PRECIOUS METALS ON THE RUN

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

Gold, Silver and Platinum all of them have found a new life after they broke their technical resistances, strongly.

 Gold rose nearly 1 percent to a two-month high on Friday, and bullion posted its biggest weekly gain of almost 5% in many weeks.

Silver rose 1.5 per cent for an eighth consecutive daily gain. The grey metal has sharply outperformed gold and was up 14 per cent this week for its biggest weekly rise in almost five years. The Gold/Silver ratio has corrected 50% of its move since end November last year and given that the 200 day moving average should provide some support too at 58.08, we might cool down in Silver versus Gold and digest the strong recent out performance.

Platinum is trading above $1,500—hitching its star to gold’s wagon.

Gold's and Silver’s rally came as U.S. stock indexes were lower on Friday and on track for their biggest weekly declines in months. The rally in gold towards $1,372 is perhaps even more impressive because the price rise came despite the 10-year US government bond yield breaking above 2.75% yesterday. Rising bond yields have been negatively correlated with the gold price over the past few months – but not yesterday. Adding more support is that we are not seeing any major slowdown in physical gold demand yet despite the rally in the gold price. Rallies like we experienced yesterday would typically see physical demand fall away until the price volatility settles once again. The SGE premium has not fallen below $22/oz the past few days.

Even the greenback pared its early gains against its peers on Friday as release of weaker-than-expected U.S. University of Michigan consumer confidence fueled expectations that the Federal Reserve will keep its stimulus measures by the end of this year. 

The Bureau of Labor Statistics published its recent report of the U.S CPI for July 2013. Based on the latest update, the consumer price index rose again for the third consecutive month; in annual terms the US CPI increased by 2%. Despite the moderate rise in the CPI, it is still very low and remains lower than the inflation target of the Federal Reserve. The low inflation could suggest the U.S economy isn’t heating up, which could raise the odds of the Fed leaving its policy unchanged and keeping the current asset purchase program unchanged. This news may have contributed to the rally of gold and silver prices.

Last but not least, the largest increase in SPDR GLD holdings turned out to be by Goldman Sachs Group, who added 3.7 Mio.

In the domestic market, a record low in the rupee lifted Indian gold futures above the closely watched 30,000-rupee mark. Dealers said the high local price of gold in the world's largest gold buyer is expected to weigh down on demand. This week gold was more of a game of demand and rupee depreciation. 

This week, Government of India increased the import duty on Gold by 2%, Silver by 4% and Platinum by 2% to new 10%. The festive season had given tremendous rise to the demand for gold. The yellow metal witnessed a sharp climb as stockists weighed supply constraints in view of the ensuing festival and marriage seasons in the midst of incessant duty hikes from the government and RBI measures. Besides other extreme steps, like abolishing the purchase of property abroad for Indians, or reducing heavily the amount Indian companies can invest abroad, they also abolished the import of gold coins and medallions. Imports of coins and medallions; however should not have a big impact on thets total import number, as most of the imports are in form of bars and not coins. These new regulations that come up now almost on a daily basis without being too clear have brought imports to a standstill and we still wait for more details on how exactly to conduct imports in the coming days ahead.

Silver also reflected the shiny metal’s surge and zoomed to hit a four-month high owing to heavy speculation.

A sharp fall in Sensex and rupee against dollar and strong global cues also contributed to the upsurge in gold price, which posted the biggest single-day gain after August 19, 2011. Interestingly, the metal had shot up by INR 1,310 on August 19, 2011 as well.

But for Indians who want to invest in gold, you may have a host of restrictions. The big ones are a trade deficit, a current account deficit and a collapsing currency. The rupee is down 28% over the last two years. That's the biggest fall since 1991.

For the weeks to come there is lot of uncertainty prevailing over precious metal prices.

The trade range for golf for the coming week is 1340$- 1420$ and in the domestic market it is expected to trade between Rs.29,000- Rs. 32,000 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 -

"Dollar makes gold look attractive"

http://riddisiddhibullionsltd.blogspot.in/2013/08/dollar-makes-gold-look-attractive.html

DOLLAR MAKES GOLD LOOK ATTRACTIVE!

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

Yes indeed, dollars helped in making gold look attractive.

This week gold prices benefited from the U.S. dollar's fall to a seven week low against a basket of currencies. Broad USD weakness was the theme of the day yesterday; leaving most of the people puzzled about the negative performance of late and force some to throw in the towel on their long positions.

