AN UPBEAT DOLLAR BEATS UP GOLD

- By Mr. Prithviraj Kothari, MD, RSBL

 

As the outlook for the U.S dollar remained upbeat, we saw a bearish sentiment in the market for gold. Many investors expect that an interest rate hike by the U.S Federal Reserve will come sometime in 2015 was responsible for this sentiment. 

The Fed had stated that before it would tighten its policy, after it sees acceleration in wage growth. But at the same time the Fed had also made it clear in the January minutes in recent weeks that rate hikes could occur even if inflation is floundering. For now, as the Fed doesn’t consider the drop in inflation anything more than transitory, it’s unlikely that the wage figures ruffle too many feathers, at least for the U.S. Dollar.

Apart from the interest rate hike, there is also a great deal of uncertainty about the geopolitical and macroeconomic situation and gold continues to react to development in this regards.
The strong greenback has pushed gold prices below the key psychological level of $1,200 an ounce and has pushed the euro to a 12-year low

Both the euro and gold prices remain under significant pressure from the U.S. dollar.
The U.S. dollar has strengthened, particularly against the euro and that is negative for gold.

Though gold ended down for the week, it did show modest gains on Thursday afternoon although in euro terms it struck a near-one-month high following a speech from ECB president Mario Draghi on the bank’s QE programme.

An optimistic Draghi today outlined the ECB’s bond-purchasing plan that will begin on March 9. But he set a floor for bond purchases at the ECB’s deposit rate of -0.2 percent, following questions regarding to the extent to which the central bank will dabble with negative-yielding bonds.

As the week ended, gold prices fell to a two month low on Friday following a strong U.S non-farm payrolls report. Details are as following-

• US total non-farm payroll employment increased by 295,000 in February and the unemployment rate edged down to 5.5 percent from 5.7 percent, which was significantly better than the forecast for the addition of 240,000 jobs and a 5.6-percent unemployment rate.
• Labor reports over the next several months will take on added significance because the Federal Reserve is on the verge of raising interest rates.

This reading put added pressure on the Federal Reserve to raise interest rates in the near term.


By Friday afternoon prices had hit a session low of $1,162.90 an ounce and settled only marginally higher at $1,164.30, down 2.6% for the day. The gold ended the week at its lowest point since Dec. 1, shedding 4% since Monday.
Many cautious investors displayed a large scale pullout, looking for refuge in investment opportunities like stock, assuming bullish prospects for equity markets would continue in emerging markets like India.

Currently investment in equities looks more fruitful. Many investors are seeking shelter under this avenue as it is expected to give better returns than bullion; hence many investors sold their holding in gold to divert funds into equities in markets like India.
The jobs report definitely added fuel to fire for those who are expecting higher interest rates. Gold’s fall today shows that there is faith in the interest rate underpinning the dollar right now.

Strengthening dollar which is trading at its 11 year peak because of optimism in the US economy will be a strong factor for gold prices to come down in this month.

Although most of the market focus will revolve around the U.S. dollar and interest expectations, the two economic reports that will garner investors’ attention are-

•  February retail sales
•  Producer inflation data

The question now on everyone’s mind is just how low gold prices will go next week, in what is a quiet week for U.S. economic data. Most analysts expect that markets will spend most of next week preparing for the Federal Reserve monetary policy meeting on March 18.
Any hike by the Fed, which has kept rates near zero since 2008 to stimulate the U.S. economy, could hurt demand for bullion, a non-interest-bearing asset. If there is no physical demand then the market could be vulnerable.

The current strategy that market players should follow is “BUY ON DIPS”. 

Following trade range could possibly give an idea for the same.

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1130-$1200 an ounce	Rs.25,700- Rs.27,000 per 10gm
SILVER	$15.40-$ 17.00 an ounce	Rs.35,000- Rs.38,000 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 -
"Overall A Decent Budget For Gems & Jewellery Industry"

http://riddisiddhibullionsltd.blogspot.in/2015/02/overall-decent-budget-for-gems.html

TOO MANY SURPRISES FOR GOLD IN THE WEEK TO COME

                                                                                                            - By Mr. Prithviraj Kothari, MD, RSBL

Finally, there are other drivers apart from deflation and dollar that have been influencing gold prices this week. After a long time gold has found supporting drivers such as negative interest rate and market turmoil and uncertainty.

