Gold prices Fall after hitting key resistance! - RSBL

                                                               - Mr. Prithviraj Kothari, MD - RSBL

Another buying opportunity or it is a one such half hearted rally? A question that is pushing investors away from the precious metals complex. I would do my best to give you an idea by starting a gist of things that took place over the week.

The above picture depicts the Gold price range for the entire week (Picture taken from RSBL SPOT terminal). The week started off from where it closed, at a doorstep of the key resistance level US$1238. In almost all my previous blogs have emphasized on this particular level, that if broken, we can expect some change in trend. But it didn't. Gold continues to oscillate around USD $1200 with initial support sitting around this level.

Last week did show us, some spectacular movement in Silver where it broke key levels to enter in the range of US$17. Like Gold it did take a beating and US$17 does act as a short term base for the Silver metal. (image taken from RSBL SPOT terminal).


Key levels do make a lot of difference when the metal prices try to change a trend. But what caused this sudden drop:

1. U.S. housing starts jumped to their highest level in nearly 7 and a half years in April and building permits soared, providing hopeful signs for US economy gaining grounds over a dismal first quarter.

2. U.S. CPI data for April showed a +0.1% increase (expected: 0.1%) to mark the third monthly increase. The core CPI too read 0.3% (expected 0.2%), the largest increase since 3-4 years.

3. One of the most prominent news coming out of the week was from Federal Reserve Chair Janet Yellen. While speaking at the Greater Providence Chamber of Commerce on Friday, she addressed, ".... If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the Federal Funds target rate." A step to increase the rate hike is inversely proportional to gold price rise.


That goes without saying that U.S. data is highly influential for movements in precious metal complex prices as the other data that could have given a better support, weren't that influential:

1.  According to the latest CFTC data, hedge funds and money managers have hiked their net long silver stance to a near 10 month high and boosted their bullish gold bets to its biggest since March (+123k contracts, +77k prior week) for the week up to May 19.

2.  Greece cannot make debt repayments to the International Monetary Fund (IMF) next month unless it achieves a deal with creditors, its interior minister said on Sunday, the most explicit remarks yet from Athens about the likelihood of default if talks fail. European leaders told Greece on Friday to return to the negotiating table for "intensive work" to wrap up a reform agreement before cash runs out, sidestepping Athens' demand for a comprehensive, long-term solution to its troubles.

3. Iraqi forces recaptured territory from advancing Islamic State militants near the recently-fallen city of Ramadion Sunday, while in Syria the government said the Islamists had killed hundreds of people since capturing the town of Palmyra.

4. Russia's gold reserves rose to 40.1 million troy ounces as of May 1 compared with 39.8 million ounces a month earlier, the central bank said on Wednesday.

On the domestic front,  India could allow individuals deposit a minimum of 30 grams of gold with banks in return for interest payments to help monetize large quantities of the metal lying with households, a step that is aimed at cutting expensive imports. India released a draft documents of gold monetization plan on Tuesday.


Looking at the price jump from Silver, it does look a strong price comeback for me. I have always asked my readers to be invested in Silver. A metal that has multiple functionality.

With the FED meeting round the corner at Greek debt payment on June 5th, a lot more lies for the price movements in precious metals. Still the range play continues and strong conviction from Bears and Bulls is lacking.

It was a memorial day in US and spring bank holiday in UK, due to which price movements were muted yesterday.

TRADE RANGE:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1194 - $1238 an ounce	Rs.26,700 - Rs.28, 500 per 10g
SILVER	$16.70 - $18.00 an ounce	Rs.38,500 - Rs.42,000 per kg

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

- Previous blog - RSBL: GOLD CONTINUES TO RISE!
http://riddisiddhibullionsltd.blogspot.in/2015/05/rsbl-gold-continues-to-rise_17.html

RSBL: GOLD BELOW PEOPLE'S RADAR

                                                                                   -By Mr. Prithviraj Kothari, MD, RSBL

Currently, the gold markets seems to be more like a see saw as it remains directionless amid mixed economic data.