Precious metals edge higher on modest demand in early Asia, but worries about the Federal Reserve starting to withdraw its stimulus program with an improvement in economic growth is likely to weigh on prices. The Fed's stimulus program has been supportive for gold prices as it triggers demand for the metal considered a hedge against inflation.

Bullion has traded as low as $ 1,180 an ounce in late June on fears of massive fund selling as the Fed looked set to cut its bond buying stimulus as early as September.

While western investors focus on Federal Reserve’s quantitative easing tapering timelines, the bigger gold story is taking place in China. The negative sentiment currently attributable to the gold price masks the accumulation of gold by the Chinese who are set to overtake India this year as the world’s top gold consumer. This is a startling turnaround given the Chinese embargo on gold ownership was only lifted as recently as 2003.

Chinese exports rose 5.1% from a year earlier, rebounding after from June's 3.1% fall, the customs agency said. However, the medium-term economic outlook remains volatile with a broader range of outcomes now possible. China gold production reached 156 tons during 5M2013, up 11% YoY (7.5% in May and 8.6% in 2012), according to China Gold Association.

In 2012, China’s gold consumption reached 776 tons, the world’s largest, up 8% YoY, representing import reliance of 49%, down from 53% in 2011. However, note that gold accounted for only 1.2% of China’s total foreign reserves according to the World Gold Council, compared to 69.8% in US. This prompts China to consider further accumulation of gold to diversify the reserve mix.

Silver and platinum group metals also rallied after data showed Chinese imports of industrial commodities and raw materials rose in July and the world's second-largest economy showed signs of stabilizing after more than two years of slow growth. Moreover the good economic figures out of Germany, which shows that despite fears to the contrary, exports are picking up from manufacturing economies. This coupled with the fact that the markets were running short and the very thin volumes, created the spike. In the past, I have always recommended that Platinum is a buy on Dips. The way it has rallied, it is all thanks to the improving economic scenario.

While in India, though the Dollar weakness and a mostly supportive movement in global equities pushed up the yellow metal today but gains in Indian Rupee ensured that the rise in local futures is tepid

India's gold demand has remained moderate over last few weeks after a spike in April when prices slumped towards INR 25000 per 10 grams in the major local markets. However, World Gold Council is upbeat about the demand for jewellery picking up momentum in the coming quarters in the country and even projected demand for gold touching 865-965 tonnes in 2013, thus exceeding 2012's record.

Currently, most of the Indian companies dealing with Gold related products are facing a severe crunch to get metal. With the government rules and regulations, it has been really hard for the importers. I do expect that Government could shed some more light on the recently announced measures to curb Gold imports.

Gold support is at $1,290 and $1,270. Resistance is at $1,320 and $1,349. $1300 should be the support zone and given the current mood of hunting stops, we are left flipping a coin on which direction the stop hunters could take.


Silver support is at $20.00 and $19.75, resistance is at $20.40 and $20.70.

“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: "WAVES OF DISAPPOINTMENT FOR THE MARKET":

http://riddisiddhibullionsltd.blogspot.in/2013/08/waves-of-disappointment-for-market.html

WAVES OF DISAPPOINTMENT FOR THE MARKET

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

As we discussed last week that this week had a bundle of surprises for gold of which the US employment data was the biggest surprise. There were mixed sentiments in the market post the data release. Investors believed that the jobless claims would be much high compared to June.

Moreover Fed Chairman Bernanke's statement over the stimulus plan created even further confusion.

There was mystification in the market as the jobless claims were 326,000, below the forecast of 346,000 while the private sector ADP change in non- farm payroll came in at 200,000 well above the forecast 179,000.

A weaker-than-expected U.S. July jobs report and a fall in the dollar helped gold rebound from a drop of more than $25 an ounce during Friday’s session, but prices still marked the first weekly loss in four week.

Gold initially fell to a two week low at $1280 an ounce as encouraging US gross domestic product and factory activity data earlier in the week reduced the metal's appeal as an investment hedge.

It jumped about  2 percent from its session low after government data showed U.S. employers slowed their pace of hiring in July but the jobless rate fell anyway, easing fears that the U.S. central bank might imminently reduce its $85 billion monthly bond buy back stimulus.

Gold’s hard times have come from the view that easy money, which has weighed on the dollar and lifted gold in recent years, is going bye-bye sooner or later.