Finally gold managed to reach a high of $1300 on Thursday and then lost a little pace and settled at $1293 on Friday.

It’s just been the third week of 2015 and gold is already 9 per cent up and because of its strong momentum, gold prices do have room to move higher and a consolidation period is expected at some time soon.


Following influential factors played a significant role for precious metals this week-

ECB- On Thursday, the ECB announced the launch of an expanded asset purchase program with combined monthly purchases of 60 billion euros or $70 billion, through end September 2016.
ECB President Mario Draghi said that this stimulus package will help in pushing inflation back towards 2 per cent during this year.
However, concerns about the global economy sustained gold's safe haven appeal, keeping prices afloat.

SPDR- Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 740.45 tons on Friday from its previous. 

US Economic Indicators- a Conference Board on Friday showed positive contributions from a majority of its components and stated that U.S economic indicators rose slightly more than anticipated in December.
This did influence gold prices but not to a great extent.

Eurozone- Eurozone private sector grew at the fastest pace in five months in January, flash survey data from Market Economics showed Friday. The composite output index rose more-than-expected to a five-month high of 52.2 in January from 51.4 in December. Economists had forecast the index to rise nominally to 51.7.

Gold prices ended modestly lower on Friday, on the above mentioned mixed global economic data with the dollar trending sharply higher even as the euro slipped significantly after the European Central Bank announced a massive, larger than expected monetary stimulus.
Gold soared to 5-month highs just above $1300 earlier in the week, but a swiftly rising dollar saddened the rally in bullion.

The coming week holds a lot of surprises for gold- Some of the noted ones are:

FED- The precious metals market will be focused on the Fed and their upcoming monetary policy statement on Wednesday. But markets believer that unlike the Bank of Canada and the European Central Bank, which both shocked markets this week, the Fed is unlikely to announce any major surprises.
The dollar is expected to be bullish as the Fed is not expected to shift their monetary policy outlook because currently the Fed remains one of the only central banks that are in any position to eventually raise rates.

Dollar- Next week, the gold market should re-establish its negative correlation with the U.S. dollar, and that steady rise in the greenback would be negative for gold.
However, the report also suggested that recent changes made to the European Central Bank's monetary policy may support precious metals prices.

Chinese Slowdown- Although China's economic slowdown can also hurt metals given the country accounts for almost half of world metal consumption,a sharp slowdown of the Chinese economy remains a low probability scenario at present.

Greece Elections- Traders are likely to turn to Sunday's election in Greece. Polls show the opposition Syriza party widening its lead to about 6% over the governing conservatives. If they get it then it raises the suspect that the Euro will likely open weaker again on Monday, helping gold in the process. The potential of more economic uncertainty and positive chart patterns provides a constructive backdrop for further gains in gold.

U.S. interest rates - "While downward pressure on precious metal prices is expected to become more pronounced when the U.S. Federal Reserve raises interest rates (expected in mid-2015), the European Central Bank's plan to purchase €60 billion of assets per month through September 2016 may put upward.

People are coming to the conclusion that while the ECB is getting more expansionary, the Fed may be forced to be less restrictive because of the headwinds to inflation from the drop in oil prices, which can trigger some delay in interest rate hikes and would be positive for gold.
To conclude, Low inflation, global risks, and firmer physical demand are all modest positives for gold and silver.

- Previous blog - "All Notions To See Gold at $800 Destroyed"

http://riddisiddhibullionsltd.blogspot.in/2015/01/all-notions-to-see-gold-at-800-destroyed.html

GOLD TEND TO MOVE SIDE-WAYS

by Mr. Prithviraj Kothari, MD, RSBL

As we just thought gold was acting positive and making a comeback, it proves us wrong by the end of Friday.

