GOLD GLITTERS...SILVER SPARKLES....PLATINUM POLISHES

Precious metals seemed to be on fire this week. Gold reaching its life time high of Rs. 31,300 (999 purity per 10gm) in the physical market where as silver and platinum reached Rs. 57,000(per kg) and  Rs. 29,600 (per 10gm) respectively.

Bright chances of another round of QE3 led to sharp rises in gold and silver prices where as labour unrest in Lonmin’s mine in South Africa resulted in the platinum volatility.

In the international market, gold rose to a 16-week high to USD 1,665.09 an ounce and silver gained by 2.5 percent to USD 30.57 an ounce

Rise in international gold prices affected the domestic prices too. Internationally, gold reached its highest level in the past three months. Rising gold rates along with the appreciation of the rupee against the dollar led to this huge leap. Indian rupee appreciated to 55.41 against the US dollar on Thursday. 

Minutes of the FOMC meeting resulted in rallying of gold and silver. The FOMC meet brightened the chances of another quantitative easing plan. US economy has been growing but at a very slow pace. The homes sales report and jobless claims report didn’t seem to be much positive. These stats will strongly affect bullion prices.

Moreover Central bank has been buying 150 tonnes of gold. Along with his there is huge SPDR ETF buying too.

Gold has always been considered as a safe haven asset and during these times of uncertainty investors are turning to gold to be on the safer side. Where traders and stockists are concerned, they too have started piling up their stocks ahead of the biggest festive and marriage seasons of the year (September- December) in India.

Looking at platinum, this metal has also shown great volatility in this week. The unrest at Lonmins mine in South Africa has spread to two other mines. Platinum prices continued to soar due to concerns of supply trouble after 44 people died during strikes at a pit owned by Lonmin.

About a fifth of global platinum production is idled in South Africa resulting in supply shortage and soaring prices.

It seems likely that these protests will affect the other precious metals too including the gold mining sector.

Outlook for gold is bullish with the yellow metal is expected to reach $ 1800 an ounce by September end.

WE NEED A GOOD MONSOON....SOON!!!!

Every year, the entire country - be it the big time investors or the small hard working farmers- all await for the most important months of the year- The June- September Monsoons.

Though India has been in the limelight for its technological, infrastructural and outsourcing developments, about two-thirds of the country's one billion people depend on farming for a livelihood and agriculture accounts for about one-quarter of the gross domestic product.

A good monsoon strengthens the rural consumption power which in turn creates an impact on growth. This clearly indicates that growth of the Indian Economy is largely dependent on agriculture, a good harvest and more importantly a good monsoon.

This entire cycle affects not only then rural areas but also the urban economy. Equities, real estate, precious metals, commodities etc all are somewhere or the other, directly or indirectly affected by monsoons.

India can hardly afford a dreadful monsoon as it has already been facing a setback due to global slowdown, domestic inflation and an uncertain economy.

Though monsoons have recovered in the past 10 days, India is still under the shadow of a drought. The entire economy now depends on what will happen by August end.

Talking about precious metals, gold has not shown as much movement as it had in 2011. A year ago gold was heading toward $2000 an ounce but has dropped back to the $1500 range and has been lying there since quite some time. However in the Indian markets, gold is much costlier than what it was last year- thanks to the appreciation of the rupee.

Another factor that has played an important role in gold prices in India is the monsoon. India- which the largest consumer of gold in the world has been facing a very weak downpour. India’s rainfall total this year is about 20 percent below its 50-year average, and possible drought will adversely affect gold consumption as the focus would turn to food and survival

So far, in June, rain deficit has already reached 41%. Rural India still accounts for 60% to 70% of gold sales in the country and if the monsoon is below normal this year, gold purchases will struggle to cross the 600 tonne mark this year.

India's demand for gold has reportedly fallen far more drastically than that of the world. In the first quarter of 2012, domestic demand for the yellow metal witnessed a 30% crash year on year. Imports too have crashed. India's gold and silver imports have fallen 52% in May. April too witnessed a decline, with gold and silver down by 33% to $3.1 billion. Imports of the yellow metal had already shrunk in the January to March 2012 period.  

Though India's annual monsoon rains had covered almost half of the country at the start of June, there has been a palpable slowdown, with no signs of a pick-up and a forecast of bright, sunny days. 

Where the entire country eagerly waits for a heavy downpour, analysts are pessimist about a good monsoon and predict a dark cloud that will bear no rainfall