US jobs data is vital to the gold market after the US Federal Open Market Committee indicated that quantitative easing may continue until the unemployment rate falls to 6.5 percent. The Fed remains committed to purchasing $85 billion in new debt per month in an open-ended programme (QE3). Accommodative measures from the US central bank are supportive of commodity prices because extra liquidity tends to debase the dollar and create future inflationary risk.

I am optimistic over the long-term time frame. Targeting inflation, the Federal Reserve's inability to taper, and underlying problems in Europe will make sure precious metals will outperform down the stretch. The nonfarm payrolls data usually brings volatility to gold, but the metals just haven't had enough upside momentum to constitute a breakout, so till that time it will be wait and watch.

In other gold market news, China’s thirst for physical metal remains strong. Imports from Hong Kong at 105 tonnes in June were down slightly from 114 tonnes in May but this was still the fourth-biggest month on record, according to Macquarie, citing Hong Kong export data. Apparent demand from China at 835 tonnes is up more than 50 percent on last year, the broker estimates.

However demand from India has not picked up pace as there are no clarification over the RBI policies for gold and the government is trying to curb g0ld imports to rectify the CAD.

As far as the international markets are concerned, it’s going to be a light week for U.S. economic news, but globally, next week will include a few more central bank meetings including the Reserve Bank of Australia, which is expected to cut rates. The Bank of Japan is also meeting, but is not expected to make changes to monetary policy.  Chinese data slated for release include industrial production, retail sales, export data and inflation report.

Gold support is at $1,280 and $1,260. Resistance is at $1,320 and $1,340. Silver support is at $19.20 and $19.05, resistance is at $20.20 and $20.40.

In the domestic market gold is expected to move in the range of Rs.26,000 to Rs. 29,500 in the coming week.

“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 -

"Bundle of surprises for gold"

http://riddisiddhibullionsltd.blogspot.in/2013/07/bundle-of-surprises-for-gold.html

INDIA'S FIRST EVER GOLD PLATED BIKE LAUNCHED BY RSBL DIA JEWELS!

Presenting to you India's first ever gold plated bike.

This bike is India's first fully Gold Plated bike and decorated aesthetically with diamonds. The gorgeous Huma Qureshi herself was present at the inaugration and unleashed the bike.

This bike is available for display at the Times Glamour Exhibition at Hotel Shangri- La, Lower Parel,  from 26th- 28th July from 10am - 7pm ( Stall no 18.)


“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 -
"Bundle of surprises for gold"
http://riddisiddhibullionsltd.blogspot.in/2013/07/bundle-of-surprises-for-gold.html

BUNDLE OF SURPRISES FOR GOLD!

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

Currently the entire market is in a confused state of mind as far as gold is concerned.
The market has split in two parts. Some say gold will rise while the others take an opposite stand.

This week we came across some interesting figures in gold:

1. On Friday, gold was trading at $1340 - almost $160 higher than the three year low of 1179$ that it hit on June 28
2. Gold has risen consecutively for the third week until Friday and also its first three weeks rise since March.
3. On the other hand, in terms of value gold has also lost a fifth of its value as investors lost faith in gold.

Many buyers also indulged in profit-taking by cashing in from gold's Friday session high of 1340$.

Initially, Fed chairman Bernanke has stated that the Fed may scale back its $85 billion monthly bond purchases. But now there is no clarity on the timeline for this activity as he further states that scaling back of the stimulus program depends on the recovery of the US economy.

The market now digests news that Russia, Ukraine and Azerbaijan were among eight countries that increased their gold holdings in June, data from the International Monetary Fund showed, while Turkey, Germany and seven other countries shed some of their bullion.

As far as the Asian markets are considered, China's gold demand could hit a record 1,000 tonnes this year, the World Gold Council said on Thursday, which means it would overtake India as the world's biggest bullion consumer.

But investors still have a mixed basket of feelings for gold. The appetite to carry large positions overnight may decline ahead of the next crucial week of data.

The U.S. Federal Reserve will announce its policy decision on Wednesday, as will the European Central Bank and Bank of England on Thursday — and on Friday, the U.S. Labour Department will release its widely watched monthly jobs report.

Now what we have to wait and see is that whether these vital reports will pull down gold or push it up.

Demand from India has taken a setback but is now expected to rise. Monsoons play a key role for demand coming in from rural areas. Also August marks the onset of the festive and marriage season. But since the government has taken measures to curb imports, in spite of physical demand there isn’t much gold available in the market to meet the demand. 

Gold support is at $1,321 and $1,307. Resistance is at $1,340 and $1,355. Silver support is at $20.78 and $19.40, resistance is at $20.70 and $20.90.