Gold erased this year’s gains earlier this month on the outlook for higher borrowing costs as the U.S. economy improves. Bullion has since rebounded as the Fed signalled a worldwide economic slowdown may delay interest-rate increases and as equities to commodities slid.

The week was decent enough for gold in the domestic markets, but then internationally showed a sideways performance.

Internationally, gold prices declined after the U.S data reports were in. The better than expected consumer sentiment data lowered gold's safe haven appeal while on the other hand the ongoing concerns over global economic growth and a recovery in global stock markets gave the yellow-metal some support.

Equities and bond yields dropped sharply and the uncertainty over the Fed's hike in interest rates have changed the sentiment for gold from bearish to neutral. Gold showed mixed trends in the week over various economic figures coming in from US

• U.S retail sales and inflation numbers slumped
• Core Retail Sales dipped 0.2%, its first decline since April 2013.
• This indicated to a decline in consumer spending which one of the key indicators of economic growth
• PPI fell by 0.1%, after a reading of 0.0% a month earlier
• US Unemployment Claims dropped to 264 thousand, marking a 14 -year low. 
• Manufacturing numbers were a mix, as Industrial Production gained 1.0%, its best showing since November. 
• The Philly Fed Manufacturing Index dipped to 20.7 points, but this beat the estimate of 19.9 points.

So it was quite a volatile market for gold and there were several factors responsible for this volatility.

DISAPPOINTING GLOBAL GROWTH AND MIXED US DATA REPORTS-

The global equity drop was induced by the European equities sell-off, which was prompted by the negative August industrial production data from Germany and the market's disappointment with the lack of further monetary announcements by the ECB to fight deflation and a likely recession in Europe. The September U.S. retail sales of -0.3%, an inflation expectation of 1.5% in 2019, and foreign growth slowdown have fuelled growth recovery concerns in the U.S. The September manufacturing output climbed 0.5% compared to -0.5% in August, which can signal that the U.S. recovery is holding up.

GOLD DEMAND

The global equity tumult and the ongoing geopolitical concerns have raised the appetite for gold even though the inflationary pressure has created a negative attitude for gold.

The U.S. SPDR gold trust holdings have risen 0.20% this week after declining for four consecutive weeks. 

Moreover demand for gold from India has risen ahead of the biggest festive season of Diwali and many have made their purchases at dips. India's September gold imports jumped sharply to $3.75 billion ahead of the wedding and festival season, data from the trade ministry showed.

Meanwhile in China, the world's largest consumer for gold, has witnessed a significant drop in demand for gold even though price are running low but demand here is also expected to pick up. Growth in Gold mine output from China is set to slow significantly in coming years in the face of declining ore grades and waning profitability, an analyst at Business Monitor International said on Friday.

Now we need to see what's in basket for gold in the coming week. Gold could trade sideways next week and multiple factors are expected to influence the price of the precious metal.

FED- markets will keep an eye in the Fed Chair's speech this Friday

US- Traders will be tracking news coming in from the equity markets, alongside news about a likely global slowdown, the future pace of US stimulus, US interest rates, the Ebola scare in the US , the U.S leading indicators index , the U.S September new home sales, the U.S September CPI, September US leading indicators index and geopolitical tensions the world over.

CHINA-Next week, we will monitor the September China industrial production data, the Q3 China real GDP growth.

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 -

"Is Gold Making A  Comeback?"

http://riddisiddhibullionsltd.blogspot.in/2014/10/is-gold-making-comeback.html

IS GOLD MAKING A COMEBACK?

by Mr. Prithviraj Kothari, MD, RSBL

Gold has fallen nearly 40% from its 2011 high above $1900 to reach below $1200 at the start of the week. A resurgent dollar, coupled with positive U.S. economic data, had been driving gold's declines over the past few weeks. Investors tend to withdraw from non-interest-bearing assets to seek higher yields elsewhere when the dollar gains.

