RSBL Gold Silver Bars/Coins

Sunday, 29 June 2014


                                                     - Mr. Prithviraj Kothari, MD, RSBL              

We are half way through 2014 and the market is still confused whether gold is showing bullish trends or bearish. But lately, gold has been behaving in such a pattern that it would be difficult for anyone to give "a" particular market trend.


At the beginning of 2014 it was the exorbitant demand for gold from China that kept gold prices high. Then came in the deteriorating weather conditions in US and political uncertainty in the Euro Zone that kept pushing gold prices even higher. Come in March and the tables tuned for the yellow metal. Gold prices dropped over developing US economy and statement released by the Fed that they may end the massive bond buying program by the end of 2014. Then came in the Ukraine crisis which proved to be vital for gold. May was once again a bumpy ride for gold as it was pulled between the escalating tensions in Russia on one side and a positive US economy on the other.

Simmering geopolitical tensions over Ukraine and Iraq have boosted gold's safe-haven appeal so far this year. Still, analysts are bearish on gold's outlook because of possible dollar strength, an equities rally and tame inflation.

Last week gold posted its biggest weekly rise in three months as the threat of escalating tensions in Iraq and the Federal Reserve's lack of commitment to raising interest rates sparked a wave of short covering

The recent crisis occurring in Iraq has boosted gold prices. Sunni tribes have joined a militant takeover of northern Iraq. Oil prices were pushed to 9-month highs last week, with a consequent knock-on effect on gold.

For a better analysis of gold prices movements over the week, I have given gold's performance on a daily basis below.

MONDAY- Following previous weeks trends, this week too, gold began on a positive note due to weak US equities and increasing violence in Iraq. Gold was hovering around $1321.90. As Iran's supreme leader accused the United States on Sunday of trying to retake control of Iraq by exploiting sectarian rivalries and as Sunni insurgents drove toward Baghdad from new strongholds along the Syrian border, we saw gold extending last week's 3 per cent gains over these issues.

TUESDAY- Following suit, Gold hit a two-month high on Tuesday since mid-March as a drop in European shares after soft German economic data and a weaker dollar helped the metal build on last week's gains. Spot gold hit a peak of $1,325.70 and was up 0.5 percent at $1,323.80 an ounce during the trading sessions.

WEDNESDAY- Gold fell on Wednesday as physical buying dried up after prices jumped to their highest level in two months in the previous session. Gold dipped $3.31 an ounce to $1,314.29 after rising to $1,325.90 on Tuesday, its strongest since April 15. It has gained 9 percent so far this year.

THURSDAY- Gold fell on Thursday as upbeat U.S. jobless claims data and weaker crude oil prices sent prices below a two-month high hit earlier this week. Another report on Thursday showed the number of Americans seeking unemployment benefits fell again last week.

Gold's appeal as a hedge has definitely declined as the market is under a strong belief of an expanding economy. Recent gains in gold were mainly motivated by short covering as speculators aggressively bought back their bearish bets. Fed President James Bullard stated that the interest rates increases could happen soon. This further got gold prices under pressure. Also negative, was a drop in crude oil prices as fears eased over export disruption from war-ravaged Iraq.

FRIDAY- Friday too, gold prices declined. Nearly flat US equities and a slightly lower dollar failed to inspire gold, when data showed US consumer sentiment rose in June as consumers remained optimistic and the sluggish first quarter was due to difficult winter conditions.

Traders warned that bullion could see some additional choppy trading amid concerns over weak imports in top consumer China. Hong Kong released import/export statistics, which showed a drop of net Chinese Gold imports to 52.3 tons, which is the lowest number since January 2013. China's total gold imports from Hong Kong dropped 17 percent to 67.233 tonnes in May from 80.817 tonnes in April, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

There are several factors that could affect this number:
  • The rising gold prices have dampened the demand for gold
  • The ongoing talks about trade finance, where Gold was apparently used in the past to borrow cheaper currency
  • A liquidation of Gold as collateral
  • Direct Gold imports into China are said to be growing, as there is no Chinese official data released such imports would be difficult to track.
Moreover, India has witnessed a weak start to the monsoon. This may curb the domestic gold demand, as 70 per cent of the gold demand in India comes from the rural areas that are dependent on agriculture as its main source of income. The majority of Indian gold purchases are made in the agricultural sector, and a good harvest typically raises income levels and translates into greater bullion demand. We still await July and August and hope for better monsoons.