“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 Has Found A Support"
 http://riddisiddhibullionsltd.blogspot.in/2013/07/gold-has-found-support.html

INVITATION FOR TIMES GLAMOUR EXHIBITION BY RSBL DIA JEWELS

GOLD HAS FOUND A SUPPORT!!!

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

I am sure every single reader who follows Bullion market will agree when I say; this week belonged to Ben Bernanke’s statements. Bullion has slipped more than 22% this year on the Fed's hints that its monthly bond-buying program may end altogether by mid-2014.

Fed Chairman Ben Bernanke eased some market nerves by telling the U.S. Congress this week that the central bank's plans to scale back asset purchases later this year were not set in stone and depended on the strength of the economy.

He further stated that the U.S. central bank still expects to start scaling back bond purchases later in the year, but left open the option of changing that plan if needed. These statements were enough to support bullion prices and gold gained strength, even when the data flowing out of US has been considerably positive for the growth of economy. In July, jobless claims sharply fell by 24k thus reaching 334k. The US Philly Fed Index rose again from 12.5 in June to 19.8 in July. 

The recovery of the US economy is bound to pull down demand for gold and silver as safe haven investment option, which will then affect its prices.

I have a different perspective for the Gold price. Because of the lower gold prices now prevailing, which make many operating gold mines and projects uneconomic, we are already seeing fallout among producers with cutbacks, shutdowns and postponements.  As a result global gold production is likely to decline until there is a major pickup in the metal price.  

The lower price also discourages scrap sales which have thus been diminishing too.  Meanwhile the huge demand for physical gold seems to be continuing a pace. Russia has been the biggest gold buyer in the official sector in the past decade. A shift by central banks from major sellers of bullion to net buyers has been a major support to the gold market in recent years.

Gold took a stab at the $1,300/oz level earlier in the week, although it encountered strong resistance on approach of this level and has since sunk back lower. Gold has been receiving strong support in recent weeks from physical buying (especially from Chinese buyers); however, this physical buying is waning, and becomes especially thin on approach of $1,300/oz.

Physical demand for gold from the top consumer India remains dull due to stiff measures taken by the RBI to curb imports with a view to tackle the widening current account deficit. End of peak marriage season and weak domestic currency is also restricting buyers to be active but enduring good monsoon may provide firm support to prices later. 

According to the Indian Meteorological Department, the present state of the monsoon was 16% above a 50-year average during the June 1- July 16 period. A good monsoon brings strong harvests and given the fact that 70% of India’s Gold demand is from rural areas, should keep imports on a firm note going into year end.

Market participants were now awaiting a G20 meeting in Moscow over the weekend, which will likely focus on recent financial market volatility. Attention will then turn towards a series of crucial U.S. economic data, which analysts said will give more clues about the timing of the Fed's stimulus tapering.

Many traders and investors in Europe and North America are gearing up for their summer holidays, which could made for generally quieter, summer doldrums-type trading conditions until after the U.S. Labour Day holiday in early September.

Gold support is at $1,274 and $1,265. Resistance is at $1,305 and $1,320. Silver support is at $19.20 and $19.05, resistance is at $19.70 and $20.20. Platinum support is at $1,405 and $1,390. Resistance is at $1,418 and $1,437

In the domestic market the trade range for gold for the coming is between Rs. 26,000 to Rs. 28000 per 10 gram and for silver between Rs. 39000 to Rs. 40000 per kg.

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

~ Previous Blog: 
"Hold on to your Gold" 
 http://www.riddisiddhibullionsltd.blogspot.in/2013/07/hold-on-to-your-gold.html

HOLD ON TO YOUR GOLD!

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

Gold in the spot market was up 4.8% for the week, thus stating its biggest weekly gain since October 2011. Gold rose by 2.62% to $1280.1 on Thursday and silver also increased by 4.13% to $19.95.

The markets were moved by the U.S Fed's speech on 10th July, Bernanke spoke after the markets closed on Wednesday. He said that the US economy desires a highly accommodative monetary policy for the likely future. He also suggested that the tapering of the QE3 programme does not means that monetary policy would be tightened or the interest rates would be raised.

The FOMC minutes reviewed that many Fed governors would like to see more signs of improvement in jobs before agreeing to tapering. Both risky assets and gold reacted positively to the dovish comments by the Fed. The most recent weekly jobless claims in the U.S. unexpectedly rose by 16,000 to 360,000. 

