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Showing posts with label gold prices. Show all posts
Showing posts with label gold prices. Show all posts

Tuesday, 24 October 2017

Gold Expected to Drift Lower by Year End

Firstly, wishing everyone a very Happy Diwali and a Prosperous year ahead.

And indeed it was a Happy Diwali for domestic jewellers, as the slump in gold demand had finally gained momentum this October.

Demand for gold jumped in India this week on account of Dhanteras and Diwali, but high prices took some sheen off the yellow metal's lure during the key festival period this year.

Demand in the world's second largest gold consumer generally rises during the final quarter as the country welcome the festive and wedding seasons, where buying bullion is considered auspicious and propitious.

Though a lull was witnessed in gold demand during Dussehra, it significantly improved during Dhanteras and Diwali.


Gold prices spurted by Rs 290 to 3-week high of Rs 31,000 per 10 grams on the eve of Diwali at the bullion market on increased buying by local jewellers to meet festive demand.

Demand was expected to be even better, if global prices had shown similar movements. However in Asia and other international markets, gold prices were seen falling down.

CHINA - Elsewhere in Asia, there was a slight uptick in demand for physical gold, with benchmark spot gold rates headed for a weekly decline after touching a one-week low of $1,276.22 an ounce on Thursday, pressured by a firmer dollar.

However, investors remained cautious, awaiting direction on economic policy and market reforms during the 19th Communist Party Congress in China which kicked off on Wednesday and were also focused on the upcoming elections in Japan.

In top consumer China, premiums charged ranged between $8 and $12 per ounce over the benchmark this week, compared with $9-$14 a week earlier

JAPAN - Gold hit its lowest in more than two weeks on Monday as expectations that Japan’s ultra-loose monetary policy would stay in place after Shinzo Abe’s election victory at the weekend lifted the dollar to a three-month high versus the yen.

Japanese Prime Minister Abe’s win also fed into positive sentiment in equity markets that were buoyed last week by fresh optimism about tax cuts in the United States, curbing interest in gold as an alternative asset.

U.S. DOLLAR & U.S. ECONOMY- Gold prices touched the lowest in more than one week on Thursday, as the dollar stood firm on rising U.S. Treasury yields, with investors focusing on who would replace Janet Yellen as the next chair of the Federal Reserve.

Financial markets are now awaiting guidance on who will succeed Federal Reserve chair Janet Yellen, whose term expires in February.

U.S. President Donald Trump is considering nominating Fed Governor Jerome Powell and Stanford University economist John Taylor for the central bank’s top two jobs. Powell is considered less hawkish than Taylor, who is seen advocating higher interest rates.

Moreover, the economy expanded at a modest to moderate pace in September through early October, despite the impact of hurricanes on some regions, the Fed said its latest snapshot of the U.S. economy thus hinting markets that the US economy is doing well which will further create a downward pressure on gold.

The dollar had already posted its biggest one-day gain in a month on Friday after the U.S. Senate approved a budget blueprint for the 2018 financial year, allowing Republicans to pursue a tax-cut package without Democratic support.

The dollar hit its highest in about two weeks versus the yen, supported by this week's rise in U.S. bond yields, with U.S. President Donald Trump set to make a decision in the "coming days" on Yellen, who is also one of the five candidates being considered for the job.

Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

Tensions on the Korean peninsula, however, continue to weigh upon gold and the metal could drift down towards the $1,250 level by early December weighed down by the prospect of a further increase to U.S. interest rates in December.


Monday, 9 October 2017

Gold Prices May Surge

Gold was once again seeing pulled and pushed by various factors doing rounds in the market. Where one side gold was seen consolidating by a strong dollar price on Wednesday, on the other hand on Friday it once again picked momentum over the North Korean crisis.

Gold prices fell for the fourth consecutive week with the precious metal down nearly 0.5% to trade at 1271 ahead of the New York close on Friday. The losses come amid what seems to be an unstoppable rally in broader risk assets with the major U.S. equity indices up more than 1% on the week.



A surprise U.S. Non-Farm Payroll report on Friday showed the economy shedding some 33K jobs last month, missing expectations for a gain of 80K. However, a closer look at the data revealed underlying strength in the labor markets with labor force participation rising to its highest level since March of 2014 at 63.1%. Wage growth figures were also stronger-than-expected with average hourly earnings posting a 2.9%  gain – up from a previous upwardly revised 2.7% . With the recent barrage of hurricanes largely accounting for the weak headline figure, the broader labor market outlook remains firm and keeps the FOMC on target for a December rate hike.

The dollar earlier rose to a more than two-month high against the yen and seven-week high against the euro as wage data from the September labour market report was seen as a sign of potentially improving inflation.

The greenback jumped as high as 113.43 yen, the highest level since July 14, before dropping to 112.71. The euro fell to $1.1670, the lowest level since Aug. 17, before rising back to $1.1726.
The U.S. dollar tumbled on Friday on a report that North Korea is preparing to test a long-range missile, overturning earlier gains after the government’s jobs report for September showed an unexpected rise in wages.

RIA news agency cited a Russian lawmaker’s making comments on the missile test, which North Korea believes can reach the U.S. West Coast.

Amidst these tumbling and rising influencers, gold prices are expectedto surge not only in the international but also domestic market given the upcoming and biggest festival for gold in India.
A few reasons why weexpected gold prices to shoot are:

10 reasons why gold will surge:

  1. Gold will follow inflation which will increase strongly eventually leading to hyperinflation.
  2. Real interest rates will be negative which favours gold. This was the case in the 1970s when gold rose from $35 to $850 despite rates in the mid-teens.
  3. China’s accumulation of gold on a massive scale and potentially introducing a gold for oil payment system
  4. Inflation will increase institutional gold buying substantially. Gold is today 0.4% of global financial assets. An increase to 1% or 1 1/2% would make the gold price go up manifold.
  5. With relatively low global demand today, annual goldmine production of 3,000 tonnes is easily absorbed. With falling production, the coming upturn in demand can only be met by much higher prices.
  6. Demand for gold will rise in the domestic market during Dhanteras and Diwali. After Akshaya Tritiya, gold sales are seen to be highest on Dhanteras and this rising demand might push gold prices further. 