Meanwhile we expect gold and silver to trade in the following prices range:

$1293 - $1340
an ounce
INR 28,000 - INR 29,500
per 10 gm
$20.40 - $22.00
an ounce
INR 44,000 - INR 49,000
per kg

- Previous blog -
"Iraq to Ukraine- Safe Haven Boost"

Monday, 23 June 2014

Iraq to Ukraine - Safe haven boost!

- by Mr. Prithviraj Kothari, MD, RSBL

All that was written about Gold about the next downfall, proved incorrect till date. Safe haven buying returned lying a Torpedo which took out all the possible resistance levels. Silver proved that it is always the best ally of Gold and moved at a much faster pace than Gold.

Gold saw a very good recovery internationally and in the domestic markets last week. The main reason behind this upward movement of gold and silver prices was the ongoing Geo political crisis in Iraq and Ukraine. Gold has always been considered as a safe haven assets in times of crisis. Moreover, the equities market have been trading near record levels and have reached a saturation point. 

On Tuesday, we saw the economic data coming in from US. Though the crisis in the Middle East was escalating, the attention was towards the two day policy meeting of the Fed where it was expected to further taper US bond purchases. Gold edged lower on Tuesday, backing away from the previous session's three-week highs as a stronger dollar and possible thawing of Middle East-West tensions quelled appetite for safe-haven assets. Consumer prices reading were high which further raised the belief that the Federal Reserve was headed for more monetary tightening and it so did by announcing a further $ 10 billion reduction in QE3 programme.

There was no rush to hedge in the precious metal either after weaker U.S. home construction numbers for May indicated a softer economy in general. The Fed cut its U.S. growth forecast for 2014 from 2.9 percent to a range of between 2.1 percent and 2.3 percent, but it also expressed confidence that the U.S. economic recovery was on track.

As the Federal Reserve showed lack of commitment to lift interest rates and as the tensions in the Middle East continued to escalate, we saw gold surging over 3 per cent on Thursday. This gain has been its best in the past eight months.

Bullion hit its highest level in more than two months. Silver jumped as much as 5 percent, while platinum and palladium also climbed as new hurdles emerged to settling South Africa's mining strike.  

Gold edged lower on Friday as investors took profits after it posted its biggest daily rise in nine months, but was still set for its biggest weekly gain in four months due to conflict in Iraq and a softer dollar after the Federal Reserve's comments. 

As we all know, The key factor that has driven gold prices high is the current Middle East crisis and the Ukraine crises. Militants have routed Baghdad's army and seized the north of the country in the past week, threatening to dismember Iraq and unleash all-out sectarian warfare with no regard for national borders. U.S. and Iranian officials discussed the crisis in Iraq on the sidelines of separate negotiations about the Iranian nuclear programme in Vienna. The news says US President is sending as many as 300 US military advisers to assist the Iraqi Army. 

Fighting flared between Ukraine and pro-Moscow separatist forces, further straining a unilateral ceasefire declared by Ukraine as Russian president Vladimir Putin pressed Kiev to talk to the rebels. When gold is driven by geopolitical news, there's a tendency that this has to keep getting worse for gold to improve.

Moreover there are few data releases from US which the market players believe will be positive and prompt the USD to appreciate. Looking at the above scenario we might see gold prices may though initially rise which eventually likely to turn down. 

There is a possibility that the euro currency may also continue to depreciate which basically ECB wants so as to manage inflation and economic growth in the country. So any further decline in the euro currency might prompt USD to advance and by which may cap gold’s upmove.

