold market. According to report published by the World Gold Council, entitled:  ‘China’s gold market: progress and prospects’, private demand for gold in China will see sustained growth over the next four years.

China does not report any trade numbers. The only source of procuring these gold export numbers to China is through Hong Kong as its the prime medium of gold for China. But now that China has allowed Gold imports via Beijing, it may threaten Hong Kong’s export numbers to mainland.

INDIA- Physical demand in India over the next week is expected to rise as the country welcomes the auspicious occasion of Akshaya Tritiya on may 2. This could result in a slight pickup in gold demand , but with the heavy tariffs placed on gold, there are questions on how much buying will actually occur.

UK- Demand for gold from UK is tend to augment as investors are saving up for retirement with the U.K.’s Financial Conduct Authority considering adding bullion to its list of “standard assets. Last year, the FCA was replaced by The Financial Services Authority to oversee market regulation. They published a consultation paper with the list in 2012, asking whether other types of investment should be added. Various forms like Cash, bonds and exchange-traded commodities were included but  physical gold was not. There are expectations that gold may be added to the list by June. If any such possibility materializes then demand for gold from UK will definitely rise as gold is on the radar of more mainstream investors. 

Next week is full of revelation for gold as the market moving and price deterring event will unwrap for gold. With a Federal Reserve monetary policy meeting and April non-farm payrolls data set for release; additionally, any change in the standoff between Russia and Ukraine has the ability to move markets.

Moreover, The Federal Open Market Committee meets Tuesday and Wednesday, and economists said they expect the Fed to announce another $10 billion-a-month cut in its quantitative easing program, and on Friday the Labor Department is scheduled to release its April non-farm payrolls data.

Gold traders will have to be nimble next week as these headline-making events could cause volatile market action. Because of the uncertainty over the Ukraine situation, several gold-market players believe that gold prices will once again move upwards.

*source- http://in.reuters.com/

- Previous blog - "Gold Prices Off Route"

http://www.riddisiddhibullionsltd.blogspot.in/2014/04/gold-prices-of-route.html

LOTS OF IF's AND BUT's FOR GOLD

-by Mr. Prithviraj Kothari,MD,RSBL

Last year it was Syria...This year it’s Ukraine. Geopolitical tensions have always been a booster for gold and other precious metals and it has helped gold in enjoying its safe haven appeal as it always does in times of economic turmoil recession, inflation etc.

This week gold remained on the top and showed some interesting record movements too.

Gold prices bounced on Friday during the trading hours, rising 3.3 per cent from last week's close at 1385$ per ounce, a level not witnessed since early September. Gold sailed through US$1,380 and was on course for a sixth successive week of gains as the situation in Ukraine showed no signs of easing.

Apart from the Ukraine Crisis deceleration of Chinese economic growth has dampened the investors risk appetites. Retail Sales and Industrial output figures were out this week and it has been quite disappointing. According to MNI, a Chinese Government source said not to panic if 1Q GDP would be below target. This once again raised the question that the all so hyped China and its economy and its hunger for gold was just a temporary thing? Well we need to wait and watch

This uncertainty surrounding the rising economies has to an extent eroded investors confidence. The catalyst for a shift in risk sentiment remains to be seen as the market shrugged off positive US data overnight, suggesting the potential for a lacklustre reaction to upcoming Consumer Confidence figures.

Gold continues to be well supported as Russia is seemingly un-phased by the prospect of sanctions from the West. The population in the Crimea province votes this weekend on whether to secede from the Ukraine, with the way the ballot has been set out seemingly certain to guarantee that is the outcome say observers. It is likely to be followed by the US and its allies imposing sanctions on Russia on Monday, potentially starting a round of tit-for-tat retaliation with serious implications for financial markets and the US dollar.

The last time gold had such a gold run was in July/August 2011, soon after which the metal started its climb to the all-time record high of $1,921 per troy ounce.

Looking at the week ahead, if emerging markets fears abate and US data continues to improve; traders may ease out of safe-haven plays like US Treasuries. The resulting rise in yields would likely help the greenback to recover some lost ground, which in turn would weigh on gold prices. 

If situation in Ukraine results in unrest or rioting, gold prices would breach $1,400. But if the Ukrainian situation either resolves itself in the coming days or stabilizes to the current standoff and does not further escalate gold could sell off quickly — returning towards $1,300 an ounce. 

Lots of ifs and buts for the Gold next move! But one thing is clear, safe haven appeal of Gold will always be there.

For the week gold is expected to range between $1364-$1420 an ounce in the international market and Rs.29,500-Rs.31,500 per 10 gram in the domestic market.

On the other hand, silver is expected to range between $20.55-$22.00 and Rs.45,000-Rs.48,00 in the international and domestic markets respectively.