But gold picked momentum in the past seven days. We finally saw gold catching a bid on global risk aversion. It has rebounded nearly 4 percent from the 15-month low of $1,183.46 it hit on Monday on heavy selling pressure that followed a better-than-expected U.S. payrolls report last week.

There were various factors responsible for the rise in prices-

• The end of QE
• Geopolitical uncertainty
• Falling global growth estimates

All these factors once again made gold a good prospect as a safe haven asset.

On the second day of the week, gold was up after the  International Monetary Fund cut its global economic growth forecasts and weak German industrial data stoked further concerns. Following this the dollar fell which further gave a push to gold prices.

Gold rose consecutively for four days marking its longest winning gain in seven months. In fact traders witnessed heavy short covering for gold rise over the Fed minutes which created uncertainty over the timing of a Fed interest rate rise.

*source- www.kitco.com

The minutes of their last policy meeting showed that they are still struggling to come to grips with the dual threats of a stronger dollar and a global slowdown and hence they were further uncertain about linking the interest rate rise to U.S economic progress. Equities further weakened on concerns over global growth mainly in China and Europe.

Gold prices bounced off 2014 lows this week after testing support around the $1,180 area, a price gold hadn’t seen since June and December 2013. Analysts said short covering, which is the buying back of previously sold positions, and the return of Chinese traders from their Golden Week holiday helped return the yellow metal above $1,200.

However, In India it's a different scenario this year. Last year the volumes were much high as people rushed to buy gold, when prices crashed. This year prices have been consistently low. Moreover, disappointing monsoons and continued import restrictions have also affected gold demand in India.

Now the market awaits movement in equities, dollar and crude oil which could have a major role in influencing gold prices. Also, gold-market watchers will keep an eye on the Indian market to gauge metal demand ahead of the Diwali holiday later this month. Apart from this, the market player will also watch the economic data that will be flowing in- China releases a slew of economic reports, while The U.S. will see inflation data with the producer price index expected to show falls in energy and food prices, reflecting the recent drop in commodity prices.

If the US equities market continue to drop then it could create a favourable position for gold but if investors flush in more money into equities keeping the "buy on dips" funda in mind then we could see the dollar rally and gold would once again be pulled back from its gains.

Current view: BUY ON DIPS

Trade Range:

METAL	INTERNATIONAL price range	DOMESTIC price range
GOLD	$1207 - $1242 an ounce	Rs.26,500 - Rs.28,000 per 10 gm
SILVER	$16.85 - $17.85 an ounce	Rs.38,000 - Rs.40,000 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 - "Gold's Future at Stake!"

http://riddisiddhibullionsltd.blogspot.in/2014/10/golds-future-at-stake.html

UNCERTAINTY OVER INTEREST RATE HIKE !!!

by Mr. Prithviraj Kothari, MD, RSBL

From December 2008, to September 2011, Bullion futures more than doubled to a life time high of $1,923.70 an ounce. Gold prices sky rocketed as the Fed purchased debt and cut rates to an all-time low to spur economic growth. 

This year, gold bounced once again after its downfall in 2013. 

The metal rose 6.1 percent this year , partly as unrest in Ukraine and the Middle East increased haven demand.

This week investors eagerly waited for the minutes of the FOMC meeting that were to be released n Wednesday and the Jackson Hole Economic Symposium on Thursday and Friday that was expected to bring in some volatility in the market.  Apart from this many economic reports were slated to release-

• CPI
• Housing figures 
• Philly fed index from the U.S
• BOE rate decision and CPI from Great Britain
• Japan’s trade balance
• China's manufacturing PMI
• Retail sales and CPI from Canada.

Let's have a look at the data released from these reports

• U.S. home resale's raced to a 10-month high in July 
• Six straight months of payroll growth over 200,000 jobs per month — the first time that’s happened since before the Great Recession in 2007!  
• There were signs of a strengthening economy as the  number of Americans filing new claims for jobless benefits fell last week
• On Thursday, data released showed that the Business growth in China and across Europe slowed this month
• But U.S. activity picked up speed, leaving a mixed picture of global economic growth.  