These sorts of news are enough to shudder the market up and down. On a technical note, earlier I felt that the resistance near $1285 breaching which it might fuel to $1300 mark. Now the same levels would act as key support regions in short-term. 

Gold has gained momentum much more than expected and may not rise substantially in the coming week as the overall trend remains down till the world economies are improving due to unprecedented stimulus packages offered by central banks across the work to support their currencies. 

To top that I also feel that gold prices in the domestic market will get further support out of a minor depreciation of the rupee. hence I think buying on dips would be advised.

Gold is expected to range between $1277 - $1340 in the international market and Rs.27,500 - Rs.29,500 in the domestic market.

While silver is expected to range between $20.00 - $21.30 and Rs.43,500- Rs.47,000 in the international and domestic markets respectively.

- Previous blog -
"Safe Haven Buying Returns- Gold in Picture"

Monday, 16 June 2014

Safe haven buying returns: Gold in picture!

          - by Mr. Prithviraj Kothari, MD, RSBL

As the week ended, Gold once again became the centre of attraction in the commodities market.  

Bullion metals rallied on Thursday. Gold was at a three week high on Thursday, sustained by safe haven buying following outbreak of violence in Iraq and disappointing economic news out of the US. Last month it was Ukraine, this month it’s Iraq.

Iraq was once again the topic of discussion as civil war has broken out in that country amid escalating violence. Crude oil prices were sharply higher on Thursday, mostly on the Iraq news. The bigger worry is that the violence in Iraq could spread to other Arab countries. Insurgents linked to al-Qaeda seized northern cities of Mosul and Tikrit on Wednesday. Post this, gold and silver prices shot up due to their safe-haven appeal. The U.S. said that it is working with Iraq's leaders on a coordinated response to regain lost territory and would provide additional assistance to Baghdad. 

Along with this crisis, came in a report from the US that was not as per expectations. US unemployment claims and retail sales came in below expectations, giving investors an excuse to sell equities with sentiment relatively risk averse were also friendly for the gold market.

Claims increased by 4,000 to 317,000. That was roughly in-line with the consensus estimate, which was pegged at 315,000. Total retail sales for May increased 0.3%. Excluding autos, they were up 0.1%. Those results were below the consensus estimates, which called for increases of 0.7% and 0.4%, respectively. Separately, April business inventories rose 0.6%, while the consensus expected an uptick of 0.4%. This followed the prior month's unrevised increase of 0.4%. In other overnight news, industrial production in the European Union rose 0.8% in April from March and was up 1.4% year-on-year. The increase was a bit larger than forecast.

India's monsoon season is off to a slow start, and this could have implications for gold should it continue. A lack of rainfall would have a detrimental effect upon the wealth of Indian farmers, which in turn could inhibit the ability to buy gold in one of the world’s key gold consuming nation

In 2013, gold has entered the bear market after a long period of time. This tremendous dip in prices, led to a huge demand for gold in Asia. in April 2013 Asian demand came in, in tremendous force and drained the gold market of all of that tonnage from U.S. sellers of gold taking out a total from the developed world, over the entire year of 2013 around 1,188 tonnes of gold, refining it to 1 Kg bars in Switzerland before shipping it into Asian markets, particularly that of China. The gold price was halted in its fall at $1,280 making a double bottom at that price later in the year.

Now we see more than one reason for gold prices to move even further-
  1. Demand for gold from China remains robust with an annualized +2100 tonnes (approx.) set to being withdrawn from the Shanghai Gold Exchange in 2014. While this is less than the amount seen on 2013 it is sufficient to buoy the gold price at current levels
  2. The pricing power of the U.S. gold market that came with the 1,280 tonnes of gold has been used up. With the U.S. accounting for only 7.35% of global gold demand, the U.S. markets would have to rely on the influence of the derivatives market of COMEX.
  3. Gold is currently trading at $1280 and on the lower side it has a good support at $1210. So gold is more vulnerable to shoot up from here,
  4. Indian demand could reignite on the easing of gold import restrictions that severely curtailed Indian gold demand since August last year. The new ruling party is expected to review these restrictions in the budget in the next week or so.
  5. Geo-political tensions will play a key role as they have been doing over the years.