On Friday, among other precious metals, silver fell 1.1% to $19.87 an ounce. Platinum inched down 0.1% to $1,402.99 an ounce, while palladium gained 0.1% to $716.97 an ounce. Gold pared losses after government data showed that U.S. producer prices rose more than expected in June, increasing gold's inflation-hedge appeal. 

Gold supply remains tight with current market prices now below the highest cost of production. Miners are writing down asset values and cutting back on costs. As prices move lower, it will come to a point where supply and demand economics take over.

Gold's reaction was limited after Cypriot President Nicos Anastasiades said he hoped there would never be a need for the island to sell its gold reserves, an assessment stipulated in an international bailout for Cyprus.

Meantime in India – the world's heaviest gold-buying nation – the government's new campaign against household gold demand was challenged today by the jewellery industry, as well as market analysts. A number of jewellery units and workers have been idled due to the severe shortage of gold in the wake of several restrictions on the yellow metal’s import.

Imports in April and May together were a little over 300 tonnes. This fell to 38 tonnes in June. Excess imports in May gave some initial relief but that cushion is long gone.

Starting off next week, we have Chinese Q2:13 GDP data out early Monday. This number is generally not as important for precious metals as it is for other commodities. However, given that it is well known that Asian physical buying (particularly from China) has provided a crucial crutch for gold amid Fed tapering concerns, we could see a more marked reaction from precious metals than is usually the case. There is considerable risk that this number will disappoint (Bloomberg consensus: 7.6% y/y), although this time the market might not react as violently as it did in April — the market might be buoyed to some extent by hopes of stimulus, after Chinese Premier Li stated earlier this week that economic growth and employment must stay above a certain floor.

I expect gold prices to finish 2013 at around USD1,300/oz and rise mildly in 2014 and 2015. In the long term, uncertainty will continue to plague global markets as the international financial system adapts to a changing world economy. Gold will continue to play an important portfolio role for investors

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."
-Previous Blog-
"Dollar Drags Down Gold" : 
 http://riddisiddhibullionsltd.blogspot.in/2013/07/dollar-drags-down-gold.html

DOLLAR DRAGS DOWN GOLD

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

Markets were less volatile towards the end of the week due to the closure of international markets on 4th July, as US celebrated it’s Independence day.

Gold dropped by around 0.6 per cent on Thursday but still remained strong over the week until Friday. The trend changed when, on Friday, the labour Department reported a stronger than expected  forecast . It stated 195000 rise in June non-farm payrolls, along with upward revisions for May and April.

The unemployment rate stayed at 7.6% however, rather than slipping as forecast. But average hourly earnings rose 2.2% annually against the 2.0% analysts predicted. 

Gold prices bounced and then dropped $20 per ounce to hit $1220 per ounce in London trade Friday, nearing their worst weekly finish since August 2010 after the release of June's US non-farm payrolls data.

With this improvement in the labour report, it gave more confirmation to traders that the Fed might scale back its quantitative easing program.

In fact it is believed that gold would have shown more movement and volatility had the markets remained operational on Thursday.

Many market players are on a four- day weekend after the International Holiday on fourth July. The markets are expected to show some pressure on gold on Monday as everyone will return from the long weekend holiday. I expect that rallies towards $1,300 and possibly $1,340 should continue to attract selling, till there are no stronger reasons for trend reversal.

Next week too, traders are surrounded by thoughts about when the Federal Reserve may curtail QE3. The other factors that will also matter are the ongoing conflict in Egypt and the exchange trade flow figures.

Now that the US economy has shown signs of growth and recovery and the US interest rates are rising, the dollar is now being reconsidered as a mode of investment. Gold works as a hedge against inflation. Now that inflation is declining, gold is gradually being replaced with other forms of investment.

In India too, the slag due the monsoon season and simultaneously curbs on imports of gold bullion has affected demand for gold and hence the promotion of diamond jewellery has been initiated much more forcefully.

Gold support is at $1,210 and $1,170. Resistance is at $1,262 and $1,273.

Silver support is at $18.70 and $18.40, resistance is at $19.50 and $19.90.

In the domestic market gold is expected to move in the range of Rs.25,000- Rs. 27,500 in the coming week.

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

- Previous Blog: "Good News Turns To Be Bad For Gold" : http://riddisiddhibullionsltd.blogspot.in/2013/06/good-news-turns-to-be-bad-for-gold.html

GOOD NEWS TURNS TO BE BAD FOR GOLD

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

                  As we said, the "bull" in the Bullion seems to be fading away.