This week , gold was mainly hovering around the interest rate news. The entire investment market- be it stock, bond, currency or commodities, is presently pre occupied with the only one question- When will the first interest rate increase happen? 

A positive economic growth from the US economy and an expectation for an early rate hike is expected to pull prices down.

Many researchers are expecting that the forecasting the U.S. central bank to raise rates in mid-2015 but some economists believe that it may happen much earlier.

A slowing world economy on one hand and a strengthening US economy on the other, is giving mixed reactions from the market. Uncertainty prevails and investor anxiety is on the rise. This means there will be higher movement for gold and silver.

It all depends on whether each new piece of economic data is inflationary or deflationary in nature

Though the market has been linked to rising interest rates, some say that it won't have a less negative impact on gold moving forward.

In fact now all eyes are headed towards inflation - a major driver for gold prices.

There is still some uncertainty over inflation because of the unprecedented steps the Fed has taken. Inflation along with rising interest rates will have an impact on gold. 

There are various key influential factors that will provide good support to gold -

• Rising interest rates could halt the free-flow of capital into the record-breaking equity markets and compel investors to take a more self-protective position. 
• A decline in supply  from mining and recycling sector on one hand and rising demand on the other will  raise a spark in gold prices. Also supportive for the gold market is an expected decline in supply, both from mining and recycling.

On Thursday, gold posted its steepest decline in over a month as investors left the market ahead of Friday's speech by Federal Reserve Chairwoman Janet Yellen . Gold fell to a two month low this week after the minutes of the Feds last meeting were released and it showed signs that policy makers may raise interest rates earliest than expected.  But Fed Chairman Janet Yellen also stated in a conference in Jackson Hole, Wyoming that “underutilization of labour resources still remains significant.

The debate now is about "when" to raise the interest rates. Any hike in these rates would diminish the sentiment to own gold. Gold produces no income and struggles to compete with interest-bearing investments such as Treasury bonds and bank deposits, whose yields will rise once market interest rates turn up. At the same time, signs that crisis in Ukraine and the Middle East are having a limited impact on global growth also have reduced demand for gold as a haven.

The Pentagon on Friday condemned the movement of a Russian convoy into eastern Ukraine, calling it a violation of Ukraine's sovereignty and demanding that it be withdrawn and failure of which would result in additional costs and isolation.

The world economy  is being pulled by the tug-of-war being held between the forces of inflation and deflation

In any case, all eyes are headed towards the FOMC meeting in September, which will also have a press conference and could be the one, in which FOMC chairman Yellen offers some more information regarding the next rate hike. The current estimates range mostly between the end of the first quarter of 2015 and the end of the second quarter.

TRADE RANGE-

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1264- $1297 an ounce	Rs. 27,800- Rs. 28,500 per 10 gram
SILVER	$19.00- $19.75 an ounce	Rs. 41,500- Rs. 43,000 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 -

"The Sentiments Are Bearish For Gold"

http://www.riddisiddhibullionsltd.blogspot.in/2014/08/the-sentiments-are-bearish-for-gold.html

GOLD INVESTORS BE CAUTIOUS!

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

                                 

On Friday, Gold prices were moving between small gains and small losses as the markets were quite calm as investors reined in their trading activity ahead of a long weekend in U.K. and the U.S. Spot gold was down 0.2% at $1,291.32 during trading hours where as silver was 0.3% lower at $19.391 an ounce. 

Through the week gold prices were held in a tight range between around $1280 and $1315. 

Gold prices remained low this week on strong dollar and the remarks released by the FED of a positive US economic recovery but with the Ukrainian elections Sunday, news out of the region may finally give the gold market the catalyst it needs to break through.

The market has been pulled between good news and bad news and this is what is given gold that pull and push. The big question and the reason why we are stuck in this range is the uncertainty about where to go next and need to determine what themes should be the overall driver for this sector at the moment. 