As Gold inches up, so will the Silver do! But Silver from a fundamental perspective of it being used in Industries will give it a boost as the economy shows sign of improvement. Moreover with the depreciation of rupee, Gold is expected to move upto the levels of USD 1300 and in India terms INR 28500 to 29000. 

Finally, one of the most awaited Headline: Platinum strike deal reached ‘in principle’. An agreement in principle has been reached between platinum producers and trade union AMCU, the companies said on Thursday. “AMCU will be discussing these in principle undertakings with its members to seek a mandate to accept the offers which, if given, will bring to an end the 21-week-long strike,” the platinum producers’ spokeswoman Charmane Russell said in a statement. Platinum lost 40 USD and traded down to a low of 1436.

USD may be under some downside pressure ahead of the US CPI also due tomorrow. The marquee event of the week has to be the FOMC decision due on Wednesday where the Fed is expected to leave its tapering course intact which will bring down the monthly asset purchase to $35 billion with the end date still likely to be October according to Fed Fisher. Traders will keep a close eye on the updated economic forecast which may be a tad more upbeat than previously which will help to give the USD a prop. Fed Chief Yellen's conference will also be closely eyed.

I expect gold to be in the range of $1265- $1305 and INR 26,800 – INR 28,500 in the international and domestic markets respectively.

On the other hand silver is expected to move in the range of $18.75- $20.10 and INR 40,100 - INR 45,000 in the international and domestic markets respectively.

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 -

Sunday, 8 June 2014


                                                     - by Mr. Prithviraj Kothari, MD, RSBL

Once again, gold was surrounded by a cloud of doubt.....doubt of gold being a safe haven asset...doubt of gold being the most dependable asset in times of uncertainty.

While Thursday showed signs of gold on the path of recovery, the US jobs data released on Friday once again proved fatal for gold. Bullion climbed 0.8 percent on Thursday, reaching the highest since May 30, after the euro strengthened against the dollar as the market discarded the European Central Bank’s unparalleled effort to weaken the single currency and strengthen growth. On Thursday, The European Central Bank announced a new and aggressive monetary stimulus package. This once again raises a question over the global economic recovery. This package along with dovish corresponding remarks from ECB president Mario Draghi  considered stock market and European bond market bullish. 

This move of the ECB has reinforced the notions of some in the market place that the U.S. Federal Reserve may be forced to back off its plan of “tapering” its quantitative easing. 

This has created a contradictory environment in the economic world where the European Union is stimulating its monetary policy while at the same time the Fed is tapering its monetary easing.

It was this tapering of the FED that gold saw its worst performance in 2013. It was in 2013 that we saw the yellow metal dropping almost 28 percent over expectations that the Federal Reserve will taper its monetary stimulus programme as the US economy strengthened. Since January, 2014, The Fed has made four tapers as we saw US moving gradually towards the path of recovery

This week too gold dropped on positive jobs data released on Friday. Gold prices fell on Friday as the dollar index swung back into positive territory, after a closely watched U.S. employment report came in almost exactly in line with expectations, showing a solid pace of hiring in May. Friday morning’s U.S. employment report for May showed a slightly higher than expected rise of 217,000 in non-farm payrolls. The key in the report was forecast to rise by 210,000. Nonfarm payrolls increased last month, the Labor Department said on Friday, against expectations for a 218,000 rise, while data for March and April was revised to show 6,000 fewer jobs created than previously reported.

The bearish trend in the international market is further expected to bring down gold prices in the near term. This sentiment further strengthened as premium on gold in the domestic markets dropped. 

At the same time, gold consumers in India are waiting to exhale. Consumers in India are following the "wait and watch" policy as they expect prices to decline below the crucial Rs.25,000 level in the near future as the market expect customs duty to decline.