Gold got a little lift from its downward trend.  Prices gained 1% for the week as a whole, after revisions to US payrolls data, from March and February, sparked speculation that the Fed could refrain from hiking rates in the immediate future.

The members of the Fed’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

Gold remained quite stable and was fairly unchanged on Friday afternoon trading sessions after a lukewarm US jobs report failed to answer many of the questions surrounding the US economy.
The spot gold price of $1,185.00/1,185.80 per ounce was up $1.40 on the previous session’s close. It peaked at $1,193.80 shortly after the release of the US jobs report.

Let’s have a look at the data released during the week-

Employment Data- The US economy created 223,000 jobs in April, which was essentially in line with the 228,000 forecast, while the unemployment rate dropped to 5.4 percent from 5.5 percent in March. Average hourly earnings increased 0.1 percent, slightly below the 0.2 percent expected.
But payroll employment for February was revised from 264,000 to 266,000, and the change for March was revised from 126,000 to 85,000. With these revisions, employment gains in February and March combined were 39,000 lower than previously reported.
The report said that the unemployment rate remained unchanged at 5.4%. The participation rate was also little changed at 62.8% last month.

Since April 2014, the participation rate has remained within a narrow range of 62.7 percent to 62.9 percent. Wage growth saw a smaller than expected rise last month, increasing by three cents or 0.1% to $24.87.  Over the past 12 months, average hourly earnings have increased by 2.2 percent.
The average workweek remained unchanged at 34.5 hours. The weak wage growth was also “disappointing” and could keep the Federal Reserve postpone an eventual rate hike. A trend of firmer wage growth needs to be seen before “before Fed officials are ‘reasonably confident’ that inflation is on the path back to their target.



China- the Chinese trade surplus at $34.1 billion in March was up from $3.1 billion in February but below the expected $34.5 billion. As well, exports and imports both fell further than expected.

German- German industrial production disappointed at -0.5 percent as did the German trade balance at 19.3 billion euros. But Italian industrial production at 0.4 percent was better than expected.
ADP- In another precursor to today’s data, the ADP figure on Wednesday at 169,000 was below the forecast 199,000. A higher number today, however, could underpin a surge in the dollar and ultimately dampen any near-term prospects for gold – particularly while many investors are building the case for a delay to any interest-rate rises.


Dollar- The complex shrugged off a stronger dollar, which at 1.1200 against the euro this morning was building on gains of 0.66 percent on Thursday after US weekly jobless claims at 265,000 were better than the forecast 277,000.

Most financial markets were looking a little stretched, which could create volatility, ultimately supporting gold prices.
If the Federal Reserve is not that confident of a positive economic growth then it is quote expected that the first interest rate hike would be further postponed, which would further benefit gold.

Any negative data coming from US could drive up gold prices above $1200 an ounce.


In the week to come there are two major economic reports that ill have analysts glued to it.
1)    April Retail sales report to be released in Wednesday
2)    Regional manufacturing data for May to be released on Friday from New York

The retails sales reports is expected to rise 0.3% in April. Forecasts for the Empire State survey, show economists expect the index to rise to 5.2 this month, after falling to negative 1.2 in April.

If any of the reports come out negative then it would have a major impact on Fed rate hike expectations.
A weak retail sales number for April still isn’t going to stop the Fed from hiking in September.
Gold has fallen below people’s expectations and it will take something significant to get it back their trust. Until something unexpected happens, eventual rate hikes will continue to overhang the gold market.

Although gold is expected to remain range-bound next week, some analysts do see some positives that could help prices hover above the $1,200 an ounce level.
With little economic data to provide any solid direction for gold, some analysts are looking at outside markets for some guidance.

Apart from the two major US data reports analysts will be tracking the following-
⦁    Bank of England's (BoE) interest rate decision
⦁    GDP data from the UK, Germany and from the Eurozone

Any unexpected geopolitical event like The Greek crisis, for instance, could prop up prices if Athens and EU officials fail to reach a deal needed to release bailout money to the cash-strapped nation.