Global monetary factors in particular continue to favour gold.  In addition, geopolitical risk remains high, particularly as the Ukraine elections approach, and, longer-term, Russia and China cosy up, a significant long-term global game-changer to which Washington appears oblivious.

• Holdings in exchange traded products backed by physical gold continue to hit new 4½ year lows while physical demand may receive a boost from pent up Indian demand later this year when import restrictions are expected to be eased by the new government.
• In India, the government has just authorized seven more private agencies to import gold, thus easing gold import restrictions, which will lead to lower premiums and a rise in gold demand as the wedding and festive seasons will start in August. The easing out of the 80:20 rule is still a drag, however the relaxation to include the trading houses should be seen as a positive development. 
• The record high premiums that were being charged in the market have and will continue to drop drastically as supplies will be good. The premiums have fallen from record highs to nearly $40 which is expected to reduce to $25 as the time passes by. Usually 30-35 Tonnes of gold is imported, but With this rule relaxation, supply is expected to increase to  60-70 tonnes
• In Europe, the ECB is expected to ease monetary policy in the 5 June meeting as inflation is too low and economic growth is too slow at 0.2 percent in Q1
• According to a recent Bloomberg/CME Precious Metals Conference, the East holds the key to gold’s outlook. With China printing its money faster than mining its gold, consumers will continue to demand gold to protect them against inflation

To sum it up, gold prices have got glued to the $1300 level and until we see a critical shift in market dynamics such as correction in the equities market or some statement from the Fed or some escalation in crisis, we continue to see gold in this range.

Gold has been moving in this sideways pattern for over a month and has formed a wave like pattern.

Now what we need to watch for is more important-

• We will keep an eye on Ukraine’s 25 May presidential vote, 
• The U.S. April durable goods orders and March housing prices on 27 May, 
• The U.S. Q1 GDP second release and Japan April CPI and industrial production on 29 May, 
• The Philadelphia Fed President Plosser’s (FOMC voter) speech 
• The April U.S. Core PCE Price Index on 30 May. 

As per the current market trends gold is expected to range between $1272- $1310 in the international market and Rs.27,000- Rs.28,500 in the domestic market.

On the other hand silver is expected to move between  $18.85- $20.20 and Rs.39,500- Rs.41,500 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- "MODIfying India"

http://www.riddisiddhibullionsltd.blogspot.in/2014/05/modifying-india.html

MODIfying India

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

Firstly, heartiest congratulations to Mr. Narendra Modi on his historic win. It was a time for celebration for entire India. messages, jokes, headlines etc were exchanged as Mr. Narendra Modi enjoyed a momentous win in the worlds largest democracy.

As India welcomes its most awaited PM with open arms, we saw Mr. Modi's effect extending across all assets class.

Friday at the prospect of a stable government led by Mr. Modi, whose own state, Gujarat, prospered under his leadership. stocks and the rupee jumped on optimism that Modi will make good on campaign promises to create jobs and attract foreign investment in all sectors except for multi-brand retail.

Indian rupee also benefited, strengthening to an 11-month high of 58.63 rupees to the U.S. dollar Friday. and Sensex sky rocketed at 25,000 (1400 points up.) while results were still being out.

This appreciation of the rupees pushed bullion prices down.

Gold and silver tumbled terribly on Friday. Though in the international market gold was at a weekly gain, in India , the prices declined as the rupee strengthened. Gold plunged almost 350 rupees and silver was down 825 rupees on the commodities exchange. Meanwhile, in the international market gold was playing a different move.

After dropping more than 1 percent on Wednesday, spot gold prices gained on Thursday as investors digested comments by Federal Reserve chair person that central banks are in no rush to reduce the size of its balance sheet. 

The yellow metal was also supported by escalation of geo-political tensions as pro-Moscow separatists in eastern Ukraine ignored a call by Russian President Vladimir Putin to postpone a referendum on self-rule, a move that could lead to war. However, comments from European Central Bank President Mario Draghi's that the bank may act to stem falling inflation at its June meeting knocked the euro and the strength in dollar capped sharp gains in prices.