Friday, 6 October 2017

September proves to be the worst month of 2017 for gold so far

September was an action-packed month, with North Korean rockets and a succession of monster hurricanes all coming at the markets almost at the same time. Not forgetting the comments coming out from the Federal Reserve that contributed to thefrenzy by giving a clear signal of a December rate hike. In the process, it perhaps single-handedly helped the dollar index recover from a three-year low hit earlier in the month.

Amid a resurgent dollar, the month of September proved to be worst for gold since November 2016. However, as geopolitical tensions soar, with the standoff between the U.S. and North Korea probably topping the list, demand for precious metals surged with Gold ETF holdings rising most since Feb 2017.



Last week, gold prices ended lower on Friday as weak U.S. consumer spending and inflation data did little to alter expectations for a third interest rate increase by the Federal Reserve this year.
The dollar has risen in recent weeks as investors grow more optimistic about the prospect for U.S. rate hikes and tax cuts that some expect to boost the U.S. economy.

Data on Friday showed that
U.S. consumer spending barely rose in August.
Inflation also remained sluggish with the core personal consumption expenditures price index rising 1.3% year-on-year, slowing from 1.4% in July.
The core personal consumption expenditures price index is the Fed’s preferred inflation measure and has a 2% target.

The data did little to temper rate hike bets after Yellen indicated earlier in the week that the central bank was sticking to plans for a third rate hike this year and three in 2018.

The metal recorded its biggest monthly decline so far this year in September, despite netting a quarterly rise of nearly 3 percent partly due to geopolitical tensions including North Korea’s missile tests.

The U.S. currency recorded its best week of the year on Friday, despite benign inflation data for August, as expectations that the Fed would raise interest rates again in December loomed large after Fed Chair Janet Yellen said the central bank planned to stay on its current rate hike path.
Higher interest rates tend to boost the dollar and push bond yields up, weighing on greenback-denominated gold

The dollar’s rise paused on September 28 and 29, but was seen gaining momentum on Monday morning.

Gold slipped to its lowest in nearly seven weeks early on Monday, 2nd October as the U.S. dollar rose and equities gained, while growing expectations for a Federal Reserve interest rate hike in December also added to pressure.

Spot gold was down 0.3 percent at $1,274.90 an ounce by 0353 GMT, after earlier touching its lowest since mid-August at $1,273.55.

Gold prices fell in Asia on Monday as the dollar gained and the euro dropped as investors mulled the implications of the disputed referendum on Catalonia independence in Spain on the euro zone and a sentiment survey out of Japan in a thin trading day with China's markets shut for the week and holidays regionally expected to see thin flows.

Elsewhere,The Bank of Japan released its Tankan survey for the third quarter with investors focused on the large manufacturer’s index as it rose to 22, compared with an expected reading of 18.

This week, comments by Fed Chair Janet Yellen will be closely watched for further hints on the timing of the next rate hike along with Friday’s U.S. jobs report. Market watchers will be looking ahead to remarks by European Central Bank President Mario Draghi on Wednesday.

Gold, silver and platinum prices continue to correct and the stronger dollar and lull in tensions over North Korea, seem to be weighing on prices. We would let the corrections run their course, but the North Korean situation is likely to escalate again at some stage, so the next rally in gold prices may not be that far away.

Thursday, 28 September 2017

Tensions Push while Dollar Pulls Gold Prices

Gold prices have been correcting recent gains, the pullback tested the break-up level at $1,295 per oz and it gave way, which is a sign of weakness. Stints of haven buying have since given prices some lift, but the gains have not been held on to, which suggests a market that is getting tired of the on-going pomposity but lack of progress over North Korea. In addition, the stronger dollar is proving to be a negative for gold prices.



The week began on a positive note for gold as spot gold prices inched higher during Asian morning trading hours on Tuesday September 26 as investors opted for haven assets amid heightened geopolitical tensions.

North Korean accusations and the Kurdish independence referendum threatening to add even more instability to the Middle East saw investors heading for the gold safe haven trade, shrugging off a stronger US dollar in general overnight thus increasing the demand for the yellow metal.

Concerns also arose on straining relations between the USA and Iran after the latter claimed it successfully launched a missile and over oil supply disruptions after Turkey threatened to close the route for Kurdish shipments in retaliation for holding their independence vote.

However on Wednesday the markets witnessed a u turn as gold prices were pulled down over a strengthening US dollar.

The US dollar strengthened on Wednesday following hawkish comments from US Federal Open Market Committee chairwoman Janet Yellen on Tuesday.

The spot gold price remained below $1,300 per oz during Asian morning trading on Wednesday September 27 and was quoted at $1,295.00-1,295.30 per oz as of 04:33 BST, up just $0.95 on the previous session’s close.

Yellen’s speech was interpreted by markets as hawkish as she noted that it would be “imprudent” to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a December US rate increase.

Monday, 25 September 2017

Stronger dollar pulls down gold prices

But the metal still recorded its second consecutive weekly decline after the Federal Reserve on Wednesday reiterated that it expects to deliver another rise in interest rates by the end of the year.

Prices for the yellow metal dropped about 1.7 percentlast week, posting their second consecutive weekly decline.

Gold futures witnessed nominal gains, with heightened tension pegged to North Korea credited with providing a modicum of support to the haven.