Analysts are unsure as to how gold prices will move next week and expect bullion to take its cues from the financial markets, where any sign of volatility could help boost the metal's safe-haven status.

TRADE RANGE

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1178- $1220 an ounce	Rs.26,500- Rs.27,500 per 10g
SILVER	$16.00- $17.20	Rs.36,000- Rs.39,500 per kg

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

- Previous blog -

"A Volatile Week Waits For Gold"

riddisiddhibullionsltd.blogspot.in/2015/05/rsbl-volatile-week-waits-for-gold.html

LOTS OFTHINGS TO SMILE ABOUT FOR PRECIOUS METALS

                                                                                                      - By Mr. Prithviraj Kothari, MD, RSBL

Though we did see some trading in precious metals on Jan 1st and 2nd, it was the week from 5th-9th Jan that was actually considered the first volatile trading week of 2015.

The main news doing the rounds for the week was from US- minutes of the recent FOMC meeting and the non-farms payroll report.

Apart from the macro reports there were the following financial reports that were out in the week.

• US non-manufacturing PMI, factory orders and trade balance monthly reports.
• Europe, MPC rate
• The EU flash CPI
• Unemployment report,
• GB’s manufacturing PMI
• Germany retail sales
• The French trade balance.
• In China, CPI and trade balance
• And several economic reports from Canada and Australia.

But of all the above mentioned reports, the most influential for gold was the unemployment report.


Gold was seen to have a positive start for the week as it firmed above $1200 an ounce on Tuesday hitting a near three-week high, as tumbling global equities and concerns over Greece's future in the euro zone prompted investors to seek safety in the metal.

The uncertainty behind the euro zone is once again tempting investors to run after gold as a safe haven asset. This risk off sentiment in the markets may help bullion be stable at its recent upswing.

Adding to this we also saw that holding in the world’s largest gold-backed exchange traded fund- the SPDR Gold trust, rose 0.25 per cent to 710.81 tonnes on Monday, though still near a six-year low. But this rise did reflect improving investor sentiments towards gold.

Bullion traded in a ranged manner for most part of the week while volatility was high on Friday. The Greenback jumped on likely positive economic reports from the US coming week whereas speculation increased that Fed might talk about raising interest rates as also anticipated from its monetary policy minutes report due next week and likely putting weight on Bullion.

We have always seen that precious metal markets and the equities markets are inversely related. This week too, we saw precious metals rising while equity market and commodity bellwethers including copper and oil hit fresh multi-year lows. After a disappointing end to 2014 gold is beginning to build a base above $1,200 an ounce – the metal advanced 1.2% to $1,223 an ounce in late trade Friday, the highest since December 11.

Gold's gains since hitting four-year lows early November now top 7% and is made more remarkable by the fact that the advance has come despite a rampant dollar which hit a 12-year high against major currencies yesterday and a Friday jobs report that confirmed that the US economic recovery remains on track.

Though the market players were a lot dependent on the non-farm payrolls report, it did not show much after effect on gold.

The gold price wobbled briefly but was ultimately unaffected by a non-farm payrolls report that, while mostly positive, was not potent enough to shift the Federal Reserve’s rate-rise timeline.

Total non-farm payroll employment rose by 252,000 in December, which beat the 241,000 forecast, while the unemployment rate declined to 5.6 percent, the US Bureau of Labor Statistics reported today.

Additionally, the change in total non-farm payroll employment for October was revised to 261,000 from 243,000 and the change for November was revised to 353,000 from 321,000.
The forthcoming labor reports are expected to create added significance as there are expectations that the Federal Reserve in on the verge of raising interest rates. The current market consensus is that rates will rise in mid-2015 although this is a moving target that will be dictated by jobs and inflation data.

