SILVER IS BACK!

Last week bullions were seen hovering around many factors that were responsible for its volatility - Economic Stimulus, Spain Bailout, Speculation, Japanese and Chinese growth data, Jobless claims report etc.

Gold on Friday traded at $1786.35 an ounce - moving up by 18 dollars. This resulted due to a blend of news from China that they had lowered rates to boost liquidity in the ongoing operations and the other news coming from Spain that they have officially asked for a bail out.

Spain's conservative Prime Minister Mariano Rajoy had in the past insisted Madrid would not become the fourth European capital in recent years to apply for such a bailout, but sources indicate such a programme is now likely.

Bullions were mainly benefited by the various economic stimulus actions taken by central banks globally. Following the US and the Central Bank, the Bank of Japan too enlarged the size of asset buying in order to foster economic growth,

The dollar eased after lying low since months and the Euro also improved. Moreover, Gold ETF’s have attracted investors too. The world’s top gold exchange traded fund the SPDR Gold trust reported their current holdings that are at the highest level since August.

Within a fortnight we saw gold and silver bouncing to and fro from highs and low. The recent announcement by the Fed, in which they declared the launch of QE3, has been one of the main reasons behind this upward trend. Now, looking into the near term future, launch of QE3 means a strong stimulus plan that will lead to monetary easing and better liquidity in the markets. This in turn will bring about growth in the economy which will also reflect on the industrial sector. Thus, demand for silver will rise keeping in mind its vast use in various industries ranging from jewellery, automobiles, chemicals etc.

This makes silver the next favorite metals for analysts. Moreover in the Indian market (which waits the festive season) demand for silver is going to rise. Last year we saw silver touching almost Rs. 75,000 per kg. With current range for silver being Rs.60,000 - Rs.62,000 per kg, there is great space on the upper scale for silver to rise. Silver is expected to move within the range of Rs. 58,000- Rs. 72,000 per kg till Diwali.

Stockists have already starting making purchases keeping in mind the demand for this metal during the festive season.

Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument but the now the focus seems to be shifting to silver- at least in the near future

Fed launches QE3: Markets get relief!!!

Last week we saw great volatility in precious metals. Gold that had reached a high of Rs. 32,200 per 10gram had plunged down to almost Rs. 31,800 and then bounced back to a new high of Rs. 32,650 after the Fed meeting. Such huge fluctuations were seen after Bernanke’s speech, in which he announced the launch of QE3.

Internationally, gold will cross $1800 ounce by year end, effect of which will be seen on the domestic prices too where gold is expected to cross Rs. 35,000 per 10 gram by year end.

The commodity and financial markets were shocked with the announcement made by the FED on Thursday. The Fed decided of buying open ended asset. This decision of the Fed created great impact on the markets in Thursday and Friday and it will continue to show it’s after affected in the weeks to come.

The market was surprised by this asset buying decision of the Fed. Traders and analysts did expect a third round of quantitative easing, but they did not expect that the Fed would take the asset buying decision.

The Fed declared that it would continue to buy asset until the labor market improved and the economy began to grow. Moreover the Fed said that it would continue with stimulus even if inflation began to exceed the

Apart from the meeting, other factors that are likely to influence the market are:

1. Tensions prevailing in the Middle East as more embassies are under the threat of attack.

     2. Business data, GDP growth released by the US, Euro zone and China

     3. Philly Fed Index and Empire State Index scheduled for discharge.

Apart from gold, one metal that has once again caught attention by investors is silver. Gold has already marked its lifetime high by crossing Rs. 32,200 and on the higher side is expected to touch 35,000. However, for silver there is immense space for growth. Last year silver peaked to almost 75,000 per kg. With current silver prices hovering at around 65,000 per kg and there are bright chances of an upward movement towards its peaked point. Silver is surely going to be the next favorite metal.