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 Trapped?"

http://www.riddisiddhibullionsltd.blogspot.in/2014/03/gold-trapped.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

Pause - Gold price rally!

Gold price rally has taken a pause for the first time this year. Fed’s stimulus cut and Chinese New Year holidays have created a major impact on the yellow metal prices.  

                                     

         

Fed expectedly tapered $10 billion to $65 billion a month, second such move by central bank to cut back on the stimulus program. In a unanimous decision at the meeting the move was taken, saying labour market showed further improvement and household spending, as well as investment had advanced more quickly in recent months. What followed with this announcement was the rise of bears. Gold fell around 2 percent on Thursday, its biggest one-day drop in more than a month. Signs of faster U.S. economic growth have increased bets that the Federal Reserve would look forward to end the QE3 programme as soon as possible. Moreover when you do not have the largest physical buyer in the market, finding some support is obviously difficult. It shows how much important is Chinese demand for Gold. This was supported by sharp emerging market sell off, which had boosted gold prices earlier this week, hitting gold's safe-haven appeal.

Gold ETF flows were pretty mixed, with the SPDR GLD holdings rising 2.1 tonnes, while ZKB holdings fell 1.9 tonnes and Deutsche Bank's ETF lost 970 kilos.

I did note that U.S. economy grew by a respectable 3.2% annualized in Q4 but the reduction of China’s HSBC Final Manufacturing PMI data to 49.5 in January and Manufacturing PMI to 50.5, indicates that the global economy is still fragile. Nevertheless, as the stock prices stabilized and the emerging countries vowed to stem the currency panic, the U.S. Dollar rallied while the gold prices fell. The U.S. dollar strengthened and the S&P 500 stock market index rose more than 1 percent after data showed that robust household spending and rising exports have supported US growth.

In other precious metals, platinum fell nearly 2 percent, tracking losses in gold.  Platinum mining in South Africa, which accounts for 70 percent of global supplies of the metal, has been curbed since the Association of Mineworkers and Construction Union called its members on strike on Jan. 23 at Anglo American Platinum, Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc. (LMI) The AMCU is dominant in platinum, with more than 70,000 members, and is demanding that basic wages be more than doubled to 12,500 rand a month. Talks aimed at resolving the dispute resume tomorrow, in Pretoria. While the negotiations have failed to achieve “tangible progress,” the companies and the union were pursuing a settlement, AMCU treasurer Jimmy Gama said. Even with all this, metal drew little support from the news that South Africa's AMCU union had rejected a 9 percent wage offer from leading platinum producers.

As expected the bears started to take the overhand in Silver during the same sell off. It touched a low of 19 USD levels, which had been the lower band since November. It does act as a major support for the metal.

Despite Thursday's pullback, gold was still 3 percent higher year to date. Gold has outperformed the S&P 500 by 10.2% this year. 

The Emerging market’s currency sell off that happened this week makes me think that the need for alternative currency will never diminish. With a weaker currency, Governments across the world are trying to boost their economic growth wherein lower inflation levels eventually grow when the monetary debasement continues. This leads to devaluation of local currency and in turn Gold prices shoot up in local markets as people look forward to protect their wealth in this alternative currency. This phenomenon is slowly but steadily being witnessed across various countries around the globe and specially emerging markets.

For the first week of February, we need to watch out for US ISM Manufacturing PMI on Feb 3, US ADP Non-Farm Employment Change and US ISM Non-Manufacturing PMI on Feb 5, the U.K. and the ECB monetary policy decisions on Feb. 6 as well as the January U.S. non-farm payrolls and unemployment rate on Feb. 7.

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 - "THE YELLOW METAL IS ALL GOING GREEN"

http://riddisiddhibullionsltd.blogspot.in/2014/01/the-yellow-metal-is-all-going-green.html

GOLD ROLLING AROUND PAY ROLL

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

New Year’s first full week began with a green note for gold where the weakness on Wall Street widened bullions rally.

However, Gold fell on Tuesday and Wednesday.  An expectation of a positive US jobs data (slated to release on 10th Jan), compelled investors and traders to believe that the Federal Reserve will continue to scale back its monetary stimulus on the pillars of a recovering economy.

After a consecutive fall of two days, gold prices gained momentum on Thursday ahead of the key U.S. nonfarm payrolls report. This report was a deciding factor for the Fed whether it will continue its tapering. The change in private payroll data by ADP on Wednesday showed a strong increase by 238,000 and also exceeded the prior figure of 215,000 for the month of November.

In either ways, traders were ready for some volatility in precious metals.

Finally the tussle between bears and bulls end with the release of Non-Farm Employment Change data released on Friday where Bulls gained an upper hand. A weaker than expected US jobs data supported the fact that US Federal Reserve would now go slow on its tapering.

US nonfarm payrolls rose just 74,000 in December, the smallest increase in nearly three years and far below the 196,000 forecast by economists. The unemployment rate fell 0.3 percentage points to 6.7%.