As said earlier, too gold is one such commodity which takes price direction from macro developments rather than its own demand-supply wherein we feel downside risks for the commodity may stay in the near future



- Previous blog - "An Impressive start For Gold In 2015 But A Dull End"
http://riddisiddhibullionsltd.blogspot.in/2015/01/an-impressive-start-for-gold-in-2105.html

IS GOLD BEING COMPLETELY CONTROLLED BY THE DOLLAR?

by Mr. Prithviraj Kothari, MD, RSBL

Gold is being pressurised on multiple fronts-

• Equities
• U.S Dollar
• Chinese Demand for Gold
• European Union
• Japanese Bank

The equities markets is yet another reason that continues to pressurise gold. The stock market continues to look poised for another run higher into new high territory.  

Moreover investors have been more confident about the equities market as compared to gold and this has prolonged the ongoing lack of interest in gold and precious metals.

Apart from equities, The US dollar index too has been mounting pressure on gold. 

Dollar is at multi-year highs and does not appear headed for a reversal anytime soon. Ongoing deflationary pressures in the Euro zone along with economic struggles in Japan could potentially keep the greenback well-supported for some time. 

Gold has been dancing to the tunes of the U.S dollar and there is a big expectation that the U.S. economy will continue to grow and that will further boost the dollar. The notion of higher rates and economic strength is driving the dollar higher and gold lower. 

Surge in the dollar, in which gold is priced, has knocked the metal in recent days through key chart support at $1,180 an ounce -- the lowest level hit during last year's 28 percent plunge -- and $1,155 to its lowest since early 2010 at $1,137.40.

Initially $1150 was considered a good support level for gold but now that gold has crossed this level too,  technical analysts have said a test of the $1,000 level could be on the cards after a break of support at $1,155, a retracement level of its rally to record highs in 2011.

Moreover, robust demand for gold from China has been raising concerns amongst analysts and investors. It has been marked that China, the leading gold consumer of the world, usually buy lot of jewellery, bars and coins at dips. 

Chinese gold buyers, who in the past often took advantage of falling prices as a cheap way of buying into the yellow precious metal, are still biding their time. But this year demand from this country has also been low.

On Wednesday, gold touched the lowest since April 23, 2010. Gold sank about 2 percent on Wednesday to its lowest since mid-2010, potentially opening the way for a fall to $1,000 as a surging U.S. dollar weakened the investment case for non-yielding bullion.

Moreover,  the divergence between the U.S. and economies including the European Union and Japan is driving gains for the dollar. 

Gold futures fell, capping the longest slump since May 2013, as the dollar rally eroded the appeal of the precious metal as an alternative investment.

Gold prices ended the U.S. day session narrowly mixed Thursday and not far above this week’s 4.5-year lows. Trading was quieter ahead of Friday morning’s important U.S. jobs report.  Once the report was out and the key indicators were not as per expectations , precious metals rebounded. The spot gold price was last $8 higher at $1147.90/ $1,1468 an ounce in Thursdays close after spiking up to $15850 with the dollar last at 1.2374 against the euro.

The metal has lost around $100 an ounce over the past week, regenerating memories of a stunning two-day drop in 2013 that started a huge wave of divestment and an annual drop in gold prices after 12 consecutive years. 

Silver was down 3.6 percent at $15.43 , paring losses after hitting $15.13, its lowest since mid-2010.

On Thursday, spot gold prices gained after the US jobs data was out. Spot gold was $8 higher at $1147.90/1148.60 per ounce. The US jobs data stated that the US added just 214,000 jobs in October. This was down from 248,000 in September and also below the predicted 235,000. This gave some support to gold that been witnessing a tumble since quite some time now.

Next week brings more attention to euro zone and Chinese economic data, and the results may serve to underscore the monetary policy divergence between the U.S. and the rest of the world.

The would result in strengthening of the dollar thus further putting pressure on gold which would act completely opposite to gold price movements on Friday.

Moreover, several European countries will release their first third-quarter gross domestic product data, and China will release reports on industrial production growth, producer price index and export data.

Even as China Japan and the Euro zone shows that their economy has been growing as much slow pace and they need easy monetary policies, next week there will more outlook on policy divergence with the Federal Reserve needing to decide on the interest rate hike which many analysts believe wont come in March

While the longer-term trend remains down, gold will likely not go straight down. A short covering and/or relief rally will likely be soon in the coming weeks and gold could possibly test the breakdown level of $1183 before potentially heading lower again.