Gold seems to be losing its glitter as it's no longer appealing to the common investor.

Gold has dropped almost $200 an ounce in the past 10 days.

Gold reached $1179- it’s lowest since 2010. In fact gold is headed for a 24 per cent drop for the second quarter. This is considered to be the biggest quarterly drop for gold since 1968.

All this was triggered due to short selling and good economic data coming in from the US. However, Gold has declined sharply since Fed Chairman Ben Bernanke said last week the U.S. central bank plans to start scaling back its $85 billion monthly bond purchases in the next few months if the U.S. economy grows more quickly than anticipated and the jobless rate falls rapidly. That would tend to drive up interest rates, making gold less attractive as a safe haven for funds in a low-rate environment. 

One of the prime reasons suspected was the panic selling, as everyone tried to exit as they were in deep fear as to how low can gold go.

However, Friday was welcomed on a different trading note for gold. Though it dropped during the day, later in the evening it bounced back. The main reason for this was that Friday witnessed a daily close, a weekly close, a monthly close and a quarterly close for gold contracts. This resulted in short covering. Also 1180-1155 was seen as a good bottom for gold to bounce back. It turned back from 1179 and crossed 1200 thus reaching 1228 by 11 pm (IST).

A record breaking event that we saw in the past week was the depreciation of the rupee in the Indian market. Rupee was valued at its life time low of 61.15 against the dollar. If this depreciation would not have occurred then gold would have been somewhere around 22,000 keeping in mind the drop in gold prices in the international markets. But a weak rupee curtailed the prices thus creating a support for gold at 24,800. 

Platinum remained under pressure, although it finds good support around the $1,320. I feel platinum might appear a more promising prospect, given their relatively better looking fundamentals, mostly on the supply-side due to concerns over strike activity in South Africa. However, these fears may have been somewhat reduced by the civil and reasonable wage settlement at Aquarius earlier this week—the first platinum miner to settle in South Africa’s 2013 wage negotiation season. However, whether this negotiation and settlement sets a precedent for the rest of the sector remains to be seen, especially since these negotiations were not marred by NUM-AMCU rivalry, as might be the case at other miners.

Gold support is at $1,205 and $1,170. Resistance is at $1,265 and $1,300. Silver support is at $18.18 and $17.70, resistance is at $19.42 and $20.16.

In the domestic market, gold is expected to move in the range of INR 25,500 on the lower side and 27,500 on the upper side

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

-Previous Blog: 

"Has The Bull Period For Gold Ended?" : http://riddisiddhibullionsltd.blogspot.in/2013/06/has-bull-period-for-gold-ended.html

HAS THE BULL PERIOD FOR GOLD ENDED?

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

This entire week gold was dancing to the tunes of the Fed's stimulus plan.

On Wednesday, June 19, Federal Reserve Chairman Ben S. Bernanke stated that the central bank may start curbing stimulus. He further said that the central bank may start reducing the $85 billion in monthly debt buying in 2013 and end the program in 2014. Only if US economic conditions this step would be taken. Once this statement was out, gold plunged down. The market was taken aback by shock that triggered moves in a number of markets Thursday, including weaker equities, a stronger dollar, higher Treasury yields and gold saw its lowest level since 2011. Silver was the hardest hit, which fell from 21.33 to as low as 19.39. 

However, all this comes on an assumption that the U.S. economy continues to improve.

An improvement in the US economy means that- 

Ø  The Q4 GDP in the US must reach 2.3-2.6 percent

Ø  The unemployment rate must drop below 7.3- 7.2 from the current 7.6 percent

Ø  The inflation rate must be well below 2 per cent.

If this happens then gold will no more enjoy the "safe haven metal" status that it currently has.

Investors have already started losing faith in the metal as gold heads for its first annual drop since 2000. Some even say this statement from the Fed clearly gives a signal that the bull period for gold has ended.

The main reason that gold touched its life time high in 2011 was the launch of QE and if this stimulus plan is curbed then gold will plunge terribly.

The premium at the Shanghai Exchange for physical gained 10 USD to trade as high as 30 USD over the international price. Trading volume at the time of writing was 22.2 tons on the two physical contracts, far away from the 57.6 tons seen on the record day in April of this year. One reason for the lower volume could be that the physical market is still tight as refineries have back logs. Furthermore import quotas might have been reached by some participants and last but not least the tight cash liquidity among Chinese banks these days.  

