-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)
Gold prices seemed to be in a wavy mood all this week. With prices gaining momentum on Tuesday and Wednesday and then falling back on Thursday and picking up on Friday again.
Let's take a look at the weekly movement of gold prices.
Monday- On Monday, gold and silver slightly declined. Their decline coincided with the downfall of other commodities such as crude oil. In the forex market, leading risk related currencies such as the Euro and Aussie dollar depreciated against the USD.
Tuesday- Gold went to test the downside and dropped to 1305.50 when aggressive selling hit the market in the afternoon. A lower US September consumer confidence number seemed to provide the needed support, and by the end of the day, Gold shorts got squeezed out when it recovered all the way up to 1328 again.
Wednesday- On Wednesday there was uncertainty in the market on the issue whether the US lawmakers would be able to agree to a spending bill before next Tuesday to avert a government shutdown. Focus again shifted to gold as it witnessed safe haven buying. According to US Treasury Secretary Lew the Government will be out of money on 17th October and won’t be able to meet all of its financial obligations. Gold reacted with a move higher to a high of 1338.20
Thursday- Gold fell on Thursday as a rise in the dollar and mixed US economic indicators prompted investors to take profits after gains in the previous session. In US economic data on Thursday, contracts to buy previously owned home fell for a third straight month in August, while fewer Americans filed new claims for jobless benefits last week. Spot gold was down 0.8 percent at $1322.40 an ounce
Meanwhile, Republicans in the US House of Representatives refused to give in to President Barack Obama's demands for straightforward bills to keep the government running beyond Sept. 30 and to increase the government's borrowing authority to avoid default.
Friday- Gold prices gained more than one percent on Friday as the trading hours closed. Prices rose over expectations ahead of a weekend that could yield a decision on whether the US government shuts down next week.
Gold jumped more than 1 percent on Friday as wrangling over the U.S. budget and jitters over the outlook for Federal Reserve policy stoked buying interest, with buying accelerating sharply on a break of a key chart level.
New York Fed President William Dudley said on Monday that the U.S. central bank could still reduce its support for the economy later this year, while St. Louis Fed President James Bullard said on Friday that stimulus could be scaled back in October, depending on economic data. Comments from a Federal Reserve official that suggested a bond-buying taper could be pushed out to next year helped spur the precious metal upward.
It was this month of the year, in 2011 that gold reached its life time high of 1920$ when the first US debt ceiling crisis surfaced. The crisis was resolved at the last minute. A similar crisis creates waves (though minute) in the market where investors wait and watch the US economic data reports and key figures that determine whether the US Federal Reserve could begin reducing its bond purchases this year.
The metal also received a boost from the International Monetary Fund, which reported that central banks continued to increase gold reserve. The data showed an increase of 12.7 tons in Russia’s Gold Reserves, Turkey adding 23.3 tons, Kazakhstan 2.5 tons and also Ukraine, as well as Azerbaijan were among two tons of buying. On the sell side stood Canada, Mexico and the Czech Republic with marginal amounts of a few hundred kilos in total.
Still, the price of bullion has fallen about 20 percent this year, after 12 years of gains.
Moves by India to cut gold imports as it wrestles with its ballooning current account deficit have been keeping buyers at bay.
The US debt ceiling debate is heating up, but while a temporary Government shutdown cannot be ruled out, no one really expects the US to default, but finally increase the limit again.
The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.
- Previous blog -
"Final surprise or more to go!!"
http://www.riddisiddhibullionsltd.blogspot.in/2013/09/final-surprise-or-more-to-go.html
No comments:
Post a Comment