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 -

"Fed Sets The Rules For Gold"

http://riddisiddhibullionsltd.blogspot.in/2014/11/fed-sets-rules-for-gold.html

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A BOOSTER MONTH FOR GOLD?

by Mr. Prithviraj Kothari, MD, RSBL

Gold has established a support level at $1275 since March and prices have risen post this level. 

But, during the second half of March gold fell heavily from resistance around $1400 back down to a several week low near support at $1275.

As 2014 began, gold moved very well for the initial months towards a six month high near $1400 and has now plunged to levels closer to $1300.

As news of the escalating tensions in Middle East and Ukraine gained momentum, gold gained 5.4 per cent year due to rise in demand for this safe haven asset.

After hovering at around $1290 gold has plunged sharply over the last week and has broken through the support at $1275. 

It rallied a day ago however ran into further resistance at $1275 before falling lower to a four month low around $1258.  

Though gold has always been the markets favourite metal during uncertainties, but this time bullion investors continue to worry over strong U.S. economic data and its impact on the dollar.

This week we saw gold falling to its lowest level in three months, on Friday before it recovered modestly.

On Tuesday, Gold witnessed its greatest drop this week as the market broke through recent support at the $1,270 area.

Gold was  unable to capitalize on the news of the ECB’s interest rate cut and QE program as the euro weakness offset any support gold would have received from the new liquidity programs.

AS tensions lingered over Ukraine and a weak dollar forced bargain hunting, we saw gold prices rising on Wednesday after prices earlier fell to a two and a half month low.

The yellow metal was under pressure after the Russian President drew plans for a ceasefire but then regained its prices when the Ukraine prime minister later dismissed Russia's proposal.

The metal is under pressure as the euro languished near a 14-month low versus the dollar on Friday, struggling to regain its footing after the European Central Bank delivered a fresh round of stimulus and promised even more if needed.

Gold was standing firm above the $1270 level in Thursday as it was impacted by a weaker Euro and surging equities after the European Central Bank cut interest rates to record lows which was counteracted by lower than expected U.S. jobs data. 

The main refinancing rate was cut to 0.05 per cent from 0,,15 per cent and the ECB lowered the rate on bank overnight deposits to -0.20 percent. 

But what surprised the market was Fridays U.S. jobs data that gave gold a push thus helping it to return to modest levels overnight. 

The U.S. Labor Department said the economy created 142,000 jobs in August, far below expectations for a figure of over 200,000. The unemployment rate fell to 6.1%, a six-year low. The average pace of job creation this year is 215,000, up from 194,000 in 2014. 

Gold rose from an 11-week low, after U.S. employers added the fewest jobs this year, adding some pressure on the Federal Reserve to maintain lower interest rates.

Initially data reports had stated the US economy was back on the path of recovery but Fridays number were a bit disappointing .

A stronger greenback is a setback for dollar denominated gold as it makes the yellow metal more expensive for users of other currencies.

 Gold traders are likely to keep an eye on currency moves next week after the euro fell to a 14-month low versus the dollar Thursday, following the surprising move by the European Central Bank to cut interest rates and embark on a quantitative easing program.

Traders will also extend a warm welcome to the month of September as it has historically been the best performing month for gold giving an average return of 2.16 per cent since 1969.

A spike in retail demand in India is another reason for the typical bump.

We hope this month the be a booster for gold.

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 -

"Bull v/s Bear"

http://riddisiddhibullionsltd.blogspot.in/2014/08/bull-vs-bear.html

Geopolitical cover for GOLD!

                                                        - Mr. Prithviraj Kothari, MD, RSBL

Till 2012, gold was considered as the highest return generating asset in its class. From December 2008 - June 2011 bullion climbed 70 per cent as the Fed bought debt and held borrowing costs near zero percent to spur economic growth after the recession. Prices ended the 12-year bull run last year as inflation remained low and on concern that the U.S. central bank would slow the pace of monetary stimulus.