Apart from the current statement released, traders and investors await the reports that are due this week which will justify the curtailment of the stimulus plans.

The reports to be watched for are -

Ø  Durable goods Report

Ø  Consumer Confidence report

Ø  New Home Sales report

Ø  Gross Domestic Product

Ø  Weekly jobless claims and personal income and spending

Moreover, Treasury yields and the amount of bargain hunting that emerges after this week’s sell-off will also be closely watched by gold traders next week.

While in the currency market, we saw depreciation of the rupee, with rupee touching an all time low of Rs. 60 against the dollar.

Weakness in gold initially persisted into Friday’s overnight session, but Asia-Pacific traders said Chinese buying helped the market steady. By Friday Mid night gold was up around 2 dollars reaching 1292$. 

Though gold has shown nominal signs of recovery, the basket of suspense will open next week for this yellow metal.

Gold support is at is at $1,290 and $1,232. Resistance is at $1,300 and $1,350. Silver support is at $19.26 and $18.53, resistance is at $21.30 and $22.60.

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

~ Previous Blog:
 "Searching For The Bull In The 'BULL'ION" :
 http://riddisiddhibullionsltd.blogspot.in/2013/06/searching-for-bull-in-bullion.html

SEARCHING FOR THE BULL IN THE "BULL"ION

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

                                               

Till the last day of the week everything was under the green light for gold. It reached a 1 week high above $1419 per ounce on Thursday. Research reveals that rise was seen due to the expectations by traders just ahead of the US data release on Friday.

It was being anticipated that US would not be adding much jobs which in turn would not compel the FED to discontinue its stimulus measures. Hence Gold prices would rise even further.

As economic condition in US and the global economy would worsen and central banks would print more money to spur growth, analysts say that gold will shoot up to new highs and send shocking waves the way it did when it crashed in April.

Central banks around the world are looking at gold bullion as an alternative to the currencies they hold in their reserves. It is well documented in these pages how major central banks like the ones from Russia and Turkey continue to buy gold bullion. This too was a reason to support the rising gold prices. But what happened on Thursday came as a complete shock to the bullion market.

The US reports showed signs of growth and recovery. The country added 1,75,000 jobs in May compared to just 1,49,000 in April. The Fed stimulus plan is based manly on the basis of the Labour report.  The employment number is better than expected and it suggests that the Fed bond buying may end in some time.

The addition of jobs reduced hopes that the Fed will continue with its stimulus plan and this reduced gold’s appeal as an inflation hedge tool Gold fell back through $1400 Friday as European stock markets erased earlier losses. GOLD and silver prices whipped sharply Friday lunchtime in London, as there was a slight rise in jobless rate to 7.6 per cent 

Gold fell around 2 per cent on Friday, thus making it the biggest one day drop in three weeks. During the trading day on Friday, Spot gold was down 2.1 per cent at 1383.96 an ounce, having hit a low of 1377.39 during the same day

Moreover, SPDR gold trust ETF holdings continue to tumble: the ETF’s amount of gold held declined by 5.8% during May and by 25% since the beginning of 2013. If gold holdings will continue to dwindle, they could indicate the demand for gold as an investment continues to fall. 

While in India, gold imports reached an all time high. For the first time ever, 135-160 tonnes of gold were imported during the month of May. The highest in any month till date. This compelled the government to raise the import duty yet again to 8 per cent so as to curb imports.

As per my view, the government’s decision is good. Imports are at an all time high. Though this decision of the government will curb imports but it will not have an effect on the demand. In a population of 120 crore where gold is the most preferred investment mode, the government should undertake other policies to curb imports, there is 25000 tonnes of house hold gold lying idle in Indian homes. This gold should be got into the markets through gold deposit and gold lending and borrowing schemes. 

ETF loans are also a good option. But in spite of constant mentioning, these schemes are consuming time for execution due to complications.

Gold is expected to move in the range of Rs. 26500 to Rs. 28500 per 10g in the coming week.

"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

-Previous Blog:
"Comments On Gold Duty Hike Of RBI":
 http://riddisiddhibullionsltd.blogspot.in/2013/06/gold-duty-hike.html

Comments on Gold Duty Hike of RBI!

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

                

          

Finance Minister is back with a new change in Gold policy, announcing another attempt to curb Gold imports by increasing the import duty from 6% to 8% with immediate effect, will have a loud impact on the Bullion sector. Increase of 2% at current rate of $1400 per ounce is 28 USD per ounce. To be clear, with this duty hike a difference of 9.24 percent between the international and domestic price of the yellow metal is evident.

