Gold prices Rise: RSBL

                                                       - Mr. Prithviraj Kothari, MD RSBL

                           

 
Just when Gold was raising questions on its recent rally, last week’s labour report proved to be a saviour for the yellow metal. Gold prices traded sharply higher in Friday thus giving a technically bullish weekly high close to gold.

In May, the US non-farm workforce grew up only 38,000, missing the forecast of 160,000 and indicating that the US recovery may be starting to slow. Additionally, the March and April figures were revised 22,000 and 37,000 lower respectively while growth in average hourly earnings last month of 0.2 percent was below the predicted 0.3 percent. The Labour Department report released Friday showed employers added jobs in May at the slowest pace since 2010 as unemployment dropped to 4.7 percent, already reaching the level Fed officials expected to see by the end of 2016. Apart from disappointing headline NFP (nonfarm payrolls) number, there is a also a sharp jump in involuntary part time workers.

A much-weaker-than-expected U.S. jobs report prompted the yellow metal to surge higher, and those initial solid gains have been extended to show gold trading over $30 higher on the day. A sharp drop in the U.S. dollar index also helped push gold prices higher.

A broad slowdown is troubling for the Federal Reserve, which has grown increasingly hawkish in recent weeks following the April meeting minutes, giving their support to a rise in interest rates as early as this month if data warranted such a move. But a negative jobs report has once again left the markets perplexed per se the rate hike.

Considering the pliability of the US economy, has once again raised some questions about the momentum of growth and about the outlook. This in turn takes June off the table for a Fed hike.

Apart from the current news what needs to be watched this week for gold are:

1. THE MAIN EVENT: Fed Chair Janet Yellen's speech today at 10.00 pm.  
2. Central Bank (Rate Cut) Watch:

• Reserve Bank of Australia (June 7) no change expected
• Reserve Bank of India (June 7) no change expected
• Reserve Bank of New Zealand (June 9) 0.25% rate cut expected

Sentiments for gold are bullish and the major turning pint for this sentiment is the US dollar. Gold could remain in rally mode through the coming week as traders reassess their U.S. dollar and Fed outlook.

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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 –

" INTEREST RATE HIKE SPOILING GOLD PRICE RISE :RSBL" - http://riddisiddhibullionsltd.blogspot.in/2016/05/interest-rate-hike-spoiling-gold-price.html

INTEREST RATE HIKE SPOILING GOLD PRICE RISE :RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

Just when gold had started entering in to the good books of majority of the market players, it once again started losing its appeal. Gold has started trending differently from the beginning of May. Along with platinum, palladium and silver, it is heading for the biggest monthly loss since November as investors anticipate higher borrowing costs in the U.S.

Gold has pared this year’s rally after retreating more than 5 percent in May as investors raised bets on the Federal Reserve increasing interest rates from as early as next month, causing the dollar to rally. Higher rates curb bullion’s appeal against interest-bearing assets.

At the start of this month, markets were excessively dovish, pricing almost no probability of a U.S. rate hike in June but a run of better U.S. economic data plus the minutes of April’s FOMC meeting have seen U.S. forward rates move up, the dollar rally and gold has naturally sold off.

The fundamental data released that changed the game for gold were:

• The U.S. Federal Reserve continued to lay the groundwork for an interest rate hike in the next two months, with Governor Jerome Powell saying he felt the U.S. economy was on a "solid footing" and within reach of the central bank's inflation goals.
• The U.S. economy is set to grow by a 2.9 percent annualized rate in the second quarter following the latest data on durable goods orders and advance goods trade, the Atlanta Federal Reserve's GDP Now forecast model showed on Thursday. 
• U.S. business spending intentions weakened in April for a third straight month amid soft demand for machinery, but a surge in contracts to purchase previously owned homes to a 10-year high supported views economic growth was gaining speed. 
• Japan's core consumer prices fell 0.3 percent in April from a year earlier, the second straight month of declines, keeping the central bank under pressure to deploy additional stimulus to achieve its ambitious 2 percent inflation target. 

Gold crawled higher early on Friday but stayed near seven-week lows and remained on track for its biggest weekly decline in nine, with positive economic data boosting expectations U.S. interest rates will rise in the next two months. The dollar stayed in consolidation mode early on Friday after its rally to two-month highs ran out of steam with bulls looking for fresh from the head of the U.S. central bank.

Now the market eagerly waits for the Fed officials will gather in Washington June 14-15 to decide whether to increase rates for the first time since December.

Thank You!

You may follow me on:

       Facebook: https://www.facebook.com/prithviraj.kothari
          Twitter: https://twitter.com/prithvirajrsbl
         Website: http://www.rsbl.co.in/
        YouTube: https://www.youtube.com/user/PrithvirajKothari
         Google+: http://www.google.com/+PrithvirajKothari

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 launches RSBL SPOT APP- Live Gold, Silver, Platinum  prices at your fingertips"

http://riddisiddhibullionsltd.blogspot.in/2016/05/rsbl-launches-rsbl-spot-app-live-gold.html