Post election, gold premiums have dropped drastically. premiums had slid from 10% to 1% and 2%, soon after the government allowed premier trading houses to import gold and increased the availability of the metal in the market. and markets have a positive feel towards a lot of sectors including precious metals. Investors and traders now await a new gold policy to be unveiled by the government.

Many have even postponed their purchases as they feel that prices will decline further.
Jewellers expect prices to slide further in the next 4-6 days, given the price slump in the international market.

In the international markets people have shifted focus from gold to equities. Following suit, In India too, stocks are stealing the lime light as gold has been sidelined. Moreover, customers expect a further fall in import duties after which gold prices are anticipated to fall further. Demand in the domestic market is also expected to remain slack for the next two months, as there is no festive season.

Many traders who had resorted to hoarding gold due to supply concerns would refrain from doing so now, as import norms for exporters have been relaxed to a certain extent, said jewellers. Moreover, June is considered a slow month as far as demand is concerned.

So as of now gold is just hanging around. While some people have shifted focus to equities and physical demand for gold isn't strong, the announcements of the ECB meeting has found some cover for gold.

Most people will just wait for the market to make a decisive move before entering at this dip.

While the only mantra now is wait and watch I expect gold to be in the range of $1238- $1273 and Rs.26,200- Rs.27,500 in the international and domestic markets respectively.

On the other hand silver is expected to move in the range of $18.15- $20.15 and Rs.39,500- Rs.41,000 in the international and domestic markets respectively.

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 -
"A Dreadful Week For Gold"

Sunday, 1 June 2014


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

It's been a dreadful week for gold. The yellow metal is down almost 3%, the most in any week since late March. 

I have repeatedly been making a point that gold prices are being pulled by the bullish and bearish factors and it has been moving on a see saw as we get a positive growth report from US on one hand and escalating Ukraine crisis on the other.

Finally the strong resistance of $1280 gave up. On Wednesday, Gold prices fell to a near 4-month low as easing Ukraine crisis paved way in the market. But gold prices bounced off these levels after data showed that the U.S. economy contracted in the 1st quarter for the first time in three years. The US Commerce Department approximated that GDP dropped in the 1st quarter. Economists held severe weather conditions responsible for this. 

On the other hand, the US Labour Department report showed application for jobless benefits declined last week which reduced the safe haven appeal for Gold as the market is now moving their focus to riskier assets like equities that have given better returns than gold in the past year,

At each dip there are more people exiting the markets than entering.

In 2013, we saw gold moving in exorbitant quantities from West to East. Last year China overcame India as the world's top gold importer and gold jewellery and investment demand, rising to a record 1,065.8 tons. Most of that sold gold ended up in China and India and other growing gold consuming nations in Asia led by Vietnam and Indonesia.

But in the first quarter of 2014, that demand tanked. Mainland China's demand for gold fell 18% in the first quarter of the year as investors bought fewer bars and coins, offsetting record demand for jewellery.

India's bars and coins buying also showed a huge drop-off of 54% to 98 tonnes and with jewellery consumption also sliding overall gold demand on the subcontinent slid 26%.

One of the most important ongoing news was about the Major metal exchanges emerged as contenders in developing an alternative to the London silver price benchmark, or "fix", after the century-old system for setting the globally recognized price is disbanded in August. The major exchanges CME and LME both said on Thursday that they were working with LBMA and the precious metals industry to find an electronic-based solution.

Meanwhile, expectations remain high that a strong US economic data report might support the Fed's policy of scaling back its bullion friendly stimulus. 

The market will now be glued to the ECB meeting that will be held next week when the bank might take further steps to ease its monetary policy and enhance growth.

Gold remains 5% to the upside for 2014 but is down $120 an ounce from highs reached mid-March as the rally on the back of safe haven demand and bargain hunting loses steam.

Further for the week gold is expected to be in the range of $1238-$1273 in the international market and Rs.26,000 - Rs.27,800 in the domestic market.

While silver is expected to move in the range of $18.15 - $18.85 and Rs. 38,500- Rs.41,00 in the international and domestic markets respectively.

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 -
"Gold Investors be Cautious"