The year began on a good note for gold and it has performed well till date. Since the beginning of 2014, gold has rallied 3 per cent compared to its 28 per cent loss in 2013, which has been one of the worst performing years for gold.

Although gold is consolidating in the $1,215 to $1,250 range, my technical view sees that internationally the metal is a sell into rallies. The FOMC minutes from the December FOMC meeting, released Thursday morning IST, provided little information that the market has not already priced in. Therefore, ETF holdings have likely to continue their downward trend for the time being while the Fed slows its asset purchases.

The current market trend seen in the first two weeks of 2014:

Global ETF holdings keep falling, losing another 2moz in the last three weeks to reach 56.9moz. - The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Share, reported its first outflow of 2014, of 1.5 tonnes, taking its holdings to a 5 year low of 793.21 tonnes

Meanwhile SGE volumes have picked up ahead of Chinese New Year on 31 January. Trading volumes on the SGE, a physical platform, have also picked up. Volumes hit an eight-month high on Monday, but the buying pace has now slowed from that peak The Chinese New Year, which will be celebrated on Jan. 31, typically prompts a spurt in bullion purchases as the precious metal is bought for good fortune and given as gifts. Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange (SGE) climbed to over $20 an ounce this week, up from single digit premiums late last year. 

Indian premiums over spot remain high and will likely continue until the end of the wedding season in Feb­ruary or until the Indian government brings about a change in policies

Meanwhile, Ben Bernanke, who steps down as head of the Fed at the end of January, gave an upbeat assessment on Friday of the U.S. economy in coming quarters, though he did temper the good news in housing, finance and fiscal policies by repeating that the overall recovery clearly remains incomplete.

Gold support is at $1,233 and $1,227. Resistance is at $1,262 and $1,275.

Silver support is at $19.30 and $19.75. Resistance is at $20.42 and $20.54.

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 -

"Precious Sweet Revenge- Whats Next??"

http://www.riddisiddhibullionsltd.blogspot.in/2014/01/precious-sweet-revenge.html

2013-2014 Gold view by Prithviraj Kothari - ET now (+playlist)

2013's LAST BLOG!!!!

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

As I begin to write the last blog of 2013, I would like to thank all my readers, followers and friends who have been through this journey. Though it has been just two years since I started my blog, your extended support and constant following has made sure that I do not take a break. 

It is for the first time in 30 years that gold is heading for a negative return. In fact 2013 has been one of the worst years for gold. With the end of 2013, we also see an end to a 12 year rally. This decline was driven by low interest rates and  certain steps taken by global central banks to foster the economy. 

Gold was once again seen trading at 1185 (the low it reached in June 2013). This drop came in when the Fed announced its tapering plan. This was the same reason that had plunged gold prices in June when the Fed had for the very first time stated that it would soon taper its QE. Though that time there was a lot of uncertainty prevailing in the market as to how and when the scaling back would be executed, until Fed finally implemented the tapering plan in December.

Gold traded flat around $1,200 an ounce on Tuesday as activity slowed before Christmas, while signs of a steady U.S. economic recovery could deter investor interest as the metal heads for its biggest annual loss in 32 years.

U.S. economic data on Monday showed consumer spending rose in November at the fastest pace since June, while consumer sentiment hit a five-month high heading into the year-end.

The euro zone crisis has more or less stabilised, global economy seemed to be improving and the US too plans to taper its QE. Though all this makes gold a bit unfavourable in the year to come there are loyal investors who have still not lost faith in gold. 

A risk of deflation could push gold prices higher in 2014. Although perceived by many as a negative for gold such worries could exacerbate the debt problems of weaker euro zone economies and force the European Central Bank to loosen monetary policy further, boosting gold prices.

Another supporting factor for gold could be the Fed's continued asset purchase program. Although the central bank has announced a small taper, it will still be pumping large amounts of stimulus into the economy, which should be supportive for gold. 

Most importantly China’s support will always be crucial to Gold. Frankly, Gold is carrying along with it a big burden of uncertainty in 2014.

As the economy improves, Silver and Platinum demand will surely rise faster as compared to Gold. With the current policies by the central banks across the world, these precious metals are to be watched out for the year 2014. 

Apparently, the poor performance in 2013 has left the precious metals looking less attractive compared to other assets, including equities. But, Gold should and always be considered as a safe haven asset. Being in this industry for so many years, I would always recommend some part of portfolio allocation towards Gold and other precious metals.

The trade range for gold is expcted to be around Rs. 29,000- Rs. 30,000 per 10 gram in the domestic 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 -
"Gold- Past Performance, Present Prices & Potential Predictions"
http://www.riddisiddhibullionsltd.blogspot.in/2013/12/gold-past-performance-present-prices.html