Late Thursday, North Korean officials threatened to test a hydrogen bomb over the Pacific Ocean, escalating tensions in the Korean Peninsula. North Korea’s leader Kim Jong Un criticized President Donald Trump for remarks made during the U.S. leaders U.N. speech Tuesday, in which he threatened to “totally destroy” Pyongyang if provoked.

Gold prices would have crashed to $1,265.60 if North Korean risk didn’t resurface and would have taken prices back to levels last seen more than a month ago.

But the Fed, which indicated Wednesday that it still plans to raise rates once more by the end of the year, was the reason why gold prices fell.

The central bank also announced that a plan to unwind its more than $4 trillion balance sheet would commence in October. Both policy measures can have the effect of tightening monetary policy and raise rates. Higher rates in turn can make gold, which doesn’t bear a yield, less attractive compared with assets with rising yields.

Gold opened lower in early Asian tradin as weekend uncertainty passed without incident. Merkel’s win in the German federal elections and a quiet news weekend on the North Korean front, saw the US dollar opening stronger and gold’s weekend safe-haven premium eroded from Friday

The spot gold price fell during Asian morning trading hours on Monday September 25, as the dollar strengthened and a quiet weekend on the North Korean front saw a further deterioration in any risk-off sentiment.

Gold prices dropped on Monday, andhovered around one-month lows hit last week, weighed down by afirm U.S. dollar and as concerns over the Korean crisis easedover the weekend.

Merkel's win in the German federal elections and a quietnews weekend on the North Korean front, saw the U.S. dollaropening stronger and gold's weekend safe-haven premium erodedfrom Friday.

The euro slipped on Monday after German Chancellor AngelaMerkel won a fourth term in a weekend election, but facedleading a much less stable coalition in a fractured parliamentas support for the far-right party surged.                    

Last week, the Fed announced it would begin trimming down its $4.5 trillion in assets and signalled it will likely raise rates again this year. With the market increasingly expecting another US rates rise by year-end, this should continue to lend support to the dollar tis pushing down gold prices further.






Thursday, 21 September 2017

FOMC Meet breaks down gold

It is rather remarkable to think that less than a month ago, gold shot up on the back of a missile firing in North Korea and the assorted baggage that came with that. The market was scared and gold was the major beneficiary. Now here we are, with the price of gold almost fifty dollars lower, but nothing has really changed. Trump is threatening total annihilation of North Korea, to which I am sure Kim Jong Un will have something to say or do. And now in addition to that, the US President is picking another fight, this time with Iran, with inflammatory comments at the UN yesterday. It does indeed seem that the markets have very, very short memories. But among all this, this week’s focus shifted to the much awaited FOMC meet, its concluding statement and what the Fed would say about balance sheet reduction.





On Nov 25, 2008 The Fed announced it would begin buying assets for its own account to save the world. In Oct 2014, The Fed ended its QE3 buying program but continued to reinvest the proceeds to maintain its $4.4 trillion balance sheet. Today, Janet Yellen announced the balance sheet will be allowed to normalize, with reinvestment slowed/stopped starting in October.

Let take a quick look at the key highlights over the Feds statements of the meet:

  • Hurricanes are unlikely to change economy’s course medium term
  • Economic activity has risen moderately and job market has strengthened
  • Rates kept unchanged as Fed plans balance sheet runoff in October
  • Fed signals another hike in 2017 and 3 more in 2018


As expected, the Fed announced it will begin reducing bond reinvestment's, starting by $10 billion per month and growing to $50 billion.

Gold prices settled higher Wednesday but slipped in electronic trading after the U.S. Federal Reserve's decision to keep interest rates unchanged

The price of spot gold has cracked back below the $1300 on the run up in the dollar after the FOMC decision. The precious metal is trading at the lowest level since August 28th.

In electronic trading after the Fed statement, prices traded lower at $1,310.70. The central bank said it will taper its $4.5 trillion balance sheet by $10 billion per month, the first reduction in nine years. Meanwhile, the Fed's interest rate projections, known as the dot plot, suggested a rate hike in December and three more in 2018.

A spill over effect of this meeting was clearly seen on gold as it broke the important trading level of $1300.

Tuesday, 12 September 2017

Strong Rally in Gold Prices RSBL

We have seen gold nearing a 1 year high over the past few months. But what has supported this rally for the yellow metal? 

Lately, uncertainty in many forms has played a key role. This past week's nuclear test in North Korea shook investors, sending them fleeing to safe-haven investments such as gold. In addition, uncertainties over Congress's ability to pass corporate tax reforms, which are being counted on to boost U.S. GDP growth, have some pundits favouring gold relative to stock-based equities.
Last Friday, the spot gold price was trading at $1,352.50/1,352.90 per oz, up $5.2 from the previous trading day’s close. 

Gold prices were well-bid on Friday September 8 as weaker-than-expected US economic data and the ECB’s decision to leave interest rates unchanged, as well as continued geopolitical risks, maintained pressure on the dollar.




Let’s take c closer look at all the influences- 

US Dollar-Uncertainty and lower-than-expected inflation rates have been doing a number on the U.S. dollar. In recent weeks, the dollar hit multiyear lows against the euro and at least one-year lows against a handful of other major currencies. 

In recent months the dollar has suffered from multiple issues forcing it lower against other major currencies, including political failures, multiple climate-related disasters, geopolitical tensions and weak inflation in the US.

The latter, in particular, has made it more difficult for the Federal Reserve’s Federal Open Market Committee (FOMC) to justify hiking interest rates

The dollar index on Friday morning was down 0.08 to 91.45. Overnight US jobless claims surged to a two-year high because of Hurricane Harvey, which raised doubts over further US interest rate hikes in December.