Lately gold has been abandoned by many as investors seem to be captivated by other assets like equities. The equity market continues to attract money as people expect that the economy will improve further.

Though gold has risen lately, many investors believe that this price rise won't last for long and any easing of the geopolitical tension would bring gold prices down. It was these tensions that gave gold the all needed boost at the beginning of the week. Gold prices jumped 6.1 percent for the month, while recording a gain of 3 percent for the quarter ended June.

Gold was up on Monday and climbed to a three-month high on Tuesday as a softer dollar and escalating violence in Iraq increased the metal's appeal, boosting inflows into the top bullion-backed fund. Spot gold climbed to $1,332.10 an ounce, its highest since March 24 during the trading hours.

Post the release of employment data, gold tumbled as the nonfarm payrolls data was much stronger than expected. This data was released on Thursday as Friday was a holiday. The U.S. Labor Department said the U.S. added 288,000 jobs in June, with the unemployment rate falling to almost a six-year low of 6.1%. The headline figure was sharply above the consensus estimate of slightly more than 200,000 new jobs, while the jobless rate fell 0.2 basis point from last month’s 6.3%.

In addition, the government upwardly revised the May job figure to 224,000 from 217,000 and April job gains to 304,000 from 282,000.Wage gains remained as expected, up 0.2%, and the labour-force participation rate was also flat at 62.8%. US jobs data released Thursday supplied evidence that the country's economy is growing, with the unemployment rate nearing a six-year low.

As U.S. markets were closed in recognition of Independence Day, investors will have to wait until after the holiday long weekend to determine the full impact of Thursday’s much better-than-expected nonfarm payrolls report.

On Friday, gold prices rose as they were reinforced by mixed European shares and tensions in Iraq and Ukraine. But data indicating that the US economy is strengthening may soon reduce demand for the precious metal.

The yellow metal has benefited from its traditional haven status in recent months. However, when geopolitical tensions ease, less-committed investors are sure to exit; and one can expect gold to return to its downward trajectory witnessed since April last year.

Moreover, demand from two of the worlds largest consumers of gold has dampened in the recent months with slowdown in Chinese imports as well as continuing lacklustre performance by India. Customs duty of 10 per cent ad valorem and export obligation (80:20 scheme) have discouraged gold imports into India.

Meanwhile, a Bloomberg report indicated gold shipments into India may have plunged 77 percent in the first half amid government restrictions such as higher taxes on bullion imports.

However Modi’s government has hinted that it will relax some of the restrictions. Loosening those restrictions could help to revive Indian gold demand and further push gold prices higher. The next big event on the domestic front is the First Budget of the new government to go live on 10th July, 2014.

Meanwhile we expect gold and silver to trade in the following prices range:

METAL	INTERNATIONAL	DOMESTIC - RSBL BENCHMARK PRICE
GOLD	$1291 - $1345  an ounce	INR 27,500 - INR 29,500  per 10 gm
SILVER	$20.20 - $22.00  an ounce	INR 43,000 - INR 47,500  per kg

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 - "Halfway through 2014...But where is gold heading for??"

http://www.riddisiddhibullionsltd.blogspot.in/2014/06/half-way-through-2014but-where-is-gold.html

HALF WAY THROUGH 2014...BUT WHERE IS GOLD HEADING FOR?

                                                     - Mr. Prithviraj Kothari, MD, RSBL              

We are half way through 2014 and the market is still confused whether gold is showing bullish trends or bearish. But lately, gold has been behaving in such a pattern that it would be difficult for anyone to give "a" particular market trend.


                                  

At the beginning of 2014 it was the exorbitant demand for gold from China that kept gold prices high. Then came in the deteriorating weather conditions in US and political uncertainty in the Euro Zone that kept pushing gold prices even higher. Come in March and the tables tuned for the yellow metal. Gold prices dropped over developing US economy and statement released by the Fed that they may end the massive bond buying program by the end of 2014. Then came in the Ukraine crisis which proved to be vital for gold. May was once again a bumpy ride for gold as it was pulled between the escalating tensions in Russia on one side and a positive US economy on the other.