Gold prices fell on Thursday on positive US unemployment claims data which weakened the precious metals complex while dollar strength added to the bearish sentiments.

Stronger growth is expected post the poor winter growth. backed up by data this week showing strong housing starts and an uptick in consumer prices, might move up the Fed's plans for raising benchmark interest rates from near zero.

Half of the sates in US now have unemployment rates below 6 per cent. This figure shows that the jobs market in US is improving but at a slow pace. While employers in 39 states added jobs, we see that hiring too is picking up well.

On Friday, Gold saw slight gains in Asia before it fell to $1291.95  and then bounced back to $1296.09 in the next four hours of trade, but it then dropped to a new session low of $1288.02 after  housing data was released and the yellow metal ended with a loss of 0.19%.  Silver slipped to as low as $19.271 and ended with a loss of 0.62%.

The Economy

Report	For	Reading	Expected	Previous
Housing Starts	Apr	1072K	975K	947K
Building Permits	Apr	1080K	1008K	1000K
Michigan Sentiment	May	81.8	84.5	84.1

Source- http://news.goldseek.com/GoldSeeker/1400271241.php

For now, the gold market’s key drivers are, first and foremost, the flow of U.S. economic indicators as they affect expectations about prospective Federal Reserve monetary policy . . . and, second, of a more temporary nature, the ebb and flow of geopolitical anxieties arising from events in and around Ukraine.

Now that India has formed  a stable government and that the world picture is minutely fading and getting clear, market players are once again expected a rally in gold prices.

Reasons Being- 

Import duty reforms in India- The his morning, for example, as I write the news has come through that India’s ruling Congress party has conceded defeat in the world’s biggest democratic election to Narendra Modi’s BJP which may even win enough votes to take power on its own without its coalition partners. The BJP is thought to be more sympathetic to gold and could repeal, or reduce, the import restrictions that have led to India falling from first place as the world’s biggest gold consumer. 

This will lead to a rise in demand for gold from India which in turn will push gold prices high.

Physical Demand- Demand for gold from China is also expected to provide support for gold. This factor will give gold a wild card entry into the bulls market. over the next three to five years the demand from Asia and, also from Central Banks which have been buying gold rather than selling it over the past couple of years, will actually be sufficient to drive the gold price higher.

U.S. Economy- Many traders expect the US economy to deteriorate further which will compel the Fed to rethink about its policy prospects. The recent statistical improvement in the U.S. economy is little more than a bounce back from the past winter’s weather-induced economic chill. 

As a more realistic view of economic prospects takes hold, the financial markets will re-assess expectations of Fed policy – and this could be the catalyst triggering a resumption of gold’s long-term bull market. 

At the same time, equities are due for a setback – perhaps mild, more likely not so gentle. Either way, the competition for investment funds between equities and gold – a competition that equities have won in recent years – will shift increasingly toward bullion

when we expect to see a deterioration in the economic indicators and a reassessment of Fed policy prospects.

De- Dollarization- Russia is actively pushing on with plans to put the US dollar in the rear-view mirror and replace it with a dollar-free system. Or, as it is called in Russia, a “de-dollarized” world.

Russian Ministry of Finance wants to reduce the share of dollar denominated transactions and is hence ready to green light a plan to radically in the role of Russian ruble in export operations. Dollar will then be replaced by gold. This too will give a support to gold prices.

Geo-political tensions in Russia-  as we all know, tensions in Russia can escalate any moment thus increase the chances of a war. Any spark in the geo-political crisis in Russia will shoot up gold prices.

Meanwhile, gold is expected to range between $1272 to $1310 in the international market and Rs. 28,000- Rs.29,000 in the domestic market. 

On the other hand silver is expected to range between $18.80-$20.00 and Rs.40,000- Rs.42,500 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 on a see-saw"

http://www.riddisiddhibullionsltd.blogspot.in/2014/05/gold-on-see-saw.html