The dollar and gold usually move in opposite directions, meaning the dollar's weakness has been a green light for gold investors.

ECB Meet- ECB policymakers indicated at their meeting overnight that the European central bank was not intending to weaken the common European currency, which is expected to support euro performance in the short-term. The ECB maintained rates and upgraded its growth forecast this year by 0.3ppt to 2.2%, but maintained its 2018-19 forecasts.

Hurricane- Meanwhile gold prices jumped today morning as an earthquake off the coast of Mexico added to the hurricane damage in the Caribbean and US east coast in driving demand for the traditional safe haven.

U.S Data- The tally was the highest level for initial claims since April 18, 2015, when it was also 298,000, the government said. 

Consensus expectations compiled by various news organizations called for initial claims to be around 241,000 to 242,000. The government left the prior week’s tally at the previously reported 236,000.
Gold prices rose after a Labor Department report Thursday showing that initial weekly U.S. jobless claims surged by 62,000 to a seasonally adjusted 298,000, with the government citing the impact of Hurricane Harvey.

Geopolitical tensions- Geopolitical risks also remain at front of mind, with the USA pushing hard for additional sanctions against North Korea. This kept safe-haven buying relatively strong 

Persistent North Korean tensions and general US dollar weakness propelled gold $15 higher to new 2017 highs overnight, touching $1,249.98 and closing just below at $1,249.50. 

Geopolitical events have boosted precious metals prices. Gold prices continue to push higher, underpinned by geopolitical concerns over North Korea. For any further escalation in the on-going tensions, gold is likely to remain in demand. 

FOMC Meet and Interest Rate Hike-A combination of stubbornly low core inflation and rising doubts about the Trump administration’s ability to pass new legislation has been underpinning the situation. 

Specifically, the failure of high asset prices and strong labour market growth to pass through into underlying inflation is bringing into question how much further the FOMC will be able to lift rates in the near term. While the healthcare bill fiasco and lack of detail around both tax reform and infrastructure spending have underlined the difficulty of turning rhetoric into reality when it comes to shifting growth onto a higher structural path. In consequence, markets have been remarkably sanguine about the FOMC’s anticipated announcement of balance sheet reduction at their September 20th meeting and are now only pricing 25% chance of another hike by year-end.

Prices are closing in on last year’s highs so some nervous profit-taking may emerge, leading to choppy trading, but the combination of North Korea, a weak dollar and low treasury yields are all supportive. Silver and platinum may well follow gold, but palladium prices that are already elevated, may struggle more.

Although this combination of factors clearly presents a constructive cyclical backdrop for gold prices, the extent of the recent rally has surpassed what can be explained by just US rates and the weak dollar. 

Wednesday, 6 September 2017

Bullish sentiments for gold

Gold for the week ended with a good sign, as it posted gains in the Friday session, continuing the upward movement we saw on Thursday.

In the North American session, gold was seen trading at $1323.74, up 0.18% on the day. This rise was seen post the release of the labor report told prices have enjoyed a strong week, gaining 1.9%.
The metal showed some strong gains earlier on Friday, as the metal touched a daily high of $1329.05, its highest level since November 2016. These gains were triggered by the disappointing non farm payrolls and wage growth reports for August, both of which missed their estimates.

On the release front, US job numbers were unexpectedly soft. Non farm payrolls slowed to 156 thousand, well below the estimate of 180 thousand. Wage growth also disappointed, as Average Hourly Earnings posted a small gain of 0.1%, shy of the estimate of 0.2%.


Although the US labor market remains tight, investors are fretting about the lack of wage growth, which has contributed to the low inflation which continues to hamper the US economy.

The Federal Reserve will also be perturbed by small wage growth, as a December rate hike is very much in doubt due to inflation levels which obstinately remain well below the Fed's inflation target of 2.0%. Currently, the likelihood of a December rate hike stands at just 36%

Gold is traditionally considered a safe-haven asset, and often benefits when investors get jittery and lose their risk appetite. Such was the case last week, as renewed tensions between the US and North Korea early in the week propelled the metal above the symbolic $1300 level.

On Tuesday, North Korea fired a missile over Japanese territory, drawing sharp condemnations from Japan and the US, with President Trump declaring that "all options remain on the table"

In times of uncertainty or crisis, investors typically take refuge in “safe” options like the Swiss franc, gold or the US dollar, but under President Donald Trump the greenback has lost its lustre, especially to the euro.

Although, tensions have since eased somewhat, if North Korea decides to fire another missile towards Japan or the US military base on Guam, gold prices will likely move higher. As well, as the markets digest the disappointing job numbers, we could see risk appetite continue to wane early next week, which could extend the current gold rally.

The reaction to the lackluster U.S. Non-Farm Payrolls (NFP) report suggests gold will continue to exhibit a bullish behavior ahead of the Federal Open Market Committee (FOMC) interest rate decision on September 20 as mixed data prints coming out of the economy sap bets for another rate-hike in 2017. Even though ‘the Committee expects to begin implementing its balance sheet normalization program relatively soon,’ the fresh forecasts from Chair Janet Yellen and Co. may ultimately heighten the appeal of gold if central bank officials attempt to buy more time and project a more shallow path for the Fed Funds rate.

In turn, U.S. Treasury Yields may stay depressed throughout the remainder of the year, and the precious metal may continue to retrace the decline from 2016 amid the shift in trader behaviour.
Weak U.S. economic data has effectively removed the Fed’s prospective rate rise scenario from the gold price equation – at least for a couple of months although may have an impact in November as speculation will reign over whether the Fed will implement another small rise in December, or kick the can down the road again.  The U.S. dollar is looking weak and a weak dollar tends to see the dollar gold price rise. And it is the dollar gold price which the market judges to be the most important indicator, even though the gold price in other currencies, like the euro or the yen, should perhaps be more relevant.