The headline should however have had a negative psychological impact and it is surprising that Gold wasn’t sold harder yesterday, which might again point to the fact that traders are now cautious on the next set of US data.

Taxes included in the price is 8.24% Customs Duty + taxes(Educational Cess etc) + 1% VAT = 9.24% while  1% TCS is applicable on Cash Sale, will incentivize a rise in illegal channels and malicious activities with respect to importing gold and related products like jewellery etc., in the country. To give you a snapshot, 1 kilo of smuggled Gold into India, where the bar has a size smaller than a Samsung S4 (approx), would yield approx 4160 USD i.e. INR 2,37,000 (approx as per current rate of 1 USD = INR 57), or 3 times a yearly income per capita [GDP (nominal) - 2012 estimate  - Total $1.947 trillion (10th), Per capita - $1,592 (140th), Source: http://en.wikipedia.org/wiki/India]. Every Indian going on a holiday abroad might be tempted to carry some Gold back (in prescribed limits as per Government norms), as the tax saving could help paying part of the trip. While 1 kilo of Gold is not affordable to most of Indians, organized illegal channels could finance porters and collect the Gold at their return to the country.

In turn it will lead to an increase in unemployment among the skilled artisans of the country (around 1-2 million people depend on this sector to earn their livelihood) as well the businesses of local jewelers across the country. The government should harness the existing reserve of gold in our country rather than turning towards imports and implementing this alarming hike on customs duty. Also other opportunities for revenue generation, like increasing exports should be explored by the government of India. Hiking the duty on imports will in no way, curtail the absolute demand (can reduce it), as the precious metal has always been regarded as one of the best investment options for social security.


"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

- Previous Blog:
"See Saw Yet Again" :
 http://riddisiddhibullionsltd.blogspot.in/2013/06/see-sawyet-again.html

SEE SAW.....YET AGAIN!

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

There were mixed or rather confused sentiments in the precious metals market as we saw gold rising consecutively for 3 days till Thursday but again dropping almost 1.6 per cent on Friday (its biggest one day loss in two weeks)

The prices of precious metals changed direction and bounced back on Tuesday. Their recovery coincided with the decline in equity markets and the rally of leading risk related currencies such as Euro and Aussie dollar

The main reason for gold recovery till Thursday was the US Economic Data that was released. There was an unexpected Increase in the jobless claims and higher pending home sales too increased less than expected. Jobless claims rose by 10k to reach 354k during the previous week and the US GDP for the first quarter of 2013 expanded by 2.4 per cent - which disappointed many as it was slightly lower than the previous estimate. It gave signals that its recovery is still not too close. This boosted the prospects that The Federal Reserve will not pull back its monetary stimulus plan

Prolonged accommodative monetary policies favour gold as low interest rates encourage investors to put money into the non-interest-bearing assets. The little to no improvement in the U.S economy according to these reports may have contributed to the depreciation of the USD against leading currencies and the rally of precious metals

Gold was up 1.98%, thus trading at 1417.81 an ounce post the data release on Thursday. The yellow metal remains supported by weak US GDP numbers and positive Asian growth numbers.

However, Friday being the last day of the month we saw selling pressure in the markets.

A few data was released on Friday too. There was again optimism created in the market as regards the recovery of the US economy. Some stronger-than-expected U.S. economic data released Friday morning has boosted the U.S. dollar index and in turn put selling pressure into the gold market. US Data released on Friday showed low inflation and improving consumer confidence. This dampened investor interest, thus dropping bullion prices.

Bullions marked sharp losses for a second consecutive month as we has also witnessed the great gold crash in April

Moreover, there was no sell off seen in ETF's on Friday. Holdings in the SDPR Gold Trust remain unchanged at 1013.15 tonnes on Thursday, after rising for the first time in three weeks on Wednesday

As we are exiting May, volatility of precious metals is expected to rise as gold and silver contracts are expiring.

Gold support is at $1,390 and $1,373. Resistance is at $1,427 and $1,440. Silver support is at $22.20 and $21.80, resistance is at $23.10 and $23.54.


"The primary purpose of this blog by Prithviraj Kothari - MD, RSBL(RiddiSiddhi Bullions Ltd.) is to educate the masses of the current happenings in the Bullion world."

- Previous Blog-
"Fed's Policy Statement- Predictable I feel?" :
 http://riddisiddhibullionsltd.blogspot.in/2013/05/feds-policy-statements-predictable-i.html