Simmering geopolitical tensions over Ukraine and Iraq have boosted gold's safe-haven appeal so far this year. Still, analysts are bearish on gold's outlook because of possible dollar strength, an equities rally and tame inflation.

Last week gold posted its biggest weekly rise in three months as the threat of escalating tensions in Iraq and the Federal Reserve's lack of commitment to raising interest rates sparked a wave of short covering

The recent crisis occurring in Iraq has boosted gold prices. Sunni tribes have joined a militant takeover of northern Iraq. Oil prices were pushed to 9-month highs last week, with a consequent knock-on effect on gold.

For a better analysis of gold prices movements over the week, I have given gold's performance on a daily basis below.

MONDAY- Following previous weeks trends, this week too, gold began on a positive note due to weak US equities and increasing violence in Iraq. Gold was hovering around $1321.90. As Iran's supreme leader accused the United States on Sunday of trying to retake control of Iraq by exploiting sectarian rivalries and as Sunni insurgents drove toward Baghdad from new strongholds along the Syrian border, we saw gold extending last week's 3 per cent gains over these issues.

TUESDAY- Following suit, Gold hit a two-month high on Tuesday since mid-March as a drop in European shares after soft German economic data and a weaker dollar helped the metal build on last week's gains. Spot gold hit a peak of $1,325.70 and was up 0.5 percent at $1,323.80 an ounce during the trading sessions.

WEDNESDAY- Gold fell on Wednesday as physical buying dried up after prices jumped to their highest level in two months in the previous session. Gold dipped $3.31 an ounce to $1,314.29 after rising to $1,325.90 on Tuesday, its strongest since April 15. It has gained 9 percent so far this year.

THURSDAY- Gold fell on Thursday as upbeat U.S. jobless claims data and weaker crude oil prices sent prices below a two-month high hit earlier this week. Another report on Thursday showed the number of Americans seeking unemployment benefits fell again last week.

Gold's appeal as a hedge has definitely declined as the market is under a strong belief of an expanding economy. Recent gains in gold were mainly motivated by short covering as speculators aggressively bought back their bearish bets. Fed President James Bullard stated that the interest rates increases could happen soon. This further got gold prices under pressure. Also negative, was a drop in crude oil prices as fears eased over export disruption from war-ravaged Iraq.

FRIDAY- Friday too, gold prices declined. Nearly flat US equities and a slightly lower dollar failed to inspire gold, when data showed US consumer sentiment rose in June as consumers remained optimistic and the sluggish first quarter was due to difficult winter conditions.


Traders warned that bullion could see some additional choppy trading amid concerns over weak imports in top consumer China. Hong Kong released import/export statistics, which showed a drop of net Chinese Gold imports to 52.3 tons, which is the lowest number since January 2013. China's total gold imports from Hong Kong dropped 17 percent to 67.233 tonnes in May from 80.817 tonnes in April, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

There are several factors that could affect this number:

• The rising gold prices have dampened the demand for gold
• The ongoing talks about trade finance, where Gold was apparently used in the past to borrow cheaper currency
• A liquidation of Gold as collateral
• Direct Gold imports into China are said to be growing, as there is no Chinese official data released such imports would be difficult to track.

Moreover, India has witnessed a weak start to the monsoon. This may curb the domestic gold demand, as 70 per cent of the gold demand in India comes from the rural areas that are dependent on agriculture as its main source of income. The majority of Indian gold purchases are made in the agricultural sector, and a good harvest typically raises income levels and translates into greater bullion demand. We still await July and August and hope for better monsoons.

Meanwhile we expect gold and silver to trade in the following prices range:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1293 - $1340 an ounce	INR 28,000 - INR 29,500 per 10 gm
SILVER	$20.40 - $22.00 an ounce	INR 44,000 - INR 49,000 per kg

- Previous blog -
"Iraq to Ukraine- Safe Haven Boost"
http://www.riddisiddhibullionsltd.blogspot.in/2014/06/iraq-to-ukraine-safe-haven-boost.html