The seemingly increasing threat of war between North Korea and the USA, will likely give the gold price a huge boost in the days and months ahead with safe haven demand escalating worldwide – and particularly in Asia and the U.S. itself.

Thursday, 24 August 2017

Weekly Gold Forecast


The week began on a silent note for precious metals. Gold was up +0.1% which probably reflects a lull in the haven demand as investors appear risk-on at the beginning of the week. It was strange to see that demand for the yellow metal wasn’t much despite of the on-going geopolitical tensions.

OVER THE WEEKEND, North Korean leader Kim Jong-un warned of a second “Korean War” as US- South Korea military exercises, viewed as “reckless behavior” by the North Korean leader. But reactions in the market were contradictory as the market layers stayed calm. Hence the news which could have had strongly pushed gold prices further proved to be non-influential for gold.



After a firm price movement on Monday, precious metals were more or less stable on Tuesday morns. Spot gold prices were down by 0.2% at $1287.90.

On Wednesday, Gold prices edged slightly higher after news that sales of new U.S. single-family homes fell by 9.4% in July to a seasonally adjusted and annualized pace of 571,000, which was below forecasts.

Consensus estimates compiled by various news organizations called for sales to be around 610,000 to 620,000. The Commerce Department revised sales for June upward to 630,000 from the originally reported 610,000.

Apart from the geo political tension, the focus now shifts on host of global economic data that will be released throughout the week

Monday, 21 August 2017

Gold expected to cross $1375 mark

Gold prices have risen to the highest level since November last year as investors shift away from risky assets in the wake of geopolitical uncertainty.

Futures for the yellow metal rose to $1,303.90 per ounce, while spot gold remained just below $1,300 per ounce.

A market that was once worried about the nuclear war has now moved on a host of other factors that are creating concerns for various market players.

Let’s have a look at the various factors that created jitters in the market in the past week.

Barcelona Attacks - Heightened terror fears added to the risk off sentiment after at least 13 people died when a van plowed into pedestrians in Barcelona. The terror attack was a reminder of lingering geopolitical risks, with nerves still raw after last fortnight’s escalation of tensions on the Korean peninsula.

Investors fled into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to this deadly attack.

US Data - The global risk-off mood accelerated overnight on Trump "stability concerns", coupled with fallout from the Spain terrorist attack and lingering North Korea tensions.

Data released showed that Jobless claims for the week ending Aug. 12 came in at 232,000, versus expectations of 240,000. The Philadelphia Fed Index, gauging overall manufacturing conditions, came in at 18.9 for August, compared with consensus estimates of 18.5.

Industrial production grew 0.2% on the month in July, slipping below estimates of 0.3%.Concerns that Trump’s stimulus is in peril spiked following speculation that his top economic advisor, former Goldman COO Gary Cohn, was set to resign roiled markets on Thursday until reports that he’d opted to stay on board steadied the ship, however the weak dollar and dialling back of US Federal Reserve (Fed) monetary tightening expectations has given a modest lift to the precious metals, which stood up high.

US Dollar - The dollar was pulled lower on Wednesday as traders grappled with the prospect that the Federal Reserve might not raise interest rates again this year following the release of the Fed’s July meeting minutes.

The U.S. dollar retreated against haven currencies like the Swiss franc and the Japanese yen Thursday, following a day of negative headlines.

Earlier on Thursday, the greenback was propped up by weakness in the euro EURUSD, -0.0850% following the release of dovish minutes from the European Central Bank’s last meeting. The U.S. unit also remained stable as initial jobless claims and the Philadelphia Fed Index came in better than expected, but was weaker than the prior period, while industrial-production data missed expectations.

FED comments - The metal started its rise from $1268 on Thursday afternoon after the release of Fed minutes from the July FOMC policy meeting, according to which policymakers grew increasingly concerned about the sluggish inflation numbers. Whilst also on Thursday US President Donald Trump fell out with business leaders over his response to the recent turmoil in Charlottesville.
This followed a mixed session on Thursday in which gold strengthened a little while the rest of the complex was under downward pressure in spite of a friendlier macro backdrop (i.e. lower US real rates, equity losses) due to the release of dovish US Federal Open Market Committee minutes on Wednesday and dovish Fed speech.

Geo political uncertainty - Gold’s status as a safe-haven asset has seen investor demand surge during periods of heightened risk. In recent times, however, President Trump's combative style has seen safe-haven buying reach a sustainable high level. With tensions around North Korea and Iran rising, this is unlikely to subside any time soon.

Gold Supply - political uncertainty has been impacting investment in supply. In fact, global mine supply has fallen in 2017. According to World Bureau of Metal Statistics, gold production is down 2% y/y in the first five months of the year. Production in May alone was down 3.1% y/y. Growth in mine output is at its lowest point since the financial crisis, with risks only getting greater

Although Gold failed to break above $1300/oz today (Friday), it remains in position to do so because of its renewed strength in real terms. As long as the US$ index does not rally hard, we expect Gold to break above $1300 and reach $1375. The gold stocks as a group have been lagging recently but in the event of a Gold breakout, we foresee significant upside potential as the group could play catch up.

Monday, 14 August 2017

Fundamentals for Gold are strong

As we have noticed in the past months, it was mainly the dollar and Fed actions that were influencing gold prices. But last week geopolitical tensions were fueling gold prices.

Gold was on the move in the past week after a display of threat of the military force by the U.S. and North Korea pushed the safe-haven metal back onto investors' radar.

President Trump said on Tuesday that threats by the Hermit Kingdom would be met by "fire and fury," which was followed up a day later by a North Korea threat to bomb the U.S. territory of Guam.
The yellow metal climbed to $1,285/oz as tensions rose this week, the best level in about two months, driving year-to-date gains to around 11.5%.




