GOLD ON LIFE SUPPORT

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

Gold prices climbed up on Thursday and it showed recovery for the first time in 10 months as the metal's inflation-hedge appeal jumped following the ECB rate cut. Adding to this, the hopes of easing measures by the US Federal Reserve continued to boost gold and silver. The price of gold increased by 1.48% to $1,467.6; Silver rose by 3.40% to $23.81. During the week, gold rose by 1.0%; silver, by 0.2%.

Spot metal was last at $1,477.05/1,477.85 per ounce, up $10.35 on the close and making gains for the second session in a row. It has now also edged $1.55 above the previous weekly close, putting it on course for two consecutive higher weekly closes

Investors in the market were taken aback by the ECB when it decided to lower its short term interest rate to an all time low of .50 per cent. 

Jobless Claims report was due on Friday afternoon and gold drifted higher in its new range just before that. However, nothing happened as expected. The Jobless claims in US had reduced and the unemployment rate fell to 7.5 per cent. Just before the report was out gold was seen trading at 1487$ per ounce. However, later in the evening it dropped to 1445$. American employers took on more workers than forecast in April and the jobless rate unexpectedly fell to a four-year low of 7.5 percent, reflecting confidence in the outlook for the world’s biggest economy. Payrolls expanded by 165,000 following a revised 138,000 increase in March that was larger than first estimated, Labour Department figures showed today in Washington. Revisions added a total of 114,000 jobs to the counts for February and March.

The drop in jobless claims came as a surprise with economists expecting claims to edge up to 345,000 from the 339,000 originally reported for the previous week. Separately, the U.S. Commerce Department said the nation's trade deficit narrowed to $38.8 billion in March from a revised $43.6 billion in February. 

Officials at the Fed are still looking for greater progress in reducing unemployment. The central bankers said earlier this week that they plan to maintain their $85 billion monthly pace of bond purchases to spur growth and employment prospects and are prepared to raise or lower the level of purchases as the economic outlook evolves.

The Fed stated that though the jobless claims have dropped and the Labour market conditions have improved, the unemployment rate is still eminent.

Central bankers said that though we have seen a recovery in consumer spending, business investment and the housing industry the fiscal policy is restraining growth.

Till then gold seems to be on a life support system.

Trade range for gold for the  week is 1430- 1505 $ in the international market and in the Indian markets it is expected to move within 26500-28000 rupees per 10 gram.

“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 -
"Gold tend to move side ways"
http://riddisiddhibullionsltd.blogspot.in/2013/04/gold-tend-to-move-sideways.html

GOLD TEND TO MOVE SIDEWAYS

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

As investors took profits in the precious metals market, gold witnessed a down fall on the last day of trading week. But if you look at the overall week, gold still posted its biggest weekly gain in 3 months. Bullion has recovered more than half of the loss of $225 per ounce incurred between April 12 and 16.

The main reason behind this price pick up was an extremely high physical demand for the yellow metal world over. In Asia particularly in Hong Kong, Singapore, Indonesia, Thailand and India gold was being sold at high premiums. Some analysts have described this as pent-up demand in which buyers pounced when presented with lower prices. This helped gold rise for the week.

The mid-April price decline also came at a key period for seasonal demand due to spring weddings in India, as well as the 15th May Akshaya Tritya festival, auspicious for gold buying. Bullion dealers in India put in great efforts to meet the strong demand, quoting premiums even as prices recovered partially since last week.

But while physical demand has been strong, China, the second-largest gold consumer after India, will be on holiday for three days next week for the May Day break, possibly removing significant support from the market

Apart from physical demand there has been sustained effect from the economic data coming in from the US. First-time claims for unemployment benefits fell by more than expected in the week ended April 20, the Labor Department said. The initial jobless claims fell to 339,000, a decrease of 16,000 from the previous week's revised figure of 355,000. Economists had expected jobless claims to show a more modest decrease, dipping to 350,000 from the 352,000 originally reported for the previous week. Investors in exchange-traded funds headed for the exits, worried about potential central bank sales of bullion and uncertainty over the outlook for U.S. monetary stimulus. 

Gold traders will have plenty on their plate next week. The basket includes-

• Central Bank Meetings
• U.S employment Report
• The U.S. Federal Open Market Committee Meet
• The European Central Bank meet
• personal income and spending Monday
• Chicago Purchasing Managers Index
• ADP private-sector employment report
• Supply Management manufacturing PMI
• initial jobless claims

Traders also will keep monitoring reports about the voracious physical buying that was unleashed by a sharp price decline in mid-April. Traders will find on May 3 out if the labor market has picked up, when the Labor Department releases the April report. 

And, as always, traders will be watching economic data to see whether conditions are improving or deteriorating so they can gauge for themselves what officials may do with monetary policy down the road.

India, the biggest buyer of gold, has been trying to limit imports to keep a lid on record current account deficit, and the economic advisory council expects the country to import $45 billion tons of the yellow metal in the year to March 2014.

In the coming week gold is expected to move in the range of 1405$- 1485$ in the international markets and in the Indian markets it will moving in the range Rs.26,000- Rs.28,500 per 10 gram.

“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 -

"RSBL  Launches 18th delivery center of RSBL SPOT in Hubli, Karnataka"

 http://riddisiddhibullionsltd.blogspot.in/2013/04/rsbl-launches-18th-delivery-center-of.html