Gold has always been considered as a safe haven asset in times of uncertainty. The current rally in gold prices is because of the rise in safe haven demand for gold.

President Donald Trump intensified up his orotundity toward North Korea and its leader on Thursday, warning Pyongyang against attacking Guam or U.S. allies after it disclosed plans to fire missiles over Japan to land near the U.S. Pacific territory.             

Gold prices rose early Wednesday amid rising tensions between the United States and North Korea after the North responded to warnings from U.S.

President Donald Trump with a threat to strike the U.S.territory of Guam.   

Though prices rose on Wednesday and Thursday, by the end of the week, prices more or less stabilized. 

Gold prices held steady after touching their highest in more than two months on Friday, as rising tensions between the United States and North Korea triggered safe-haven buying.

Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold. Although more hostile magniloquence between the U.S. and North officials would temporarily boost gold prices, we see outright military action as unlikely and upward pressure on gold prices stemming from the confrontation as limited.

Meanwhile, a lower-than-expected rise in U.S. consumer prices in July suggesting benign inflation could persuade a cautious Federal Reserve to delay raising interest rates until December.                

Gold is seen being stable over easing out of the geopolitical tensions. But still, a minor escalation over the tensions can once again trigger gold prices. Hence the situation currently is quite unpredictable. 

On the other hand, The Fed expects "very weak" U.S. inflation to rebound thanks to a slide in the dollar and to a labour market that keeps getting hotter, one of the Fed's most influential officials said in comments that reinforce its gradual policy-tightening plan

Gold edged down from two-monthhighs on Monday, 14th August, , as the dollar inched up from last week's lowsand investors kept a close watch on any developments on tensionsover the Korean peninsula.

Summing it up we can say that though the threats from the Koreans have lowered, the fundamentals for gold still seem to be strong.

Tuesday, 1 August 2017

Green back gives backing to gold

It was a quiet Monday for gold on 24th July followed by a little change in gold and silver prices on Tuesday. Spot gold prices were at $1,255.60 per oz and silver at $16.46 per oz, while the PGMs were looking stronger with gains of 0.6%.

Gold’s rebound has found new vigor on the combination of the weaker dollar and the less hawkish US Federal Reserve stance. Dollar weakness has stemmed from the weak political scene in Washington which has resulted in a push in gold prices. Gold is sensitive to moves higher in both U.S. rates and the dollar. Weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.


Gold prices held steady on Friday as investors locked in profits from the precious metal's rally to six-week highs on Thursday and as markets awaited the release of U.S. second-quarter growth data due later in the day.

U.S. 2Q GDP figures released on Friday showed the economy grew at an annualized pace of 2.6% q/q, slightly missing consensus, with the Core Personal Consumption Expenditure (PCE) topping expectations with a print of 0.9% q/q. The data did little to shift expectations for a December interest rate hike with markets still pricing a roughly 50/50 chance the Fed will hike again this year.

Gold prices rallied for the third consecutive week with the precious metal rallying 1.9% to trade at 1268 ahead of the New York close on Friday. The advance comes alongside continued weakness in the greenback.

The dollar remained under pressure after the Fed said on Wednesday that inflation remains below its 2% target even as near-term risks to the economic outlook appear "roughly balanced". In the past, the Fed judged that weakness in inflation was transitory. The central bank's cautious tone on inflation sparked fresh uncertainty over the possibility of a third rate hike this year.

The greenback was also weakened by data on Thursday showing that initial jobless claims rose by 10,000 to 244,000 last week. Analysts expected jobless claims to rise by 7,000 to 241,000 last week.
Gold prices have done well, especially with equity markets setting fresh highs, but the weaker dollar of late has no doubt helped fuel the rally and it may be that as equities are setting fresh highs, more investors are expecting a correction so may be putting more into havens. Silver has been following gold, platinum prices have struggled to follow gold and palladium is still consolidating after the strong run in May/June. For now we expect the dollar to be the main driver in gold prices.

This week began with a positive note for gold as it Monday held around its highest price in nearly seven weeks as tensions on the Korean peninsula boosted safe-haven demand for the metal and as the U.S. dollar hovered close to multi-month lows.

News that North Korea has conducted yet another missile test spurred a late-week push higher in gold prices which stretched into near-term resistance just ahead of the European close.

The United States flew two supersonic B-1B bombers over the Korean peninsula in a show of force on Sunday and the U.S. ambassador to the United Nations said China, Japan and South Korea needed to do more after Pyongyang's latest missile tests.

Though a weaker dollar is the main driver for gold prices, currently deepening political turmoil in Washington and North Korea's progress on ballistic missiles will all ensure the uncertainty premium continues to support gold's price.

Looking ahead to next week, markets will be closely eyeing central bank interest rate decisions from the Reserve Bank of Australia (RBA) & the Bank of England (BOE) with the highly anticipated U.S. Non-Farm Payroll report slated for Friday. While the broader outlook for bullion remains constructive, prices are eyeing near-term resistance heading into the close of the month and could limit the topside near-term.

Thursday, 20 July 2017

Gold Dips expected to remain Supported




Gold and other metals had a firm start for the week which continued over Tuesday. Gold and the other precious metals were firmer on Tuesday morning, with prices up an average of 0.4% while gold prices were up 0.3% at $1,237.35 per oz. This was seen as an after effect of a strong performance on Monday when the complex closed up an average of 0.8%.

Gold was more or less stable on Wednesday as it opened at 1241.75/1242.75 per ounce. Post which it rose to a high of 1243.50/1244.50 before retreating to a low of 1239.00/1240.00 as the dollar pared early losses and the euro fell back from yesterday’s 14-month high.

Gold prices are gaining from the weak dollar prices and lower bond yields which help in reducing the opportunity cost of holding gold thus pushing its prices higher.  Prices have firmed up in recent days, this despite geopolitical concerns being light but the weaker dollar and a less hawkish US Federal Reserve seem to be underpinning price rises.

But at the same time, buoyant equities are also a headwind for gold and the lull in geopolitical tensions is not getting any good for gold. So the expectations of a steep rise in gold prices aren’t strong currently.

All in all, we are not expecting much from the precious metals camp in the short term, but we expect dips to remain supported.

Monday, 13 February 2017

GOLD STABILISES AMIDST UNCERTAINTIES

While when gold was just about to continue to maintain its 3 month high last week, there was a sudden pull back and gold prices moved lower by the end of the week.

Gold steadied on Friday, but remained below the week's three-month top as the U.S. dollar and Treasury yields came off their highs after the currency initially jumped on U.S. President Donald Trump's promise of a major tax announcement.


Gold was being pushed and pulled amidst various factors that played key roles in influencing gold prices-

Interest Rate - Gold slid on Thursday from a three-month high in the previous session after strong U.S. economic data pointed to a robust economy, increasing the possibility that the Federal Reserve will raise U.S. interest rates.
U.S. economic data has also strengthened talk that the Federal Reserve would press ahead with U.S. interest rate hikes sooner rather than later.
Gold is highly sensitive to rising U.S. interest rates which increases the opportunity cost of holding non-yielding bullion while boosting the dollar  in which it is priced.

Dollar and Data - U.S. economic data also underpinned the dollar. Initial jobless claims unexpectedly dropped last week to a nearly 43-year low, while inventories at wholesalers surged in December for a second straight month. U.S. import prices rose more than expected in January.
The data showing rising U.S. wholesale inventories and an unexpectedly low number of Americans filing for unemployment benefits further pushed up the dollar and U.S. bond yields.                        
A stronger dollar makes gold more expensive for holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion. Higher interest rates would lift yields further.
           
Tax Announcement - Donald Trump plans to announce the most ambitious tax reform plan since the Reagan era in the next few weeks, the White House said.
On Thursday, sending stock prices and the dollar higher on hopes leading to a cut in corporate tax rates.

French Elections - Investors are concerned about the strong showing in the French presidential race of far-right candidate Marine Le Pen, who has promised to take France out of the euro zone and to hold a referendum on European Union membership.

Gold held near 3-month highs on Thursday as political risks from elections in Europe and worries over U.S. President Donald Trump's policies buoyed safe haven demand for the bullion.

While gold was stabilised by Friday. It was still amongst the favourites for investors. Many of them are being bullish for gold – Reasons being :

  • Controversy over U.S. President Donald Trump's temporary travel ban on people from seven Muslim-majority countries has recently boosted gold as a safe-haven asset.
  • Further geo-political uncertainties, increasing hostilities in the Ukraine, Greek bailouts, French elections, Iran-U.S. sabre-rattling have supported gold prices and drawn interest from investors who seek support in safe haven assets.
  • Investors' bullish stance on gold is reinforced by an increase in net longs by speculators and a rise in holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. (SPDR holdings rose 0.68 percent to 832.58 tonnes on Wednesday from Tuesday, rising for a sixth straight session.)

Increasing uncertainties has increased the demand for gold as a hedge. Amidst all this, gold prices are expected to rise till Mid Feb. Once January CPI data is released, it will give an idea about the possibility of a rate hike in March which will then be a deciding factor in the movement of gold prices.

Thursday, 12 January 2017

2017 - SURPRISES TO UNFOLD FOR GOLD : RSBL

Until Wednesday last week, gold was trading in positive territory continuing the rally from the previous session.

The spot gold price was quoted at $1,164.85/1,165.15 per oz, up $8.05 on the previous close.


There were many supporting factors for gold’s rally-

  • Mainly all the uncertainty that lies ahead with the changeover in the US administration 
  • Brexit 
  • The weakening trend in the yuan. 
On Friday last week, gold slipped following the release of strong US employment data which was as follows-
  • The USA added 156,000 jobs in December, compared with 204,000 in November, while wages grew 2.9% year-on-year to reach a seven-year high.
  • German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected. 
  • The non-farm employment change for December showed 156,000 Americans entered the workforce, a slight miss from the 175,000 forecast.
  • However, the figure for the previous month was revised up 19,000 jobs and the headline unemployment figure came in as expected at 4.7%.
  • The big surprise was that average hourly earnings grew by 0.4% month-on-month, bringing total wage growth to 2.9% for the year and the highest level since before the recession.


Gold prices were in positive territory in London on the morning of Monday January 9, recovering slightly from last week’s drop.

The spot gold price was recently quoted at $1,176.20/1,176.50 per oz, up $3.40 on the previous close. Trade has ranged from $1,172.50 to $1,178.75. Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve.

US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the economy for stronger growth and the prospect of further interest rate increases this year.

Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.

Evans and other regional Fed presidents are scheduled to speak this week, and the outlook for U.S. rates may become even clearer when Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.

Expectations of US interest rate hikes lowers demand for the non-interest-paying bullion.
Apart from a rate hike the most discussed r rather the most awaited topic currently is the fiscal stimulus that Trump is promising and, of course, inflation.

Despite the rebound in the dollar, gold prices are holding up well – all thanks to the safe haven move by investors, just ahead of the shift in US administration.

By the end of 2016 or rather post the 2016 US election, confidence in the global markets was running high thus propelling gold to lose its safe haven appeal. But 2017 has lot of uncertainties and surprises to unfold for gold which will once again get into the investors basket keeping in the mind its appeal as a safe haven asset in times of global uncertainties.

In the week ahead, investors will be looking ahead to US economic reports, particularly Friday’s retail sales figures for December. Investors will also be watching an appearance by Fed Chair Janet Yellen on Thursday and speeches by a handful of other Fed officials during the week, as well as President-elect Donald Trump on Wednesday for a press conference.

Now investors await the upcoming inauguration of President-elect Donald Trump to see what the volatile leader will implement once in office.

Monday, 12 December 2016

Gold appeal Fading

Gold hitting newer and newer lows have been a current trend confirming a bearish view on the metal’s safe haven appeal. Reasons begin with:

  1. Death of uncertainties and acceptance of the same as a new norm.
  2. Central banks of the world getting their ticks right to push the economic growth via fiscal and monetary measures.
  3. Physical buying cushion; getting softer.
  4. Massive reduction in geopolitical tensions with UN forces keeping a check on the extremists.



The upcoming FED meeting will give a glimpse to the US economy getting strengthened. Almost a 100% prediction for a Rate cut in this meeting has put a downward pressure on Gold. Over the course of 2017, there is an expectation that interest rates would be raised by the US Federal Reserve.
Meanwhile, US Dollar has gained a lot of attention due to a rise in US treasury yields and US equity markets causing a downward spiral in Gold prices.

Furthermore, if the recent election outcomes and market reactions to them have taught us anything, it’s that nothing is certain in politics, the global economy and the markets. While I say this, I do understand that the investors have used recent Gold rallies to unwind existing long positions and this is treated unhealthy for an asset’s performance.

While domestic prices would be supported by the Rupee weakness, overall Gold in Dollar terms would trader in the range of US$ 1,080 to US$ 1,200, while Silver would trade in the range of US$ 14.70 to US$ 18.20. In Rupee terms a range of INR 28,200 to INR 29,700 is expected for Gold while INR 39,000 to INR 44,000 is expected for Silver.

Sunday, 8 May 2016

HAPPY AKSHAYA TRITIYA: RSBL

                                                    By Mr. Prithviraj Kothari, MD, RSBL






Firstly wishing everyone a very Happy Akshaya Tritiya. May this year be filled with wealth and prosperity.

We have seen many stories being revolved around this auspicious occasion. Our mythology and scriptures are filled with many interesting stories that relate to Akshaya Tritiya. Out of those, the tale if friendship between Lord Krishna and Sudama is relevant not only to understand the importance of this day, but also to emphasize on the need of having a true friend.

Sudama, also known as Kuchela, was one of Krishna’s childhood friends and the two share an equation so strong that it has become a legend of sorts. According to Hindu mythology, while Krishna went on to rule Dwarka, Sudama led a simple life and could hardly make ends meet. He needed all the financial assistance he could to led a normal life. Sudama led a life of poverty. 

One day, his wife could not bear to see their children hungry and said “can’t you ask Lord Krishna for help?” Sudama agreed but decided that he would not ask Krishna for anything. Then Sudama's wife borrowed some puffed rice from a neighbor and gave it to Sudama as a gift for Krishna. When Sudama came to Dwarka, Krishna was overjoyed! Then, he saw his pouch and snatched it fro
m his hand. “Puffed Rice! My favorite dish!” said Krishna and he ate a handful of rice greedily. 

Before he could take a second handful, Rukmini, stopped him, saying “One mouthful will give him all that he needs my Lord!”/ The next morning, Sudama left Dwarka. As he approached his house he saw a grand mansion. His wife and children came out wearing jewels and fine clothes. Sudama was filled with joy and happiness as his friend had given him more than he ever needed. The day when Krishna blessed Sudama with abundant wealth was marked as Akshaya Tritiya. 


This is one of the reasons why this day is celebrated as a day of material gain and wealth. Hence the custom of buying gold, silver, real estate etc has been followed.

Once again, it’s that time of the year where everyone is talking about investing in gold! Buying gold funds, jewelry and coins on Akshaya Tritiya is considered the best way to invest your wealth on this auspicious day. Though nowadays people look for other avenues like real estate, gadgets but nothing can replace gold.

 As the history of our country has it, after Dhanteras, maximum purchase of Gold, Silver and Platinum happen on this day.
People this year are full of mixed feelings-anxiety, excitement, nervousness as a lot is been happening around gold since the past few weeks.

Generally we also witness a price rise few days ahead of Akshaya Tritiya due to the rise in demand for the yellow metal.

In fact demand for gold this year is expected to be better than last year because-

Monsoons- A good monsoon will lead to rise in demand for gold prices this year which will ultimately boos prices. Those who expect further rise in gold prices may advance their purchases.



Strike- the jewelers went on strike after the announcement of excise levy. The industry is gearing up to meet the pent-up demand, which will be witnessed during this Akshaya Tritiya. There were many players who couldn’t make their purchases during the strike and will now enter the market to buy gold on this auspicious day


Gold rally- Recent rally in gold prices due to global influential factors have propelled investors and traders to anticipate further price rise which has pre-poned their purchases of the yellow metal.
As we all know this quarter has been the best quarter for gold in the past three decades. Prices have ranged between Rs.24, 910 to Rs.30, 300 per 10 gram. On one side where we see sales dampening due to this high volatility, on the other hand we also expect the demand for gold to rise given the global and domestic factors that have been influencing gold.


Traders also anticipate that in terms of volume, consumer demand might witness a negative growth of about 10%, but in value terms, it is likely to be at par with last year’s sales.
Above all demand for gold this year is expected to be comparatively better that the past 2 years.


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
"RSBL: Gold & Silver Price Rise"
http://riddisiddhibullionsltd.blogspot.in/2016/05/rsbl-gold-silver-prices-rise.html